New Investor Seeking Guidance on Out-of-State Properties

[Harish Pasupuleti]

Hi everyone,

I'm Harish and I'm based out of Seattle and I'm new to real estate investing and am particularly interested in exploring turnkey properties preferably multifamily, especially out-of-state opportunities. I’m looking for advice and insights from more experienced investors who have experience with turnkey providers or purchasing remotely. Specifically, I’d appreciate recommendations on how to identify trustworthy turnkey properties, vet providers, and avoid potential pitfalls.

Any tips, resources, or suggestions would be greatly appreciated!

Thank you in advance for your help!

[Ziad Hamati]

Hello Harish.
I am a mortgage loan officer, and also an investor. I invest in and out of states.

First, is to make sure you understand your financing options when investing out of states (not sure if you are a first-time investor or not). 

Second, I always recommend investing in your own backyard unless you live in aa very expensive market.

Third, if out of state investing is the way to go: You need a good property manager (which i don't i was able to ever find one), contactors and a good real estate agent who has experience in investments. Not every real estate agent is a good agent. 

[Mike Paolucci]

Hi Harish. Welcome to BP. 

I started off as an out of state investor back in 2021 while living in San Francisco. First thing I'd recommend is figuring out your target market. Seems like you already have your target investment property type locked in which is great. 

I'd recommend doing some research into what markets you want to target (landlord friendly / growing population / economic drivers and developments) of those markets. 

Happy to connect and answer any questions you might have about out of state investing. Good luck on your journey! 

[Travis Biziorek]

Hey Harish, I do a ton of stuff in the Detroit market both for myself and with other investors.

If turnkey is your thing, definitely interview some folks. But it's not a strategy I love and it's not one that I believe is all that profitable.

In terms of general tips... do your research on your target markets. If you can visit, that's great, even if it's just to get a general lay-of-the land.

Understand what your goals are and what property classes you're targeting (A/B/C neighborhoods). Also, understand the real risks of whatever market you're planning to invest in. That sounds silly, but a lot of these midwest markets have risks that you wouldn't think of being from Seattle.

[Harish Pasupuleti]

Quote from @Travis Biziorek:

Hey Harish, I do a ton of stuff in the Detroit market both for myself and with other investors.

If turnkey is your thing, definitely interview some folks. But it's not a strategy I love and it's not one that I believe is all that profitable.

In terms of general tips... do your research on your target markets. If you can visit, that's great, even if it's just to get a general lay-of-the land.

Understand what your goals are and what property classes you're targeting (A/B/C neighborhoods). Also, understand the real risks of whatever market you're planning to invest in. That sounds silly, but a lot of these midwest markets have risks that you wouldn't think of being from Seattle.

 Hi Travis. Thanks for your great advice. I got few more responses where turnkey was discouraged. The only reasoning behind thinking turnkey as a strategy because I thought I would get this readymade package where I get to do minimal work being an out of state investor. I'm starting to rethink my strategy and try to pivot to more hands on.  

I read few of your blog posts and I'm not going to ask "Can I Pick your brain :)". I'm setting up an introductory call this Friday to discuss. Again, thank you for reaching out. 

[Stuart Udis]

@Harish Pasupuleti As someone who is beginning to invest in real estate for the first time, what is motivating you to invest in a market other than one in your backyard? I believe most investors are better served hitting singles locally than swinging for the fences (and usually missing) in outside markets they don't know and with far less control over the day to day functions. Not to mention, your knowledge grows exponentially when you have the ability to be hands on with your investments. Even if you view yourself as a passive investor, I always recommend investors take a hands on approach with their earliest properties as it lays a helpful foundation.

With respect to turn key operators, I've personally found their objectives to be at conflict with the objectives of investors like yourself. You will constantly hear of shortcuts during construction and the conscientious decision to use lower quality materials during the renovation. For example, I  never hear stories of the turn key provider spending extra sound proofing between units or investing in better quality fixtures or other high touch building materials so that the end buyer can enjoy reduced maintenance costs and better tenant engagement. The turn key providers have moved on by the time these issues manifest themselves. Most also rely on beefed up rents and unrealistic operating expenses in their pro-formas to justify higher sale figures and can generally take advantage of their investor clients who are not familiar with the nuances of the market.

