Pinch Me - Numbers Always Seem Too Good

[Andrew White]

Howdy folks,

My wife and I are looking to invest a significant amount of cash in to out of state rental properties with a target of $115k/year in passive income. I got Mashvisor and love the analytics that it offers, as we're trying to hone in on an area to invest in. That being said, I'm looking alot at the St. Louis area, Texas in general(lots of family there), Memphis and Chattanooga and I feel like I'm missing something when I'm doing the analysis. I feel like I'm quite regularly finding on-market deals that look like they'd provide 15-25% CoC, especially in MO and TN.

Outside of hard numbers, what are the other key parts to deal analysis? I'm out of state, so I know that I need to build a team once I've landed on a region and am assuming a good realtor would help steer me away from issues with homes, so maybe that's the part I've yet to experience, ie; 10 homes have great numbers but 8 of them turn out to be duds or disasters once a realtor does a walk through?

Should I plan to make a trip to each of these cities to get a feel for the layouts and neighborhoods?

I guess I'm looking for some advice on pitfalls, because right now it looks, on paper, like I could be printing money in the near future (just kidding...kind of!)  Am I likely doing something wrong, or do I just need to take the next step and start engaging some boots on the ground?

[Lindsay Lekkalapudi]

Hey Andrew, 

I can’t speak to the other markets but I live and invest in and around Chattanooga, TN. You’re not talking specifics In the post above but one thing I would point out with Chattanooga is that many homes inside the city limits are beginning to sell at or above listed price within 1-14 days. Several of the homes we have bid on in the last 30 days have had all cash offers in 12 hours or less. This is likely the case with many markets right now, given the strange economic circumstances we all find ourselves in, but I find this detail is worth mentioning because when you’re running your numbers I would be sure to start at or above list price. Hope this helps a little and if you do choose Chattanooga I would love to be a part of your boots on the ground team. I know the area well as I’ve grown up here and it’s an exciting place to invest! 

Best, 

Lindsay