Out of state Investor

[Michelle Macias]

Hello, 

My name is Michelle Macias. 

I am an investor based out of San Diego CA. I’ve flipped homes and currently own two multi family properties in the L.A. county area. 
I am wanting to purchase another multi family out of state. L.A county and San Diego county are too expensive. 

I’m new to out of state investing , so any pointers would be greatly appreciated. 
I have been doing my research as to what state to buy in, but have not narrowed it down yet. 
Any help is appreciated. 

[Simon Ashbaugh]

Hey Michelle, welcome to BiggerPockets! I recommend that you first identify a strategy for your investment and make sure that the market you choose supports it. Also, building your Core 4 Real Estate Team is important when investing out-of-state. This team should include professionals like agents, lenders, contractors, and property managers. There are a lot of markets where you can generate a profit. The Midwest for example offers a great opportunity for investors due to its affordable housing market and strong rental demand. You should check it out. All the best!

[Bradley Buxton]

@Michelle Macias

California is expensive and still has its advantages. Any state you invest in will require time and energy, more upfront until you build a trustworthy team. Then that will also take maintenance and follow-up. Sounds like you are on the right track doing research on different markets from the Midwest to Texas. It's even more important now to interview agents and contractors because of the new NAR rules. They will be anchors for boots on the ground. Markets that are close to travel to are good places to start. Looking at what cities you can get direct flights or day drives will save time in going to view and check on properties.

[Nadeem Alamgir]

Hey @Michelle Macias, when it comes to out-of-state investing, you want to build and rely on a team such as your property manager, contractors, and deal finders. 

You also want to educate yourself about a market before entering it because many deals look good on paper, but the area's occupancy can be at an all-time low. This is where you can lean on a reliable agent to prevent you from buying bad deals but I would also make sure you do enough research before making offers. 

[Account Closed]

Hello @Michelle Macias I am local investor in Southern California. I recently wanted to invest outside Southern California as well where my dollar goes farther. I  used a brokerage out Orange County by the name of Allure Capital the head broker is KC James. He helped me identify two properties that I am under contract for as I write this located in Texas and North Carolina. I would highly recommend you give KC a call (949) 533-6802 

[Ryan Cheek]

Quote from @Michelle Macias:

Hello, 

My name is Michelle Macias. 

I am an investor based out of San Diego CA. I’ve flipped homes and currently own two multi family properties in the L.A. county area. 
I am wanting to purchase another multi family out of state. L.A county and San Diego county are too expensive. 

I’m new to out of state investing , so any pointers would be greatly appreciated. 
I have been doing my research as to what state to buy in, but have not narrowed it down yet. 
Any help is appreciated. 

Hello Michelle,

Great to connect with you here! I’m also involved in multi-family investments and specialize in new build duplexes in Indianapolis, which might be an interesting market for you given your goals to invest out of state. Indianapolis offers strong rental demand and more affordable entry points compared to California.

I’d love to connect further to share insights and discuss potential opportunities that align with what you’re looking for. Feel free to reach out if you’re interested in chatting more about the market or if you have any questions!

Best regards,
Ryan Cheek

[Min Zhang]

Hi Michelle, I can’t speak much about other markets, but as someone who started off in Columbus, and grew up in Cleveland. I would say, the Ohio market in general is a very beginner friendly state to get started with your out of state investing journey. I have seen so much growth in Columbus when it comes to appreciation and job opportunities which I have experienced. On average, 80 people move into Columbus weekly. On the other hand, if you have a lower budget, let’s say $100-$150k. Cleveland would be a great market for you. I have experienced cash flow anywhere from 10-18% with so much more to offer. Don't hesitate to ask if you need anything!

[Samuel Diouf]

There are some great opportunities in the Ohio markets. Many investors from California are choosing to invest in the Midwest because of the low barrier to entry and yearly cash returns making more sense in these lower priced markets. Ohio markets show up 3 times in Zillow’s 2024 hottest markets, with Columbus and Cincinnati taking the top 2 and 3 spots. I moved from Florida to start investing in Columbus because of the same reason.

https://www.zillow.com/learn/hottest-housing-markets-2024/

Read this article on the "core 4". It explains the team that you should develop to have a strong foundation under you while investing remotely.

https://www.biggerpockets.com/blog/core-four-real-estate-team

[Michael Smythe]

@Michelle Macias

Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

PM us if you’d like to discuss this logical approach in greater detail!