Again, my recommendation is to be more active with your earliest investments but if you feel so strongly about a particular market network and partner with the leading developers  in that  market. Chances are they are a better operator than the turn key providers and are developing better assets but this is something to consider down the line.

[Travis Biziorek]

Quote from @Harish Pasupuleti:

Quote from @Travis Biziorek:

Hey Harish, I do a ton of stuff in the Detroit market both for myself and with other investors.

If turnkey is your thing, definitely interview some folks. But it's not a strategy I love and it's not one that I believe is all that profitable.

In terms of general tips... do your research on your target markets. If you can visit, that's great, even if it's just to get a general lay-of-the land.

Understand what your goals are and what property classes you're targeting (A/B/C neighborhoods). Also, understand the real risks of whatever market you're planning to invest in. That sounds silly, but a lot of these midwest markets have risks that you wouldn't think of being from Seattle.

 Hi Travis. Thanks for your great advice. I got few more responses where turnkey was discouraged. The only reasoning behind thinking turnkey as a strategy because I thought I would get this readymade package where I get to do minimal work being an out of state investor. I'm starting to rethink my strategy and try to pivot to more hands on.  

I read few of your blog posts and I'm not going to ask "Can I Pick your brain :)". I'm setting up an introductory call this Friday to discuss. Again, thank you for reaching out. 

 Sounds good, man. Talk soon!

And yes, the best way to pick my brain is by consuming my blog. There's an insane amount of info there that goes far deeper than I could on a call.

[Jay Hinrichs]

Few tips I have been funding and buying out of state ( west coast) rentals since 2002.

1. do not start with C and D class or let providers tell you they are C or agents its just human nature to puff this a little. 

2. Figure out the median price point of a given MSA that U want to invest in and buy at or above that value this will get you in better schools.

3. Schools are critical in real estate dont let anyone tell you otherwise and I am sure you know that by values in Seattle based on school districts.

Now use logic.. if the median price point of an MSA is say 250k and you are looking at 110k props what does that tell you ???  U will not get wealthy on just cash flow actually unless you scale to LOTS of doors cash flow will not do much for you .. you need values to hold and go UP while your tenants are paying down your mortgage wealth is created by equity. the cash flow starting out if your leveraging is just so minimal any way what is 200.00 a month going to do for you ????

[Travis Timmons]

You've received great advice already. I second a lot of that and would offer that you only receive returns that make it worth it, as i see it, when you are hands on. I'd rather toss money in the S&P than a turn key property in a cheap market with low or no population growth. Focus on the property/location you want to own the most 10 years from now. We all chase cash flow in the beginning, but property and rent appreciation over time is how you get the big wins. 

A home that is selling for $100k after we just saw the biggest run up in real estate values in my adult lifetime means that it's probably not a very desirable place to live for people that have options. That property is unlikely to go up in value or rents faster than the rate of inflation. We overcomplicate real estate. It's mostly the intersection of "Would it be cool to live here?" and "How can I employ a strategy to make this property work?"

I have nothing to sell and would be happy to help if you think that I can be a resource. I've invested both locally and out of state. 

[Kerlous Tadres]

Quote from @Harish Pasupuleti:

Hi everyone,

I'm Harish and I'm based out of Seattle and I'm new to real estate investing and am particularly interested in exploring turnkey properties preferably multifamily, especially out-of-state opportunities. I’m looking for advice and insights from more experienced investors who have experience with turnkey providers or purchasing remotely. Specifically, I’d appreciate recommendations on how to identify trustworthy turnkey properties, vet providers, and avoid potential pitfalls.

Any tips, resources, or suggestions would be greatly appreciated!

Thank you in advance for your help!

