Remote Investing/Out of State Investing

Buying & Selling Real Estate
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Remote Investing/Out of State Investing

Davon JohnsonPro Member
Member since 2022 · 17 posts · 10 votes

Hi Everyone,

I am hoping to get some feedback concerning buying on out of state properties. I currently live on the east coast (New Jersey), where there definitely are good deals to be found, but I hear of ROI's being better in some other up and coming states. Would love to hear your opinion of what cities offer the best ROI/Cash Flow. Would prefer multi-family. Would love to connect with some out of state realtors who can connect me to some great deals in their respective market.

Thanks!

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Daniel Fraenkel
Real Estate Agent · Cleveland · Member since 2022 · 5 posts · 13 votes
4y

Hello @Davon Johnson, I moved to Cleveland from Germany 5 years ago because of the great ROI/Cash Flow it offers and the high quality of living. I flipped a bunch of single family properties and kept a few for cash flow. Now my wife and I are full time real estate agents, specialized at helping out of state investors find the right properties and reach their investment goals.

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  • Daniel Fraenkel
    Real Estate Agent · Cleveland · Member since 2022 · 5 posts · 13 votes
    4y

    Hello @Davon Johnson, I moved to Cleveland from Germany 5 years ago because of the great ROI/Cash Flow it offers and the high quality of living. I flipped a bunch of single family properties and kept a few for cash flow. Now my wife and I are full time real estate agents, specialized at helping out of state investors find the right properties and reach their investment goals.

    2Reply
  • Taylor L.
    Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
    4y

    I think the best thing to do is to learn what makes a market healthy for real estate investing, so when someone suggests a particular market you can evaluate it for yourself to see if you agree with their reasoning. Or, you can take the reins and evaluate a number of markets until you find one that works for your goals.

    In our view, local real estate markets are downstream of the local economy. So we start with economic indicators. Those can include job growth, population growth, household earnings growth, economic diversity, and other factors in that vein. Then we'll look at real estate specific indicators like landlord-tenant laws, rent growth, stable or declining vacancy, healthy rates of new development, and so on. Many posts have been written about how to evaluate this over time. 

    You may also consider travel time from your home. Even though you're investing from a distance, if you find two markets that are equal in your eyes except one is 6 hours away and the other is 2 - that may be a good factor to consider!

    The reason it's important to evaluate the market on your own is because someone recommending such-and-such market may have ulterior motives without your best interest in mind. They might be right, but they may also be wrong. It's important to dispassionately prove it for yourself.

    2Reply
  • Michael Dumler
    Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
    4y

    @Davon Johnson Investing out of state (remotely) is all about implementing a successful strategy and developing your core four (RE agent, lender, contractor, property management, etc). I would first advise that you narrow down on your criteria and stick to a specific investment strategy as well as one or two niched markets. Newer investors make the mistake all the time of trying to broaden their net into multiple markets, I understand the logic, but the strategy is quite counterintuitive. Sounds like you're on the right track as far as networking with real estate agents. I also recommend you work with an agent that either has rentals or is consistently working with out of state investors. If it's cash flow you're more focused on, generally your midwest and south east states are more favorable, but to reiterate, if you don't have a resourceful team assembled, I can almost guarantee you won't have much success. Hope this helps! 

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  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    4y

    @Davon Johnson I think most investors will claim the area they invest in is the "best"  I have been owning multi families in north jersey for about 7 years now.  We are well north of a million in equity across these properties. Cash flow has been amazing, appreciation has been huge, high quality tenants paying top dollar in rent.  At the end of the day ever rumor about NJ: tenant friendly, you cant cash flow, its a bad place to invest my wife and I turned upside down.  It is working well for us and we are extremely grateful to have stayed in our market for had we left NJ no way we would be where we are today and at the speed we got here.

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  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    @Davon Johnson

    The Midwest offers a lot of great cash flow, appreciation or cash flow/appreciation hybrid markets to invest in. It really comes down to what you value the most. Columbus, OH is a great cash flow/appreciation hybrid market. You can find 1% rules, mainly in B-/C+/C areas.