[Greg Parker]

Alabama has the second lowest property taxes in the nation behind Hawaii.  And very landlord friendly.  And our governor just passed anti-squatting legislation.  We can basically send our brother n law over there with a big stick to remove them.

[Account Closed]

@Min Zhang Hello I manage a portfolio of 40 door inside the Cleveland. I would highly recommend you disclose the that Cleveland and Cuyahoga County is not out of State Landlord friendly. The state actually goes after out of state investors and many properties inside cleveland are losers. I would recommend you google Cleveland "Residents First Initiative " . This is some of the strongest pro tennant, pro squatter and anti landlord legislation to date. 

To own a rental property in Cleveland you must have a register property manager that lives in the county, you must register every rental unit, you must have HVAC inspection, and you must have every unit lead certified. Upon many more requirements also each of there registrations and inspections comes with a significant  fee. And  all have be renewed every couple years. 

TO ANY OUT OF STATE INVESTOR STAY FAR AWAY FROM THE CITY OF CLEVELAND IF YOU DO NOT BELIEVE ME JUST GOOGLE AND READ THE NEWS OR CALL A REAL ESTATE ATTORNEY THAT WORKS IN CLEVELAND AND CONSULT THEM BEFORE PURCHASING PROPERTY. 

[Sam McCormack]

Quote from @Michelle Macias:

Hello, 

My name is Michelle Macias. 

I am an investor based out of San Diego CA. I’ve flipped homes and currently own two multi family properties in the L.A. county area. 
I am wanting to purchase another multi family out of state. L.A county and San Diego county are too expensive. 

I’m new to out of state investing , so any pointers would be greatly appreciated. 
I have been doing my research as to what state to buy in, but have not narrowed it down yet. 
Any help is appreciated. 

 Hey Michelle, may I recommend the market of Greater Cincinnati/Northern Ky? Cincinnati is more known, but Northern Ky is another great market that I think you would be surprised to like. Let me know if we can talk more about it!

[Jimmy Lieu]

Quote from @Michelle Macias:

Hello, 

My name is Michelle Macias. 

I am an investor based out of San Diego CA. I’ve flipped homes and currently own two multi family properties in the L.A. county area. 
I am wanting to purchase another multi family out of state. L.A county and San Diego county are too expensive. 

I’m new to out of state investing , so any pointers would be greatly appreciated. 
I have been doing my research as to what state to buy in, but have not narrowed it down yet. 
Any help is appreciated. 

Hi Michelle, welcome to the BiggerPockets community! As an investor myself, the macroeconomics of the location is one of the things I consider. That's why I moved form Portland OR to Columbus OH to start REI. The population is growing, the job market is growing, and there are so many major companies moving and developing out here like Intel, Amazon, Google, Meta, etc. You can still find deals here that has cash flow, meet the 1% rule, and has a ton of appreciation potential at a cheap price point - $120k-$180k. Anything you buy from Columbus will appreciate like crazy in the next few years that's why my out of state clients love it here. The rules are also very landlord-friendly. Happy to connect and answer any questions you may have.

[Julio Gonzalez]

Hi Michelle, you came to the right place to learn all about real estate investing!

-Julio

[JooYung Choi]

Hi Michelle, what are your investing goals? Are you looking for cash flow or appreciation? I personally do a mixture of both; investing in NJ (more expensive but higher appreciation) and investing out of state (more cash flow but less appreciation). Cash flow is nice and all but I am realizing that true wealth is built in equity! I'd say the trick is to find the property that will do both and hold!!

[Mike Paolucci]

Quote from @Michelle Macias:

Hello, 

My name is Michelle Macias. 

I am an investor based out of San Diego CA. I’ve flipped homes and currently own two multi family properties in the L.A. county area. 

Hey Michelle. I'm originally from San Francisco and ran into those same issues in 2021 when trying to find properties. I ultimately started focusing on the Midwest and have been pretty happy so far. 

