Guidance on OOS markets to get into

[Kent Fang ching]

Hello BP community! I am looking to get into out of state investing. I live in San Diego, CA and as you all know, it’s a very high entry point here so looking to get into a long term rental elsewhere. I am looking to use all cash, under 200k, preferably under 180k for a single family or a duplex if viable with my budget. I am a small business owner, business is not doing too well right now so that’s why I’m looking at an all cash buy, so I can get a nice cash flow to supplement. Would like to be in a city where I could get potentially $1,500 to 2k in rent. The list of cities that I’ve come up with so far by my own rookie research is the following, but always open to other suggestions from members that have experience else where. 
Waco, Dallas, El Paso, TX

Indianapolis, IN

Pittsburg, PA

Looking to connect with locals who can help build a boots on the ground team as well. Thank you guys so much for any help here. 

[Ronald Rohde]

Are you going to invest via an LLC?

Whats going on with the business? I'd focus on getting that more profitable than learning something new out of state.

[Jordan Ray]

Quote from @Kent Fang ching:

Hello BP community! I am looking to get into out of state investing. I live in San Diego, CA and as you all know, it’s a very high entry point here so looking to get into a long term rental elsewhere. I am looking to use all cash, under 200k, preferably under 180k for a single family or a duplex if viable with my budget. I am a small business owner, business is not doing too well right now so that’s why I’m looking at an all cash buy, so I can get a nice cash flow to supplement. Would like to be in a city where I could get potentially $1,500 to 2k in rent. The list of cities that I’ve come up with so far by my own rookie research is the following, but always open to other suggestions from members that have experience else where. 
Waco, Dallas, El Paso, TX

Indianapolis, IN

Pittsburg, PA

Looking to connect with locals who can help build a boots on the ground team as well. Thank you guys so much for any help here. 

Hey Kent! There is a-lot of good information in previous responses that I read but I have one more thing to add on for why Memphis is an attractive rental market. There is opportunity here for great cash-on-cash returns because we have local hard money lenders that provide 100% purchase & rehab loans for doing the BRRRR method, which ultimately decrease the amount in the deal. I have been doing deals with less than $10,000 out of pocket and seeing 40%+ COC returns. I personally feel very blessed to have Memphis in my backyard to build my portfolio but being an out-of-state investor is very manageable with the right team to be your boots on the ground that will go to work for you! Find you an agent with a team behind him of solid general contractors, lenders, and property managers as well as other necessary contacts that will make navigating the best neighborhoods for solid rentals that will help you achieve what your looking for (Under $180K for SFH and/or a duplex, cashflow, and $1500 - $2000 in monthly rent)

Here is one extra bonus to add into the mix for your criteria.. Section 8 tenants. I personally own 2 of them and plan to make all of my rentals section 8 as leases end. I enjoy the guaranteed rent and higher rents than most regular properties with a "normal" tenant. There are also some challenges here as well to navigate but with the right systems and processes, section 8 rentals could be a nice avenue for you to explore. Let me know if I can help in any way! Talk soon!

[Kaitlyn Chami]

Hi KC, excited for you on your out of state journey. I have several out of state and am currently seeing Charlotte, NC (where I now live full time) taking off from a long term growth perspective and fitting your metrics. Going 10-20 minutes outside of city center Charlotte there are tons of single family rental opportunities. I'd be happy to chat more if you're interested DM me!

Would stay away from TX - have a few friends that were burned on the Dallas and also Austin markets... 

[John Nachtigall]

You an invest in a high yield bond fund that returns 6-7% with zero investment of time, effort, or education.   Why would you buy an out of state property, with all the related risks, when you can get a similar if slightly smaller yield on a completely liquid investment?  The risk reward return is not worth it.

[Todd Anderson]

Kent,  You are getting suggestions of good markets all across the country.  

I have worked with many people in your situation.  Many of the out of state investors I work with come from the west coast.  The investor that I work with are looking for a market that they can get cashflow right away but also the the area growth makes appreciation obvious.  There a number of good markets that have been suggested for cashflow but is that area growing?  Will an investment there appreciate over the time you owned it?

When I talk with other investors in your situation they are also looking for a turnkey way to invest out of state.  they are not looking for another job.  I have four a way to offer investors New Construction Investment properties that solve for all the issues that investors face today.  There is a turkey way to purchase,  financing that you can't find in most places in this market and boots on the ground to make sure the property is right for you. 

I have a list of off market properties that will solve for all the problems.  let me know if you would like to connect and talk further.  

Best of luck!

[James Wise]

Quote from @Kent Fang ching:

Hello BP community! I am looking to get into out of state investing. I live in San Diego, CA and as you all know, it’s a very high entry point here so looking to get into a long term rental elsewhere. I am looking to use all cash, under 200k, preferably under 180k for a single family or a duplex if viable with my budget. I am a small business owner, business is not doing too well right now so that’s why I’m looking at an all cash buy, so I can get a nice cash flow to supplement. Would like to be in a city where I could get potentially $1,500 to 2k in rent. The list of cities that I’ve come up with so far by my own rookie research is the following, but always open to other suggestions from members that have experience else where. 
Waco, Dallas, El Paso, TX

Indianapolis, IN

Pittsburg, PA

Looking to connect with locals who can help build a boots on the ground team as well. Thank you guys so much for any help here. 

 You can hit those numbers in most every market in Ohio and Michigan.

