OOS Investment -- which city in midwest should I start with?

Question

Hi all! I'm new to the forum and just starting to look into OOS investing.

My husband and I live in Los Angeles. We are looking for high cash flow areas with the potential to grow steadily (not depreciate at least, hopefully, a stable market for long-term growth over time) I'm narrowing down cities to Indianapolis, OH cities Columbus, Cincinnati, and Cleveland. Other areas that draw my interest are: San Antonio, Huntsville, Pittsburgh, and Philadelphia.

As you can see it's all around...we don't have any local connections to these specific markets; studying all different cities and choosing our next move market is overwhelming... I would appreciate any advice you could provide! :)

As for OH, Cleveland's housing price is the lowest and generates the highest cash flow. It's very appealing, but it doesn't have much appreciation. It makes me wonder if we should sacrifice some cash flow but choose Columbus/Cincinnati for both cash flow and appreciation potential.

Also, it seems that Ohio's property tax is quite high. For this reason, is Indianapolis a better choice?

Any reason we should choose Indianapolis over Ohio? It gets mentioned a lot, and I looked into the market really like it as well. :)

I'm very interested in Texas, but its property tax is so high. Regarding cash flow, San Antonio seems to make more sense than other cities, but in general, should we just go to texas for appreciation purposes? For cash flow, should we still consider San Antonio or only look into the midwest?

Any opinions on Pittsburg? I'm only interested because it's a college town. Is it too slow for long-term holding tho? I have seen a huge population decrease over the past decades.

My goal is to choose a market that is good for both long-term buy and hold strategy with good cash flow, also I'm considering working on fixer-upper deals and Brrrr in that market; adding this into the consideration, plus the extremely high-interest rate right now...which is a good market to enter? Many thanks for any of your input, fellow investors!

Nicholas L. · Answer

@Helen Jiang

This question gets asked all the time, especially by folks based in California / LA like you are.  Just search for other threads, and you'll see many recommendations and lots of information on some of the places you mentioned.

For example, I own some rentals in Pittsburgh.  I would not at all consider Pittsburgh a "college town" the way, say, State College PA is. Rather, Pittsburgh is the center of Allegheny County and its own metro area, and has 300k people and lots of other industries.  Yes, there has been a huge population decrease since the 1960s.  I'm watching this too.  The pace of the decrease has slowed recently, and Allegheny County actually grew slightly between 2010 and 2020.  I don't know what's going to happen in the next 10 years.  It's a tough market to invest in - the housing stock is extremely old and there is tremendous variability within and among neighborhoods.

With all that said, I always recommend that folks at least try to get started in a market they can drive to.  Why?  Because you can go look at properties in person; go to REIA meetings in person; network in person; meet agents in person; take other investors to coffee in person; etc.  Yes, no California market is going to be as cheap as Cleveland.  Or Pittsburgh.  But OOS investing is not an automatic slam dunk.  What about Riverside County or another place within a couple hours of you?  You could at least start with the activities I mentioned and see what happens.  If you still feel like it's too expensive, you haven't lost anything and you've probably learned a bunch and made a bunch of contacts.

Thoughts?

Remington Lyman · Answer

It does not matter where you start as long as you develop your Core 4. The core 4 is David Greene’s long-distance investing strategy and consists of a realtor, contractor, property manager, and lender. Once you have this team in place, you should be able to invest in any market confidently.As for picking a specific market - I would go after one with an increasing job and population growth. I invest and work in Columbus, Ohio. I am also looking to invest in Cincinnati and Cleveland.

Austin McClain · Answer

Dayton Ohio would be a good mix of cash flow and appreciation as a new market to review.

Nicholas L. · Answer

@Helen Jiang

just to challenge you a little - driving a few hours is not like investing OOS.

how can you go to a monthly meetup every month if it's OOS?  how can you meet people in person and network OOS?  how can you pick a weekend very month and go see 10 properties if it's OOS?  how can you quickly go check on a rehab same day if it's OOS?

just something for you to consider.  good luck.

Simon Ashbaugh · Answer

Hi Helen, I think you're looking in the right areas. I'd strongly recommend Columbus Oh. its the fastest growing metropolitan area in the midwest and has tons of big corps moving here, giving you the long-term growth you're looking for. Cleveland is also a good option because it cashflows really well.

Tracy Keffer · Answer

I can chat with you about Columbus OH. It's not much cash flow as Cleveland for sure. Yet the growth potential here is unreal. Intel broke ground last month and the next 3 years will be huge changes here. I somewhat agreed with Nicholas comment up here - not to say you gotta invest in CA but at least learn from real experience from local fellows. That learning curve is huge before you take the leap of faith to make decision on OOS investment virtually. PM me if more questions about Columbus :-)

Bob Willis · Answer

@Helen Jiang - what is your level of experience when it comes to real estate? Are you currently an investor? As @Nicholas L. said a property a few hours away is easier to deal with than flying cross country. You can put your eyeballs on what is going on (rehab, quality of property mgt, etc) If you do not have the right team in place as an OOS investor you could have an unpleasant and unprofitable experience. Just search these forums for threads describing the challenges. Best of luck whatever you do.

Scott Allen · Answer

@Helen Jiang I can send you some referrals in Columbus, OH

Sam McCormack · Answer

@Helen Jiang Hi Helen! I am a real estate agent in Cincinnati and will glad-fully answer any question you may have! As well as that, consider Northern Ky as well, it is often looked over because of Cincinnati but provides opportunities to invest as well. DM me if you have any questions or just want to connect!

Aj Parikh · Answer

Hi Helen, I have found a lot of value investing in Cleveland and I have scaled up to 12 doors in the past 2 years buying small multi family and Single family homes. It's a great area for good cash flow and steady appreciation. Definitely recommend the area and would love to connect and discuss any questions you may have.

OOS Investment -- which city in midwest should I start with?

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