Invest nonlocally in Upstate New York, or elsewhere?

Question

Hi everyone,

I believe upstate NY is still a flight away from NYC. So I wonder if there's much advantage to investing there vs a more LL friendly state. I've been thinking Cleveland, OH may be worth the extra time in the air.

Curious what others are doing and what led to your choice of market.

James Wise · Answer

Many markets available for you to target. Coincidentally Cleveland is the one I am most familiar with so I figured you'd get some value out of reading The Ultimate Guide to Grading Cleveland Neighborhoods. I also have similar guides that you may want to look over for Kansas City, Missouri. & Birmingham, Alabama. In addition there are tons of other turnkey markets out there besides those listed above. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors Cincinnati, OhioDayton, OhioToledo, OhioYoungstown, OhioCincinnati, OhioMemphis, TennesseeSaint Louis, MissouriIndianapolis, IndianaDetroit, MichiganErie, PennsylvaniaLouisville, KentuckyMilwaukee, WisconsinJackson, Mississippi Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly. One thing to note when looking at the individual markets, you can make or lose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible. Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.Make sure your property manager is a licensed real estate brokerage.Google Clayton Morris scam and/or Morris Invest scam for a cautionary tale of what not to do when buying turnkey real estateUnderstand you can not eliminate all risk, only mitigate it. If you are risk averse, real estate, (especially out of state) is not for you.

Sean Toomey · Answer

@Sean DHi Sean. I live on Long Island and invest out of state in both TN and CT. I find returns to be way better. You have to make sure you have a good team set up if you physically cannot be at the property to watch over it. There is a ton of content on Bigger Pockets on how to to find critical members of your team. I would also suggest joining your local REIA and attending meetings to network with others who invest out of state. I find that people who are successfully doing this are always willing to help and share. Best of luck and feel free to reach out if you have any questions.

Nick Rutkowski · Answer

@Sean DUpdate NY’s next big hot spot is Syracuse. Microsoft and Amazon are moving in, the city just installed 5G (first city of its size to do so), 48% of the housing stock is affordable to millennials. Now if the beer virus doesn’t kill us, you should take a look at SU.

David Kiszka · Answer

@Sean DWhen you are talking up state do you mean the Capital District consisting of Albany, Schenectady, and Troy? If you do, we are only a 3 hour drive from NYC. If you are looking for a stable rental market with great government and health care jobs, university students, and others moving north from the big cities than our upstate market is for you. Right now everything is a bit crazy with the Coronavirus but everything will should come back to normal after this is all over. If you are looking for more information feel free to reach out.

Marci Stein · Answer

I am not sure why you think Upstate is a flight away . I invest in Ulster and Sullivan County which are both under two hours by car from where I live in Manhattan . it makes investing a lot more manageable for me to know I can be there in two hours and there are still some great deals to be found.

Chad Stark · Answer

When you live in a market like NY or CA... it's probably best to go out of state..

Sean Dezoysa · Answer

Great information everyone. My model now is mainly cash flow. I want cheap rental houses to pay themselves off and then in the future, possibly roll the proceeds into higher tier neighborhoods with more appreciation potential. But for now, cash flow is king for me.

Kevin Paulk · Answer

@Sean D It depends on what you are looking to accomplish. Are you looking for cash flow ? Are you looking for a potential appreciating market? Are you looking for a little bit of both? @James Wise gave some really good turn key cash flowing markets to help you start if that's the goal, but by understanding your goal or goals you will have a better idea of what markets you want to be in.

Daniel Price · Answer

Great info here guys thanks for sharing. I took a look upstate also, Sean. Greene county has some steam getting behind it it seems, from a development standpoint but not sure if its there yet. Will check out those books on Cleveland, KC etc. Hope all are keeping safe and healthy. Cheers