Newbie to Out of State Investing

General Real Estate Investing
11yFollow

Newbie to Out of State Investing

Ron Collins
Investor · New Orleans, LA · Member since 2014 · 73 posts · 29 votes

GM BP'ers

I live in New Orleans, LA and am looking into my first property as an out of state investor. I have been researching the Dayton, OH and am ready to move forward. Looking to invest in SFR's that I can Buy and Hold between I-75 & I-675. I have been in contact with a Realtor that have provided me with properties and information. Will be making a trip up when the weather breaks. I want a focused place of attack and don't want to waste the Realtor or my time.

So, I gave a question for BP investors in Southwest Ohio. What neighborhood grade would you give zip code 45417 within the bordering streets of Nicholas Rd, S Broadway, W 3rd and S Gettysburg??

Thanks in advance for the input.

1Reply
10 views

Most Popular Reply

Darrin CareyPro Member
Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
11y

@Kimberly Jones Flips in Dayton can be tough, especially to someone who is not local. I don't know what price point your client was targeting, but it makes a huge difference in sale vs rental. My working exit strategy parameters for the ARV are:

<40,000 Rental

40-70,000 Rental/Lease Option/Land Contract

70-90,000 Rental or first time buyer with lots of concessions.

90+ gets decent buyers, but needs to be priced aggressively.

2Reply
See this reply in the discussion

19 Replies

Jump to latestLatest
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    11y

    that neighborhood is a "D" to "D-". and obviously not between 75 & 675.

    Houses are cheap, rent is ok. However,  turnover, maintenance, vacancy, theft, & vandalism costs are higher than normal.

    People make money in the area, but you have to be cautious. You also need to have a great property manager who does really good screening.

    1Reply
  • Ron Collins
    OP
    Investor · New Orleans, LA · Member since 2014 · 73 posts · 29 votes
    11y

    Thanks @Darrin Carey

    The agent was trying to steer me that way. Said I would get better numbers than my target neighborhood for buy and hold rentals. 

    0Reply
  • Rafael Norat
    Investor · Lodi, NJ · Member since 2013 · 487 posts · 179 votes
    11y

    Ron,

    I think it basically boils down to:

    1) What you are comfortable with: Some people want to rent only in areas they would live in, while others are OK renting in areas that may be below their means

    2) Your team in place: Your acquisition, rehab, rent, management, and lenders in your specific investing area. A great team can make most areas profitable.

    I own properties in a C/C+ neighborhood. Not much crime, but low paying wages. The houses I buy are a bit older. I do deal with leaky pipes and minor "older home" issues. However, my team there does a great job of mitigating the issues and keeping me profitable.

    Hope that helps. When you take a look for yourself in the area, you'll have a better idea of what the potential is. I investigated on-site my area for about a month before making my decision.

    Hope that helps!

    0Reply
  • Paul Timmins
    Specialist · Rockland, MA · Member since 2010 · 7k+ posts · 2k+ votes
    11y

    Ron

    To find out about an area go to IREM.org search for ARM certified property managers. Call 5 ask them what parts of the city they like/dislike and why. Ask them what they see expenses running per category per unit. What do they see them selling for per unit, what is the market occupancy rate. What are the market rents? Ask them if they know anything coming up for sale. Great way to pick up some good info and possibly a deal.

    You can also search NARPM.org for the RMP (Residential Management Professional) and MPM (Master Property Manager) certified.

    Paul

    1Reply
  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    11y
    Originally posted by @Ron Collins:

    GM BP'ers

    I live in New Orleans, LA and am looking into my first property as an out of state investor. I have been researching the Dayton, OH and am ready to move forward. Looking to invest in SFR's that I can Buy and Hold between I-75 & I-675. I have been in contact with a Realtor that have provided me with properties and information. Will be making a trip up when the weather breaks. I want a focused place of attack and don't want to waste the Realtor or my time.

