Quote from @Ivette Raygoza:
Hi everyone,
I’m a beginner real estate investor based in California, exploring the idea of investing out of state — likely in single-family homes or duplexes.
I’m curious to hear from experienced out-of-state investors:
How did you decide on your market? What factors made you feel confident about the area?
What resources and tools do you use to analyze markets before committing? (e.g., job growth, population trends, landlord laws, rent-to-price ratios, crime rates, cash flow potential, etc.)
What states or cities do you recommend for a first-time out-of-state investor? Any areas you’d avoid?
I’d love to hear about your process, any lessons learned, and the specific tools, websites, or data sources you found invaluable — whether that’s BiggerPockets' calculators, Rentometer, Zillow, or others.
Thanks in advance for your insights!
Hi Ivette, good to see you looking into investing out of state. Here are a couple different factors that I would look into when exploring investing out-of-state.
Choosing the right markets
Population Growth: Target cities with a minimum 1.5% YoY growth over the past 20 years and populations exceeding 100,000. (Use tools like loopnet, Costar demographics, and crime maps. Check with local governments for their economic plans.)
Job Growth: Prioritize areas with a minimum of 2% employment growth YoY for the past two decades. (Investigate the presence of Fortune 100 companies and industry diversity, using resources like metropolitan council reports and broker websites (e.g., CBRE, Colliers).)
Affordability: Ensure household income has grown at least 1% YoY for the past 20 years. Be wary if rents exceed 1/3 of average incomes.
Absorption/Vacancy: Consult National Association of Realtors for market time and inventory insights. Evaluate historical and current vacancy rates, aiming for decreasing trends.
Demographics: For younger populations, focus on proximity to parks and schools. For older demographics, consider the availability of medical centers, entertainment, and restaurants.
Buildings/Permits: Assess the city's growth compared to previous years.Determine if the city can accommodate future supply.
Government Regulations: Examine the city's efforts and the type of businesses they are targeting. Be cautious of cities that aren't proactive in job attraction; too much growth can lead to strict building regulations, affecting housing value.
Other Factors
- Favor cities with a crime index that has consistently decreased over a decade.
- For appreciation, I look for a minimum of 2.5% YoY growth in median house values over the past 20 years but I don't use this explicitly in calculations.
The Midwest has been doing great for OOS investing. I would look into different cashflow vs. appreciation markets.