Hey Harish,

Congrats on getting started on your investing journey out of state! First thing I would do is to do your research on what type of market you want to be in. Some cities are going to be better for cash-flow and others will be great for appreciation and cash-flow. After you find what city/state you want to invest in I would do build your Core 4. Core 4 consists of having a great realtor, contractor, property manager, and attorney.  Finding a great realtor in whatever city you invest will help you get connected to everyone else. Let me know if there is anyway I can help!

[Luke Bricca]

@Harish Pasupuleti

Turnkey properties are attractive due to their low barrier to entry, especially for new investors, but they also have the extreme negative of eliminating your ability to build immediate equity through reno. Typically the big ways you make money through real estate investing are passive appreciation, forced appreciation via reno, and cash flow.

Of those 3 money-making facets of real estate, only forced appreciation via reno occurs quickly. Even though looking for properties in need of reno is more difficult and likely will require more up-front capital, you will likely make far more money, far more quickly.

[Harish Pasupuleti]

Quote from @Stuart Udis:

@Harish Pasupuleti As someone who is beginning to invest in real estate for the first time, what is motivating you to invest in a market other than one in your backyard? I believe most investors are better served hitting singles locally than swinging for the fences (and usually missing) in outside markets they don't know and with far less control over the day to day functions. Not to mention, your knowledge grows exponentially when you have the ability to be hands on with your investments. Even if you view yourself as a passive investor, I always recommend investors take a hands on approach with their earliest properties as it lays a helpful foundation.

With respect to turn key operators, I've personally found their objectives to be at conflict with the objectives of investors like yourself. You will constantly hear of shortcuts during construction and the conscientious decision to use lower quality materials during the renovation. For example, I  never hear stories of the turn key provider spending extra sound proofing between units or investing in better quality fixtures or other high touch building materials so that the end buyer can enjoy reduced maintenance costs and better tenant engagement. The turn key providers have moved on by the time these issues manifest themselves. Most also rely on beefed up rents and unrealistic operating expenses in their pro-formas to justify higher sale figures and can generally take advantage of their investor clients who are not familiar with the nuances of the market.

Again, my recommendation is to be more active with your earliest investments but if you feel so strongly about a particular market network and partner with the leading developers  in that  market. Chances are they are a better operator than the turn key providers and are developing better assets but this is something to consider down the line.

Hi Stuart. Thank you so much for your valuable advice. I’m based out of Seattle and initially I started analyzing deals in home turf but it is really expensive to break into Seattle market. That’s when I pivoted to out of state market.  May I ask which market are you based out of? If I decide to invest there I would reach out to you. Again thank you so much for sharing your knowledge with a newbie like me.

[Harish Pasupuleti]

Quote from @Kerlous Tadres:

Quote from @Harish Pasupuleti:

Hi everyone,

I'm Harish and I'm based out of Seattle and I'm new to real estate investing and am particularly interested in exploring turnkey properties preferably multifamily, especially out-of-state opportunities. I’m looking for advice and insights from more experienced investors who have experience with turnkey providers or purchasing remotely. Specifically, I’d appreciate recommendations on how to identify trustworthy turnkey properties, vet providers, and avoid potential pitfalls.

Any tips, resources, or suggestions would be greatly appreciated!

Thank you in advance for your help!

Hey Harish,

Congrats on getting started on your investing journey out of state! First thing I would do is to do your research on what type of market you want to be in. Some cities are going to be better for cash-flow and others will be great for appreciation and cash-flow. After you find what city/state you want to invest in I would do build your Core 4. Core 4 consists of having a great realtor, contractor, property manager, and attorney.  Finding a great realtor in whatever city you invest will help you get connected to everyone else. Let me know if there is anyway I can help!

 Hi Kerlous,

Thank you so much for reaching out. During my initial market research Columbus,Ohio and Cincinnati,Ohio came up as potential markets to invest in. From your profile I see that you are based out of Columbus. Can you throw some light on the market there when it comes to cash flow and appreciation. I can setup a call if you want to discuss in detail. Thank you.