    So, I gave a question for BP investors in Southwest Ohio. What neighborhood grade would you give zip code 45417 within the bordering streets of Nicholas Rd, S Broadway, W 3rd and S Gettysburg??

    Thanks in advance for the input.

    Hey Ron,

    Check out a few blogs below that I wrote for Bigger Pockets a while back that relate to you post:

    http://www.biggerpockets.com/renewsblog/2014/12/20/first-investment-property-important-things-consider/

    http://www.biggerpockets.com/renewsblog/2014/11/15/3-types-of-risks-real-estate-investors-regularly-take/

    http://www.biggerpockets.com/renewsblog/2014/07/26/sight-mind-real-estate-investing-afar/

    http://www.biggerpockets.com/renewsblog/2014/06/28/abcs-real-estate-asset-classes/

    I hope you find them useful.

    Thanks and have a great day.

    Podcast Guest on Show #89
    Oz Realty4.5368 Reviews
    WebsiteView Page
    1Reply
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    11y

    @Ron Collins Chasing the numbers always sounds great in theory. When I started I bought a couple houses "no money down". Infinite returns. Unfortunately that works in the negative too.

    The best thing is you're making a trip here. Far too many people don't do that. That'll answer a lot of questions for you about areas.

    @Rafael Norat is investing in the same types of areas I target. Good numbers, good tenants. Much less drama.

    0Reply
  • Kimberly Jones
    Real Estate Junkie · New Orleans, LA · Member since 2008 · 274 posts · 165 votes
    11y

    Definitely be very careful in Dayton. I have a client that is extremely experienced in multiple markets. Somehow he got the idea to try out Dayton and it has not gone well. He always does serious due diligence and he has a team in place that does an awesome job on the rehabs. He did the same things in Dayton that he does from Florida to NYC, but the properties are not selling. His flips have turned into rentals. Not what he had in mind.

    0Reply
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    11y

    @Kimberly Jones Flips in Dayton can be tough, especially to someone who is not local. I don't know what price point your client was targeting, but it makes a huge difference in sale vs rental. My working exit strategy parameters for the ARV are:

    <40,000 Rental

    40-70,000 Rental/Lease Option/Land Contract

    70-90,000 Rental or first time buyer with lots of concessions.

    90+ gets decent buyers, but needs to be priced aggressively.

    2Reply
  • Ron Collins
    OP
    Investor · New Orleans, LA · Member since 2014 · 73 posts · 29 votes
    11y

    @Rafael Norat 

    That was very helpful. I own a pair of doubles in a "not-so-desirable" are in Eastern New Orleans. But I do understand that it's my hometown and I have spent years building a strong team. I would not immediately cross off a D/D- neighborhood but I really have to get there, talk to the tenants, talk to neighbors and get a feel for what is/who is next door to the property I am purchasing. I have a tenant that has been with for 2+ years that was originally a neighbor.

    I don't have a strong team in Dayton, yet. Thanks @Paul Timmins you have pointed me in the right direction. I am currently making a spreadsheet so I can track the responses the PMs provide

    0Reply
  • Ron Collins
    OP
    Investor · New Orleans, LA · Member since 2014 · 73 posts · 29 votes
    11y

    @Engelo Rumora 

    Thanks for the links. I will be reading and taking notes from the information you provided.

    1Reply
  • Ron Collins
    OP
    Investor · New Orleans, LA · Member since 2014 · 73 posts · 29 votes
    11y

    @Kimberly Jones @Darrin Carey 

    Thanks for the advice and the price points. I will reference your experiences as I move through this process. 

    0Reply
  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    11y
    Originally posted by @Ron Collins:

    @Engelo Rumora 

    Thanks for the links. I will be reading and taking notes from the information you provided.

    Thanks Ron,

    All the best :)

    Podcast Guest on Show #89
    Oz Realty4.5368 Reviews
    WebsiteView Page
    0Reply
  • Jerry Padilla
    Lender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
    11y

    @Ron Collins  be very cautious with class D neighborhoods! I would connect with @James Wise he is in the Cleveland area and can give you some feedback on investing in that location, if you are not set on Dayton area and just looking for great deals. @Ben Leybovich has written a lot on some of these low class neighborhoods. 

