Which state is best for out of state SFH investment property?

Question

I live in San Jose California. I want to buy out of State property as home prices are expensive here. I will be a first time buyer. Im not restricted by any demographics as I have to hire a property management company to manage the property. Which state is landlord friendly and due to the current pandemic is there any shift in any market regarding home prices and rentals? I was considering one of the following San Antonio Texas, Phoenix Az , North Carolina as potential states to buy my first property. Can you suggest me are these good states to buy out of state property with in a budget of around 150k ? Or should I consider other locations?

Naeem Kapasi · Answer

I am a Realtor and wholesaler in San Antonio. I can tell you that the rental market here is very strong. You can easily hit the 1% rule in this market. You CAN find those deals on the MLS, but your best bet would be to work with a wholesaler who finds these properties for you at a discounted price. But you must know that most off-market deals will require some level of rehab before you put it for rent. Which is a good thing in my opinion because you get the opportunity to get equity in the deal by raising the value of the property. My two cents.

Jesse Daconta · Answer

Those are good areas. However, don't expect out of state investing with a property manager to be passive.

Best,

Christopher Campbell · Answer

@Megha Sharma

The market here is so competitive because there's a clear demand for affordable housing that the investment community can capitalize on at lower costs of entry vs other major metro cities. Local crime rates in certain areas of town are lower relative to other major cities and although property taxes may pose an issue in certain investment opportunities there are still a lot of great options to be had in the SF and MF space so long as you can compete.

With that, as I explained, there are areas of town that are appreciating well where you can still positively cash flow. You may have to invest off the beaten path and may have to do a little(or a lot in some cases) rehabbing to achieve this but having a strong team in place really helps to facilitate your goals. The market for relatively turn-key investments is almost irrationally competitive especially when it comes to the MLS. Getting to know players in town that can put solid off-market opportunities in front of you can present tremendous advantages if you're well prepared.

My first priority when starting out with out of state investors or newer investors is to get them introduced to as many key players as I can within my network. Of course it is always important for the investor to do their due diligence in all situations before taking any major steps but you'll need help to get started; you won't be able to go it alone without making avoidable and potentially costly mistakes. Getting to know experienced and reputable brokers, contractors/trades, property managers, can really boost your ability to act with confidence. You know what they say about your network.

Michael Helfant · Answer

A lot of midwest cities allow for investment in that budget also. In Southeast Michigan, where we do our business, we have plenty of clients from the coasts who have found properties SF and MF in that 150k and under range. I agree with @Gary Mac that getting access to and finding a local team will be important wherever you do land.

Gary Mac · Answer

@Megha Sharma

Recommend choosing the area where you have the best relationship to a local team of people that can help you manage. I can’t speak for TX but I am actively investing in Phoenix and N.C. if you have specific questions feel free to reach out.

Christopher Campbell · Answer

Your budget will do well in the San Antonio market but you'd have to set up a team here first. From there, filtering deals will become a little easier and you can approach the investment with more confidence.

San Antonio is very competitive these days but it's for good reason. The dynamic of the city provides great opportunities to investors that like to flip or hold. I'll be glad to share experience and local knowledge.

Cheers!

David Avery · Answer

The best answer for your question is Pueblo Colorado.

Can buy great houses all day long for $80K-100K.

May need a little work.

Have great agent their and property management team

pretty good handyman that is very fair.

Megha Sharma · Answer

@Naeem Kapasi

Thanks for the info. I really like appreciated your two cents.

As I will be buying out of state property, so I won't be able to manage all the rehab there as I will be totally new to the area. Does the wholesaler will suggest some good property management companies who can look into rehab and guide me.Is it possible under my budget?I'm planning to hold the property for at least 8-9 years.

Megha Sharma · Answer

@Gary Mac

Thanks for the info. I used to live in Tempe,Az for around 3 years. Which location is good in Az for good cash flow and appreciation value under my budget? I have seen students renting out more apartment homes and condos in Tempe. Is investment in SFH in Tempe a good idea? Which city( Mesa, Tucson, Tempe, Phoenix, Chandler and Gilbert area for investment in SFH) will be  suitable for long term goals (around 8-10 years)?

Megha Sharma · Answer

@Christopher Campbell

Thanks for the info. I will definitely hold the property and will be looking for appreciation and some cash flow. Why the San Antonio market is  so competitive? On some other forum thread on BP I was reading that Austin market has some negative cash flow, is the San Antonio market yields positive cash flow in my range if I go for B class categories of house?

Which state is best for out of state SFH investment property?

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