[Harish Pasupuleti]

Quote from @Travis Timmons:

You've received great advice already. I second a lot of that and would offer that you only receive returns that make it worth it, as i see it, when you are hands on. I'd rather toss money in the S&P than a turn key property in a cheap market with low or no population growth. Focus on the property/location you want to own the most 10 years from now. We all chase cash flow in the beginning, but property and rent appreciation over time is how you get the big wins. 

A home that is selling for $100k after we just saw the biggest run up in real estate values in my adult lifetime means that it's probably not a very desirable place to live for people that have options. That property is unlikely to go up in value or rents faster than the rate of inflation. We overcomplicate real estate. It's mostly the intersection of "Would it be cool to live here?" and "How can I employ a strategy to make this property work?"

I have nothing to sell and would be happy to help if you think that I can be a resource. I've invested both locally and out of state. 

 Wow. This is amazing advice Travis. I love it. This definitely made me thinking about the markets I want to invest in. I would like to stay connected. I'm sending out an connection request in BP. Thanks again for your response.

[Kerlous Tadres]

Quote from @Harish Pasupuleti:

Quote from @Kerlous Tadres:

Quote from @Harish Pasupuleti:

Hi everyone,

I'm Harish and I'm based out of Seattle and I'm new to real estate investing and am particularly interested in exploring turnkey properties preferably multifamily, especially out-of-state opportunities. I’m looking for advice and insights from more experienced investors who have experience with turnkey providers or purchasing remotely. Specifically, I’d appreciate recommendations on how to identify trustworthy turnkey properties, vet providers, and avoid potential pitfalls.

Any tips, resources, or suggestions would be greatly appreciated!

Thank you in advance for your help!

Hey Harish,

Congrats on getting started on your investing journey out of state! First thing I would do is to do your research on what type of market you want to be in. Some cities are going to be better for cash-flow and others will be great for appreciation and cash-flow. After you find what city/state you want to invest in I would do build your Core 4. Core 4 consists of having a great realtor, contractor, property manager, and attorney.  Finding a great realtor in whatever city you invest will help you get connected to everyone else. Let me know if there is anyway I can help!

 Hi Kerlous,

Thank you so much for reaching out. During my initial market research Columbus,Ohio and Cincinnati,Ohio came up as potential markets to invest in. From your profile I see that you are based out of Columbus. Can you throw some light on the market there when it comes to cash flow and appreciation. I can setup a call if you want to discuss in detail. Thank you.

Yeah, sure can! Columbus has given me some decent cash-flow but I'm more in it for the appreciation. Let's hop on a call sometime this week 

[Harish Pasupuleti]

Quote from @Kerlous Tadres:

Quote from @Harish Pasupuleti:

Quote from @Kerlous Tadres:

Quote from @Harish Pasupuleti:

Hi everyone,

I'm Harish and I'm based out of Seattle and I'm new to real estate investing and am particularly interested in exploring turnkey properties preferably multifamily, especially out-of-state opportunities. I’m looking for advice and insights from more experienced investors who have experience with turnkey providers or purchasing remotely. Specifically, I’d appreciate recommendations on how to identify trustworthy turnkey properties, vet providers, and avoid potential pitfalls.

Any tips, resources, or suggestions would be greatly appreciated!

Thank you in advance for your help!

Hey Harish,

Congrats on getting started on your investing journey out of state! First thing I would do is to do your research on what type of market you want to be in. Some cities are going to be better for cash-flow and others will be great for appreciation and cash-flow. After you find what city/state you want to invest in I would do build your Core 4. Core 4 consists of having a great realtor, contractor, property manager, and attorney.  Finding a great realtor in whatever city you invest will help you get connected to everyone else. Let me know if there is anyway I can help!

 Hi Kerlous,

Thank you so much for reaching out. During my initial market research Columbus,Ohio and Cincinnati,Ohio came up as potential markets to invest in. From your profile I see that you are based out of Columbus. Can you throw some light on the market there when it comes to cash flow and appreciation. I can setup a call if you want to discuss in detail. Thank you.