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  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    4y

    To assess out-of-state markets you should first make a list of all places you have lived and where your closest friends and family members live. When you do this, you are starting with areas where you have a competitive advantage (either by knowledge over other OOS investors or by honest boots on the ground who you already trust). You then take that list and compare to the hot market lists and stuff you read here. When you ask generally about good markets to invest, you will just get recs based on geography. Your second bet is to talk to other OOS investors about their funnels and how reliable they are because picking a market where you know the providers are vetted and you make a little less on paper is better than thinking you are going to crush it only to realize your whole funnel of providers wasn't properly vetted.

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  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    4y
    Originally posted by @Davon Johnson:

    Hi Everyone,

    I am hoping to get some feedback concerning buying on out of state properties. I currently live on the east coast (New Jersey), where there definitely are good deals to be found, but I hear of ROI's being better in some other up and coming states. Would love to hear your opinion of what cities offer the best ROI/Cash Flow. Would prefer multi-family. Would love to connect with some out of state realtors who can connect me to some great deals in their respective market.

    Thanks!

     I am originally from Connecticut but now I invest in Columbus, Ohio. The return is much higher in Ohio vs CT.

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  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    4y

    Directly investing in a turnkey rental or small MFH is a good way to start to learn and build up the war chest to go into my scaleable investments such as private placement syndications. Whatever you do, try to be as close to the investment as possible. This is the fundamental problem I have with Wall Street who takes too much fees off the hard-working efforts of the middle class.

    If your net worth (income minus expenses) is under $200,000 or barely save $30,000, syndications are not for you. Stick with these Turnkey rentals despite what Gurus (who are trying to sell you their program) tell you for now. They have a little higher gains (a lot more volatility) but a syndicator who is willing to put you in a deal with more than 10-20% of your net worth is asking for trouble.

    2Reply
  • Trevor Fleck
    Investor · Fort Collins, CO · Member since 2014 · 123 posts · 329 votes
    4y

    @Davon Johnson I'd have to agree with @Lane Kawaoka that if you're new and not in an area with good cash flow, then out of state turnkey rentals do provide a way to tap into someone else's existing network with built-in guardrails. You'll also get a great education. Speak with ones that offer different types of investments (single-family, multi-family, syndications, etc.) in several markets and compare those markets. If nothing else, it's free market intelligence. I agree that there are markets with decent cash flow AND a high likelihood of appreciation. Remember, $200-$300/month in cash flow is nice, but leveraged appreciation is where the real wealth is generated. Position yourself in a market where you increase your odds of appreciation while having enough cash flow in case your market timing is off. 

    Personally, I would think about larger macro factors at play that might help you whittle down your market choice. For example, where is the population growing the most in the country? (hint: it's not the Northeast or Midwest) What states are big companies moving to? (i.e., where are the jobs going) What states are landlord-friendly? Where some of the crowdfunding sites like Fundrise who has heavily analytical power investing their funds? Also, now that remote work has really taken off - where do people want to live? (near mountains, lakes, oceans, or university towns). 

    0Reply
  • Cameron Braig
    Atlanta, GA · Member since 2021 · 493 posts · 162 votes
    4y

    Some metrics to help filter out potential markets can be; population growth, income growth, rent growth, job growth and job diversification. Hopefully these can help depending on investment goals and strategy. 

    0Reply
  • Seth Young
    Specialist · Southlake, TX · Member since 2021 · 213 posts · 157 votes
    4y

    @Davon Johnson
    I know you are primary intersted in multi-family cash flow, I have more experience in SFH. The southern/midwestern states provide the best cash flow in my opinion. Selecting the market is equally important as the team you invest with when investing out of state. Best of luck in all your goals Davon.