    0Reply
  • Ben Leybovich
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    11y

    @Ron Collins - Do not buy $40,000 houses long-distance.  You will loose money over the life of this investment - guaranteed.  @Serge S. and I are collaborating on an article for the BP blog in which we will beak the numbers down to unequivocally prove that it doesn't work to pay $45,000 for a house in Ohio which rent for $600...

    I own some of them still.  I do not have the management expense, and they still do not work.  Be careful :)

    0Reply
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    11y

    @Ben Leybovich Right. You shouldn't be into a 600 rental house for more than about 30,000 in a decent area. 

    In a "D" area, the rent is only a little lower, but I won't touch it unless it is disgustingly cheap, as in 10,000 or less cheap. And even then I'm likely to pass unless it comes with a long-term tenant.

    If I'm all in at 45,000, rent should be at least $750, preferably 800 or more.

    0Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y
    Originally posted by @Darrin Carey:

    @Ben Leybovich Right. You shouldn't be into a 600 rental house for more than about 30,000 in a decent area. 

    If I'm all in at 45,000, rent should be at least $750, preferably 800 or more.

     I would say no more than $25,000 in to get rent of $600/month, and if I'd be all in at $45,000 I'd expect to get at least $900/month.  I have one at $39,900 that I'm renting at $900/month.

    Podcast Guest on Show #29
    0Reply
  • Ron Collins
    OP
    Investor · New Orleans, LA · Member since 2014 · 73 posts · 29 votes
    11y

    @Jerry Padilla 

    Thanks for the advice on D-Class neighborhoods. I am not targeting any properties in those type of neighborhoods. My original intentions were to find SFR's and rent it out as student housing near the University of Dayton. The agent that I am working with e-mailed me a list of addresses and most were in this specific zip code. I am not set on Dayton but I do have (non-investor )family/friends there. I am trying to diversify my investing dollars in the Ohio market as a whole.

    @Ben Leybovich 

    I look forward to reading your article. Having read a good number of your blog posts, I know you would back that guarantee 100%. A question for you, @Dawn Anastasi 

    and @Darrin Carey 

    What about buying $10,000 foreclosures long distance? :)  I reached out to the BP community about the zip code 45417 because I thought these properties were too good to be true. I assumed an investor in Ohio would have these picked them apart before they made it to the market. After learning that this particular neighborhood was not investment garde, it is starting to make sense why the properties are still on the market.

    0Reply
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    11y

    The only problem with $10,000 foreclosure properties is they're in $10,000 neighborhoods.

    I will on rare occasions by a property like that, but I need to have the purchase and rehab complete for under 10,000, and be able to rent it for 550 or more. I plan on zero appreciation, and at some point I'll be selling it to another landlord at 10,000. I also increase my expected expenses during the time I own it. Inevitably, when I'm tempted by a property like this, it comes with a long term stable tenant. I like the ones who plan to stay there forever.

    If that sounds pessimistic, it's not. It's the reality of the neighborhood. On occasion, something will happen to turn a neighborhood like that around. If so, hallelujah, because the properties will go up to a more respectable value. Just don't bank on it.

    There's a reason why the locals haven't snapped them up. We know they're there.

    PS. I suspect that @Ben Leybovich 's favorite $30,000 pigs are only $10,000 in Dayton.

    1Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    11y
    Originally posted by @Ron Collins:

    What about buying $10,000 foreclosures long distance? :)  I reached out to the BP community about the zip code 45417 because I thought these properties were too good to be true. I assumed an investor in Ohio would have these picked them apart before they made it to the market. After learning that this particular neighborhood was not investment garde, it is starting to make sense why the properties are still on the market.

     A $10,000 property in Milwaukee also is not going to be in a good area.

    Podcast Guest on Show #29
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free