Yeah, sure can! Columbus has given me some decent cash-flow but I'm more in it for the appreciation. Let's hop on a call sometime this week

 Awesome. Please share your mail ID. I’ll setup a call this week. 

[Drew Sygit]

@Harish Pasupuleti

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+ (roughly 5% probability of default), 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 (around 10% probability of default), 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 (approaching 22% probability of default), 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 (almost 30% probability of default), 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!

[Jay Hinrichs]

Quote from @Drew Sygit:

@Harish Pasupuleti

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+ (roughly 5% probability of default), 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 (around 10% probability of default), 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 (approaching 22% probability of default), 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 (almost 30% probability of default), 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!

Drew this is very good.... I know you post it often but I actually read it this morning.. What I do with my A class is just wait until i have a 700 plus fico and then I have never had a issue with rent collection ever basically.. but I suspect if there is a divorce or death that could happen.

All these folks buying for cash flow only and getting stuck in the D and C areas i dont think they actually comprehend that assessment is WHAT is going to happen not what MIGHT happen..

[Evan Hopple]

Quote from @Harish Pasupuleti:

Hi everyone,

I'm Harish and I'm based out of Seattle and I'm new to real estate investing and am particularly interested in exploring turnkey properties preferably multifamily, especially out-of-state opportunities. I’m looking for advice and insights from more experienced investors who have experience with turnkey providers or purchasing remotely. Specifically, I’d appreciate recommendations on how to identify trustworthy turnkey properties, vet providers, and avoid potential pitfalls.

Any tips, resources, or suggestions would be greatly appreciated!

Thank you in advance for your help!

 Welcome, Harish! BP is a great place to start

[Drew Sygit]

@Jay Hinrichs you may not remember, but we spoke like 3+ years ago.

Glad we were able to post something that you approve of!

[Bob Stevens]

Quote from @Harish Pasupuleti:

Hi everyone,

I'm Harish and I'm based out of Seattle and I'm new to real estate investing and am particularly interested in exploring turnkey properties preferably multifamily, especially out-of-state opportunities. I’m looking for advice and insights from more experienced investors who have experience with turnkey providers or purchasing remotely. Specifically, I’d appreciate recommendations on how to identify trustworthy turnkey properties, vet providers, and avoid potential pitfalls.

Any tips, resources, or suggestions would be greatly appreciated!

Thank you in advance for your help!

 Simple, connect with those that provide rentals to OOS investors. I live OOS for the last 10 years. Currently have 3 renos going, move in tomorrow, closings this week, and a sec 8 inspection Thursday. 

[Harish Pasupuleti]

Quote from @Drew Sygit:

@Harish Pasupuleti

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+ (roughly 5% probability of default), 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 (around 10% probability of default), 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 (approaching 22% probability of default), 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 (almost 30% probability of default), 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!

This is great advice. Thank you so much for taking time to explain in detail.

[Min Zhang]

I recommend you start with a turnkey rental just to get your feet wet in the market and the team you work with. Once you have that experience, and knowledge of the market, that's the time you can get into more complicated rehab projects. Good luck on getting started. If there's anything I can do, please let me know!

[Ryan Cheek]

Quote from @Harish Pasupuleti:

Hi everyone,

I'm Harish and I'm based out of Seattle and I'm new to real estate investing and am particularly interested in exploring turnkey properties preferably multifamily, especially out-of-state opportunities. I’m looking for advice and insights from more experienced investors who have experience with turnkey providers or purchasing remotely. Specifically, I’d appreciate recommendations on how to identify trustworthy turnkey properties, vet providers, and avoid potential pitfalls.

Any tips, resources, or suggestions would be greatly appreciated!

Thank you in advance for your help!

Hey Harish,

Great to see you're getting into real estate investing! I'm Ryan, based in Indianapolis, where we specialize in Build-to-Rent (BTR) duplexes. I understand the appeal of turnkey properties, especially when investing out-of-state.