    0Reply
  • Robert Keesler
    Member since 2017 · 9 posts · 9 votes
    4y

    I own a few turnkeys in the greater Little Rock area being that I purchased from a group promoted by some on these forums. They manage them and have done a poor job in the last few years. The experience has taught me that, until you have a high number of properties and cash where it makes sense to invest elsewhere because of scale, it's better to manage yourself if the numbers even remotely make sense. My experience and opinion, but there are others with the opposite out there. 

    1Reply
  • Thomas ChapinPro Member
    Rental Property Investor · Little Rock, AR · Member since 2015 · 22 posts · 18 votes
    4y

    Ouch, Robert Keesler, sorry to hear about your experience in my neck of the woods. Don't let one company or agent decide your fate. Our rents have increased dramatically in several areas of LR, Jacksonville, and Saline county. It could be that you are sitting on something that would rent for a good bit more than when you purchased. Also, with the big name hedge funds buying in the area it might be worth your time to compare what you have to what they might be paying in the area. Hope it ends up well for you here!

    1Reply
  • Davon JohnsonPro Member
    OP
    Member since 2022 · 17 posts · 10 votes
    4y

    Thank you everyone for your replies. I do think that it would be a bit overzealous to immediately jump to an out of state market. I intend to sure up my systems and processes locally before trying to test them hundreds of miles away from me. 

    1Reply
  • Antoine Martel
    Rental Property Investor · Miami, FL · Member since 2017 · 2k+ posts · 911 votes
    4y

    Hey Davon,

    Investing in turnkey rental properties out of state has worked significantly well for me. Cleveland, Memphis, St. Louis, and Detroit are all great markets if you're looking to generate positive cash flow. 

    Good luck to you!

    1Reply
  • Davon JohnsonPro Member
    OP
    Member since 2022 · 17 posts · 10 votes
    4y

    @Lane Kawaoka and @Trevor Fleck I am definitely open to out of state turnkey properties. I will be begin to reach out to those in these appreciating markets to get pulse check for where the markets are. Thanks for suggesting some metrics to look into. Prior to diving deeper, I am leaning towards the Carolina's, Texas, and the Fulton County/Atlanta area.

    Also for Syndications, I haven't been able to decide whether I prefer them over my own direct investment. Including equity in real estate, my net worth would probably be around $350k. So I do not think I am a syndicates ideal customer. 

    1Reply
  • Alicia MarksPro Member
    Fort Worth, TX · Member since 2020 · 1k+ posts · 2k+ votes
    4y
    Quote from @Davon Johnson:

    @Lane Kawaoka and @Trevor Fleck I am definitely open to out of state turnkey properties. I will be begin to reach out to those in these appreciating markets to get pulse check for where the markets are. Thanks for suggesting some metrics to look into. Prior to diving deeper, I am leaning towards the Carolina's, Texas, and the Fulton County/Atlanta area.

    Also for Syndications, I haven't been able to decide whether I prefer them over my own direct investment. Including equity in real estate, my net worth would probably be around $350k. So I do not think I am a syndicates ideal customer. 


     You can get in on syndications for non accredited investors. Those are the friends and family type deals. That is where networking becomes so important!

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  • Account Closed
    Real Estate Agent · Los Angeles, CA · Member since 2021 · 32 posts · 12 votes
    4y

    Hi Davon, I definitely can't boast Los Angeles in terms of cash flow BUT there is a lot of appreciation and tons of value-add opportunities. I'd be happy to connect and discuss the market more if you're interested! I'll shoot you a message; feel free to reply to me there.

    0Reply
  • Patrick Bavaro
    Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
    4y

    @Davon Johnson OOS investing is an excellent avenue to take living in a highly priced market that doesn’t make sense. I currently live in SoFlo where cash flow just doesn’t keep pace usually with most of the appreciation that is happening. For that reason, I’ve moved my investing to SWFL. As an example, I’m currently building a new build through a turnkey company in Cape Coral that had an all in cost of about $265k. Rents are estimated aT $2400/mo and post construction appraisals for this particular 4/3 model are hitting $377k on average. My plan is to cash out refi and look for more deals!! Feel free to reach out or connect. Good luck!

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