Yet another new member from California

[Baha M.]

hey all, after attending a Marshall Reddick seminar over the weekend, I have become obsessed with the concept of out-of-state investing! I have been on BP propably 71 of the last 72 hours lol. I have been researching various markets for buy and hold investments with a bit of cash flow. I'm looking to start with my first purchase, but still deciding on the ideal location. I was initially interested in Memphis, but after reading up on various websites, forums and blogs, it seems the best days to invest in Memphis are behind us. I am now interested in midwest cities such as Milwaukee, Chicago, etc. I'm looking to zone in on 2-3 markets then check out the MLS on those markets for multi-family listings that are in pretty decent shape (to avoid using a turnkey company- is this realistic for a first timer?) I have good capital and can qualify for conventional financing, I don't need a ton of cash flow, but I do want to net maybe $200 or so and build up my portfolio to eventually bring in 1k-2k in supplemental income and then retire on these properties.

Anyone that is willing to share advice with me on the following:

1- What are some current hot markets that give you the best bang for your buck? I'm not looking for crazy appreciation, just steady buy and hold strategies. I'm interested in Milwaukee and Chicago, as I mentioned, but what else?

2- I've read a lot about turnkey companies, but i'm uncomfortable with how they lump together their broker, lender, property manager, etc and they all play on the same team, with interest in not necessarily getting you the best deal, but primarily in making a sale (at a premium rate). Of course, I understand they add a lot of value and should be rightfully compensated for what they do, but is it possible to find a realtor in the right area and find a listing through the MLS that doesn't need a ton of work? Or are those tough to find, hence people's reliance on turnkey companies?

Thanks everyone for listening, i'm very exciting for the opportunities that await. Just need to get the first one in the books!!

[Larry Fried]

@Baha M. I have been investing turnkey for years, and helping other investors do the same, and I consider having everything - acquisitions, construction, sales & particularly property management all in one place a great advantage.  Consider that property management is a really hard business to do well in, and all too many of them fall short in providing a good service.  It is also probably the single biggest element in making for a long term success for an out of state investor.  Now, the advantages of having it in house with the turnkey company (or at least closely associated) are several IMHO:

1) they are motivated to keep the investor happy so that investor will buy more properties in the future

2) it doesn't have to be a profit center, as the company is making money on the sale

3) they are more accountable: the company is not just selling you a property and walking away, they have committed to working with you and your investment for years to come

It is of course possible to put your own team together, realtor, etc and many investors do that.  How difficult it is to do better this way over using a turnkey company and how much effort on your part will depend on the market and your timing.  It is probably not as easy as you imagine, and the risk vs reward (ie: greater equity) may not as favorable as you'd like.