When it comes to turnkey investments, one of the biggest challenges is finding trustworthy providers who deliver quality properties in solid markets. My advice would be to:

1. Research the market: Before choosing a turnkey provider, get a good understanding of the market you want to invest in. You mentioned you're open to multifamily properties, and Indianapolis offers great opportunities for cash flow with lower upfront costs compared to markets like Seattle.
2. Vet turnkey providers: Make sure to vet the provider thoroughly. Look for reviews, ask for references, and verify that the properties are in desirable areas. You could also request a property walkthrough, whether in-person or virtual.
3. Inspect for long-term value: Even though a turnkey property might seem ready to go, always ask about the quality of construction and property management options. With BTR duplexes, you're also investing in newly built homes that tend to have fewer maintenance issues.

We’ve worked with out-of-state investors like yourself and would be happy to share more about our projects in Indianapolis. If you're open to exploring these options, I’d love to connect and discuss further.

Best,
Ryan Cheek
Neu Real Estate Group

[Mike D'Arrigo]

@Harish Pasupuleti welcome to the world of real estate investment. The biggest mistake that I see out of state investors make is unnowingly buying in the wrong neighborhoods and buying the wrong asset class. It's not as hard as it might seem to identify a neighborhood class however. Get familiar with the rents in your area and the prices and see how your property compares. Use Google Maps to see what is in the immediate area. If you see strip malls with dive bars, check cashing places, bail bondsmen ets it's a pretty good idea you're not in the best of neighborhoods. On the other hand, if there is a large mall with major anchor department stores, good restaruants and Starbucks, you can be fairly ceertain that's a good neighborhood class. 

Here are some of the key things to look out for when evaluating turn key companies:

• Don't allow financing or a finance contingency. They require you to make up the difference if the property doesn’t fully appraise. This is often an indication that they are selling above market value

• Don't allow for your own independent property inspection

• Are not realistic with their pro forma projections.
  Are their vacancy and maintenance projections unrealistically low? Can they explain how they calculate their vacancy rates? Are their rent estimates realistic etc?

• Require you to pay for any renovation upfront
  
  
• Sell only cheap, low priced properties in rougher areas.
  

• Are not consistent with the areas in which they sell. Do they seem to sell in just any neighborhood or do they have a specific criteria for what class of neighborhoods in which they sell?

• Don't accurately represent the neighborhood/property classification.
  
  
• Don't have consistent rehab standards for all properties

• Don't provide a scope of work for the renovation that they have done.

• Are they a turn-key company or are they a promoter? If they are a promoter, how many turn key providers do they work with and how do they vet them?

• How many markets do they operate in and why did they choose the markets that they are in?

     How well do they know the markets and neighborhoods they operate in?

    Does the person that you are talking to personally know the market and          neighborhood?

• How do they evaluate markets and choose the ones in which they operate?

• Do they seem more interested in just selling you a property than the success of your investment

• Can't provide references of repeat investors

Below is a link to  a blog on out of state turn key investing that I wrote for Bigger Pockets that you might find helpful. Feel free to reach out for any advice or insights. I'm happy to help.

https://www.biggerpockets.com/member-blogs/3992/93651-the-si...

[Todd Anderson]

Harish, Welcome to BP.  This is a place that you can get a lot of great information and make great connections.

I work with investors all the time that are from the West coast and are looking for an out of state investment that is turnkey.  Many people above have commented about a few of the pit falls in this strategy.  I believe that we have solved for all of these problems.  We work with builders to offer off market New Construction investment properties to investors at investment pricing.  this way your initial equity bump is built into the deal.  We are able to build in other incentives like Free Property Management and Rate Buy downs to high 3%. We also have preferred venders set up to help with lending, Insurance, as stated property management, and we are boots on the ground.

Most of the investors that I work with buy f 4 or more properties through us .  Let me know if you would like to connect and get any more information.  I have personally been a Real Estate investor since 1995 and have done most strategies and would love to help.

Best of luck.