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

[River Sava]

Hi Michelle, welcome!

 It can definitely be a bit overwhelming at first, but a great way to make it smoother is to build a solid team that can work with you across different states.

Having a reliable lender is especially important—they can help guide you through the nuances of different markets and make sure you’re making the best financial decisions. Additionally, connecting with local real estate agents, property managers, and contractors in your target areas can provide further support/insights.

What markets are you looking into? Happy to connect if there's anything specific you’re curious about. Good luck with your investment journey!

[Cameron Fowler]

Hey Michelle,

Awesome job on the flips and multi family units so far! Out of state investing can certainly be difficult off the bat but can definitely be much more rewarding. 

I am Indiana and really only focus on flips or buy and holds. The Indianapolis market a very great one in my opinion (yes I might be a little Bias) but it has so much opportunity. As Indy continues to grow the inventory for older builds is still high and the cost of entry and relatively low. Would love to connect more with you, PM me!

[Ryan Cheek]

Hi Michelle,

It’s great to connect with you! I’m also focused on multi-family investments, primarily new construction duplexes in Indianapolis. I completely understand the challenges of high property prices in places like L.A. and San Diego.

When it comes to out-of-state investing, I’d suggest starting with markets that offer solid rental demand and reasonable property prices. Indianapolis, for example, has been a strong market for cash flow and appreciation, with a lot of investor activity.

If you’re interested in learning more about how I navigate out-of-state investments and the processes I use to ensure everything runs smoothly, I’d be happy to chat more. I think we could exchange some valuable insights!

Looking forward to hearing more about your journey!

[John Salcedo]

Quote from @Account Closed:

@Min Zhang Hello I manage a portfolio of 40 door inside the Cleveland. I would highly recommend you disclose the that Cleveland and Cuyahoga County is not out of State Landlord friendly. The state actually goes after out of state investors and many properties inside cleveland are losers. I would recommend you google Cleveland "Residents First Initiative " . This is some of the strongest pro tennant, pro squatter and anti landlord legislation to date. 

To own a rental property in Cleveland you must have a register property manager that lives in the county, you must register every rental unit, you must have HVAC inspection, and you must have every unit lead certified. Upon many more requirements also each of there registrations and inspections comes with a significant  fee. And  all have be renewed every couple years. 

TO ANY OUT OF STATE INVESTOR STAY FAR AWAY FROM THE CITY OF CLEVELAND IF YOU DO NOT BELIEVE ME JUST GOOGLE AND READ THE NEWS OR CALL A REAL ESTATE ATTORNEY THAT WORKS IN CLEVELAND AND CONSULT THEM BEFORE PURCHASING PROPERTY.

This is helpful for anyone thinking of investing in Cleveland market.  

David- do you know if this applies to Columbus, OH?  

What out of state markets do you find favorable?   

Thanks

[Bill Hampton]

@Michelle Macias

Welcome to Bigger Pockets. 

[Regina Blake]

Hi, welcome I would definitely check out Ohio's market because, it is affordable compared to the different States that was mentioned and my clients from all over the world are investing in Ohio's real estate. If you have any questions, please feel free to reach out to me. Thanks!

[Robin Simon]

Quote from @Michelle Macias:

Hello, 

My name is Michelle Macias. 

I am an investor based out of San Diego CA. I’ve flipped homes and currently own two multi family properties in the L.A. county area. 
I am wanting to purchase another multi family out of state. L.A county and San Diego county are too expensive. 

I’m new to out of state investing , so any pointers would be greatly appreciated. 
I have been doing my research as to what state to buy in, but have not narrowed it down yet. 
Any help is appreciated. 

 Welcome to BP! Have you looked at Idaho?  Was overheated but things look like they've come down a bit recently and good opportunities might be back

[Don Spafford]

I'll second the mention for Idaho. In particular in East Idaho. My wife and I will be happy to help you find something here. I have a fourplex that I may be selling soon as well.

[Mackaylee Beach]

Have you thought about the Midwest, specifically the Kansas City area?

Our city is experiencing rapid growth and presenting excellent opportunities for investors.

I would be delighted to connect and share insights about our current market and turnkey properties.