[Sam McCormack]

Quote from @Kent Fang ching:

Hello BP community! I am looking to get into out of state investing. I live in San Diego, CA and as you all know, it’s a very high entry point here so looking to get into a long term rental elsewhere. I am looking to use all cash, under 200k, preferably under 180k for a single family or a duplex if viable with my budget. I am a small business owner, business is not doing too well right now so that’s why I’m looking at an all cash buy, so I can get a nice cash flow to supplement. Would like to be in a city where I could get potentially $1,500 to 2k in rent. The list of cities that I’ve come up with so far by my own rookie research is the following, but always open to other suggestions from members that have experience else where. 
Waco, Dallas, El Paso, TX

Indianapolis, IN

Pittsburg, PA

Looking to connect with locals who can help build a boots on the ground team as well. Thank you guys so much for any help here. 

I would love to talk about Greater Cincinnati market with you. Getting those numbers you are mentioning is more than possible here. Both sides of the river. Shoot me a message if you are looking to talk some more about it!

[Shafi Noss]

I've got a property to sell that's sub 200k and rents for $1500. 

[Lee Ripma]

@Kent Fang ching - Hi Kent, checkout my podcast #373 I was in a very similar boat when I picked Kansas City from San Diego. There are duplexes in KC that will return the numbers you are looking for. 

[Tyler Chavez]

I know it's not on your list Kent but I am a fan of Kansas City. I do work with a hand full of out of state investors from the CA like yourself and would love to connect if you are interested in seeing what our market looks like.

[Jake Baker]

Quote from @Ronald Rohde:

Are you going to invest via an LLC?

Whats going on with the business? I'd focus on getting that more profitable than learning something new out of state.

I agree with @Ronald Rohde. Focus on building and maintaining active income first. While many gurus glorify the strategies they’re selling through courses or books, methods like out of state investing aren’t easy and can put you in a tough financial spot if you’re not careful. My bookkeeping firm provides me with a steady active income, which allows me to keep doing deals, cover unexpected expenses, and navigate the occasional black swan event.

My Take on Cash Flow:
Cash Flow is a hedge against corrections. Cash flow (in my portfolio as a whole) covers my expenses. Forced Apperception (BRRRR or buying at a discount) is also a hedge against corrections. Forced appreciation allows me to build equity from the beginning of the investment, so if I need to firesale for an unforeseeable reason, I will likely not be underwater. Debt-Paydown and Tax Benefits are also a result of time. Market Appreciation is the least predictable, but historically, where you will make the most money.

[Joe Hammel]

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I personally make well over $100k/yr cash flow from 21 properties here. All of which, I’ve purchased within the last 4 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 5-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.

[Kerry Noble Jr]

Quote from @Shafi Noss:

I've got a property to sell that's sub 200k and rents for $1500. 

 Location?

[Shafi Noss]

Send me a DM so we avoid cluttering up Kent's thread, I'll send you the information. 

[Melanie Lovejoy]

I live in Texas but invest in Oklahoma City and it meets a lot of your criteria!

I love the market there and have a phenomenal real estate agent who I work with. Let me know if you want to chat more about my experience there or connect with my agent!

[Brendan Harrison]

Welcome to BP! For your goals, Oklahoma City (OKC) and Tulsa, OK should be at the top of your list. Here's why:

1. Affordability: Your $180K-$200K budget works perfectly here, with plenty of single-family homes and duplexes in B or C+ neighborhoods.
2. Cash Flow: Rent-to-price ratios are excellent, with many properties renting for $1,500-$2,000/month.
3. Landlord-Friendly: Oklahoma has straightforward laws that make managing rentals easier.
4. Economic Growth: Both cities have diverse, growing economies, fueling rental demand.
5. Low Taxes: Property taxes and costs are some of the lowest in the country, boosting returns.

OKC and Tulsa also have strong investor networks to help you build a boots-on-the-ground team. I’m based in Oklahoma and happy to share insights or contacts if needed. These markets are perfect for cash flow-focused investors like you.

[Michael W. McCord]

I noticed no one responded about El Paso on your list. I just moved here and bought my first SFR with a detached ADU and currently renovating to rent out. El Paso is a very different animal from the rest of Texas in that there isn't crazy high appreciation here so the rents allow for solid cash flow if that is what you're looking for. And unlike other markets it's close enough to San Diego to drive in one day.

[Keith Mintz]

Quote from @Taz Zettergren:

@Kent Fang ching I work with a couple hundred clients that live in California and they're doing the same thing. They prefer the middle/southern part of the country because the laws are friendly and prices are more affordable. Markets like Memphis TN, Little Rock AR, Tulsa or OKC, OK. You'll be right around that median priced home where the most demand will be, not only for rentals but for owner occupants looking to purchase as well. 

Hi Taz, I a am on the same page with you! I know of a market that I believe will blow up in the next 10 years because of its plans. I believe that area is Cameron County in Texas. I think it will be the next San Diego of Texas. It is on the boarder next tourist areas and the island. Space X is growing there and Elon has plans of this city. I specialize in STR and by the room rentals and I see high cash flow here. If you need any help or want to collaborate on projects in this area, I am all in!

[Richard McLain]

Kent, I echo Brandon's reply about Oklahoma City but I will add a twist.  For rentals, staying with investments below $1,500 monthly rent is best because tenants who pay $1,500 and up generally do not remain tenants long term.  They have the financial wherewithal to purchase a hope (and most do).  We have a lot of long term tenants (I own and/or manage 160+ doors).  High occupancy isn't sexy, but that's what a good property manager will achieve, plus it's much easier to maintain a property with the tenant's money than the owner's money.  Just my two cents.  DM me if you need help acquiring or managing.