find market to build cash flow portfolio out of state

[Bishwash Aryal]

What factors should be considered while looking for a market to build a cash flow portfolio while investing out of state. I would like to focus on a single area to start with and buy 5-10 SFH or 2-4 units in one area before moving to another.

When investing out of state, you can choose any area that has good cash flow but with that there comes a challenge to pick a market and stick with it. Trying to look for deals and build relationship in multiple areas at the same time might not be the best strategy as it can be exhausting and you loose focus and keep bouncing one market to another.

Looking for suggestions on how to pick one and what strategies has worked for out of state investors.

What are some areas out of state investors would suggest for cash flow portfolios?

[James Wise]

Originally posted by @Bishwash Aryal:

What factors should be considered while looking for a market to build a cash flow portfolio while investing out of state. I would like to focus on a single area to start with and buy 5-10 SFH or 2-4 units in one area before moving to another.

When investing out of state, you can choose any area that has good cash flow but with that there comes a challenge to pick a market and stick with it. Trying to look for deals and build relationship in multiple areas at the same time might not be the best strategy as it can be exhausting and you loose focus and keep bouncing one market to another.

Looking for suggestions on how to pick one and what strategies has worked for out of state investors.

What are some areas out of state investors would suggest for cash flow portfolios?

When buying out of state don't think that one particular out of state market will be perfect and others won't. 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 adverse real estate, (especially out of state) is not for you.