Need Help Buying First Cash-flowing Rental Property

[Bryan Malone]

Real estate in California is expensive. Especially in the bay area. That's why I'm looking to buy out of state. I have around 50k to put down as a down payment on my first property. The problem is, I am inexperienced and lacking resources and support. I need guidance. That is how I found this website and why I am reaching out. I want a property that cashflows so I can start replacing my income. I think I want a multi-family property (Ive heard they cashflow well). Where can I find a property I can afford, in a good area, that cashflows nicely, and hopefully will appreciate in the next few years? Big thank you for any help. 

[James Wise]

Originally posted by @Bryan Malone:

Real estate in California is expensive. Especially in the bay area. That's why I'm looking to buy out of state. I have around 50k to put down as a down payment on my first property. The problem is, I am inexperienced and lacking resources and support. I need guidance. That is how I found this website and why I am reaching out. I want a property that cashflows so I can start replacing my income. I think I want a multi-family property (Ive heard they cashflow well). Where can I find a property I can afford, in a good area, that cashflows nicely, and hopefully will appreciate in the next few years? Big thank you for any help. 

 Saaaaaap playa....Many markets available for guys in your situation. Lots of bay area investors hit up the turnkey markets. 

Cleveland is the one I am most familiar with and it's also very popular with investors across the USA so I figured you'd get some value out of reading The Ultimate Guide to Grading Cleveland Neighborhoods. I also have similar guides that you may want to look over for Kansas City, Missouri. & Birmingham, Alabama.

In addition there are tons of other turnkey markets out there besides those listed above. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

• Cincinnati, Ohio
• Dayton, Ohio
• Toledo, Ohio
• Youngstown, Ohio
• Cincinnati, Ohio
• Memphis, Tennessee
• Saint Louis, Missouri
• Indianapolis, Indiana
• Detroit, Michigan
• Erie, Pennsylvania
• Louisville, Kentucky
• Milwaukee, Wisconsin
• Jackson, Mississippi

One thing to note when looking at the individual markets, you can make or lose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Google Clayton Morris and/or Morris Invest for a cautionary tale of what not to do when buying turnkey real estate
• Understand you can not eliminate all risk, only mitigate it. If you are risk averse, real estate, (especially out of state) is not for you.

[Mike D'Arrigo]

@Bryan Malone The midwest typically is best for affordability and cash flow. With $50K to put down, you can finance two properties Indianapolis or Kansas City in what I would consider B class neighborhoods. Both markets are experiencing tremendous appreciation now also. I'd be happy to share my insights and help you get starter if you want to reach out.

[Shawn Ackerman]

@Bryan Malone I'm from New York and I invest in the Mid-West(Milwaukee).  There has been some crazy appreciation going on in the market this past year or so.  All of my initial investments were low end.  Picking them up for $16K to $27K.  Those days are over now.  And I've also altered the type of properties I pick up. picking up duplexes for $50-$80K cash and delay financing them is what I am  buying these days. Milwaukee is a great market to take a look at as it truly has any and everything you can think of.  The market has, I would argue, more multi-family style building than single family, rent demand is high and with the current appreciation, I am happy I chose this spot.

[Matt Maurice]

The Milwaukee market has seen a lot of growth over the last few years and has not slowed down in recent months. It's a great mid-sized city with a strong and growing renters' market. It will see more growth as people move out of big cities and look to places with a lower cost of living. We've also got great resources for out-of-state investors.