New Out Of State Investor Seeking Strategic Advice

[Justin Harper]

I am currently looking to get my feet wet in the OOS REI space. I was initially drawn to the idea of cash flowing C class neighborhoods. However digging a bit deeper it appears many of these locations have experienced an astronomical appreciation due to the fervent buyers and lack of inventory. Many of the neighborhoods I have been eyeballing seem to nearly double in price over the last 12 months. At these prices they feel more of an appreciation play which doesn't sit well for me with my risk analysis considering the economic uncertainty and the likely higher cap ex costs of these lower valued older homes in these communities.

My thought is to pivot to purchasing in desirable b and a class homes that have a consistent historical appreciation rate (doubled since 2013), but a smaller cash flow rate. This seems like a far less risky proposition considering the seller’s market we are experiencing.

Thoughts on why I am viewing this right or wrong. Thanks for any feedback.