Looking for first rental investment property, is out of State a good idea?

Question

We are looking to purchase a rental property with a positive cash flow, we reside in Jersey City and all the properties seem to be either out of our budget or not having a positive cash flow potential.

So as an alternative, we are considering purchasing out of state potentially in Florida or Texas. I wanted advice if, this would be a good idea as a first-time owner.

As a first step, we are thinking of finding a good agent in the areas we are interested in. Should this be the first step and if so what is the best way of finding a good agent?

Which areas or states would be a good opportunity for a first-time buyer and what are some basic things to keep in mind and be prepared for while buying the property and also during the first year?

Kerlous Tadres · Answer

Hey Rahul,

I own 4 doors out here in Columbus, Ohio that cash-flow very well. There is a ton of upside of investing in Columbus with companies like Intel, Google, and Amazon coming here. Would love to help you get started and see how I can help you out!

Samuel Diouf · Answer

Columbus, Ohio is a great market to consider if you're leaning towards appreciation. I moved here from Florida after seeing the expansive growth in the Columbus market.

There are multiple billion dollar companies dumping money into the city, such as Intel, Google, and Amazon. And a lot of start-up companies are migrating to this city as well, because of the efficient costs of living, the OSU campus that has thousands of students graduating and looking for jobs locally, and the availability of land.

Everything that’s going on here in Columbus is attracting investors and other businesses from all over. A recent study showed that 80 people are moving to this city every single week, which will continue to increase housing demand.

Mike Paolucci · Answer

Hi @Rahul Rawat. Congrats on taking your first steps. I started off in 2021 as an OOS investor from CA. I was in a similar situation as you with properties numbers not making much sense and ultimately decided to invest out of state and focused on Ohio. So far, I've been pretty happy with my decision.

I'd recommend finding #1 a landlord friendly state (CA was far from a landlord friendly state) and then looking at macroeconomics for not only the state but the various cities as well. Places with job/population growth and other economic drivers that are helping the local economies grow.

Once you've decided on a market, next step would be to do some research on various property managers and get in touch with an investor focused realtor with some solid connections for everything else (lender / inspector ect. / PM's will have the contractors you'll need and already have good relationships with the boots on the ground).

Happy to connect and share some of my experiences as a former out of state investor. Good luck on your journey!

Nicholas L. · Answer

@Rahul Rawat

short answer - no.  not unless you're going to do something differently than these folks did.

https://www.biggerpockets.com/forums/48/topics/1137397-balti...

https://www.biggerpockets.com/forums/48/topics/1160450-run-i...

https://www.biggerpockets.com/forums/963/topics/1195280-expe...

if you buy a random property in a random market managed by random people you will lose money.

why not pick a market within 1 or 2 or 3 hours that is lower cost and spend some time in it?  go to meetups, build a network, look at properties in person.  it will take time and effort... but the current market is unforgiving.  as noted in the links above.

Min Zhang · Answer

Hey Rahul, I would say investing out of state is a good idea if the numbers don’t make sense locally. Since you’re aiming for positive cash flow, I highly suggest looking into the Cleveland market, where you can find turnkey properties that meet the 1% Rule. Columbus is also worth considering if you’re interested in appreciation. It has seen significant growth, especially with tech giants like Intel, Meta, Amazon, and Google setting up operations, which has driven up property prices and job opportunities. Let me know how I can help

Joseph Guzzardi Jr · Answer

I would suggest considering why you are getting into the rental real estate game. Is it cashflow? Is it wealth? You can find locations in NJ that will cashflow, but are you willing to invest in these areas? Investing out of state is option, but you will heavily need to rely on your team and trust that they know what they are doing and have your best interest.

Happy to assist if you have any needs in NJ.

Alecia Loveless · Answer

@Rahul Rawat A family member has a medium sized portfolio in Denton County, TX and says the property taxes are insane. They have increased 100% across the portfolio in the past 3 years eating up most of the cash flow.

If you want to invest in Texas be sure to do your due diligence on the property taxes. Look at them over the course of the past 3-4 years not just the current tax bill that they will try to show you in the listing.

Account Closed · Answer

Hi, congratulations! Ohio is a great place to invest in real estate. Check it out and please reach out with any questions. Best wishes!

Aristotle Kumpis · Answer

Hi Rahul. I would totally look outside of your market if the numbers do not make sense. Texas and Florida are two very popular states for long term investing. Our company specializes in helping people invest out of state, as our system makes it very easy. We do have nice rental properties with management in place in both of these states, as well as several others. Message me if you are interested in setting up a phone call to discuss. Kathy Fettke is the owner, and she is a regular speaker on the BP Podcast. I'm happy to happy help and educate.

Emanuele Mayer · Answer

Yes Sir is a good idea specially if you live in a New Jersey where home price are so high and its super hard to get cashflow. Honestly i would try Florida or Georgia, those states you cna get a great growth and cashflow using a DSCR loan you would not even need to show income to purchase the property. Message me so we can discuss more about it!

Looking for first rental investment property, is out of State a good idea?

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