All Forum Posts by: Mike D'Arrigo

Kansas City gets nearly 25 million visitor a year which makes it a great market for STR rentals. The key is knowing the right areas though.

@Aruna Abdool buying ooout of state in a market that you don't know seems like a scary proposition, but there are a lof of things that you can do to mitigate the risk, First of all, the biggest mistake out of state investors make is not knowing the neighborhoods and buying in bad areas. That is easy to avoid. Get to know the prices and rents in your market. Know what properties sell for and rent for in the type of area that you're comfortable with. Go on GoogleMaps and look at the area. If you see strip malls with tattoo parlors and bail bondsmen nearby, it's a pretty good indication that it's not a great area. Do a Google search on the neighborhood and see if there are a lot of articles about crime in the area. Lastly, talk to a property manager and get their thoughts. Ask them what the biggest challenge they would have managing a property in that area. As long as you buy in a good neighborhood and the property is in good condition, you'll be in a good position for success. 

@Ben Matityahu personally, I would recommend it. Back in the old days. FEMA subsidized flood insurance but they no longer do that and it can be very expensive. You might want to get some quotes on it but keep in mind that being in a flood zone reduces your ability to sell down the road. Any potential buyer will have the same concerns that you do.

@Jack Stovall the markets that you menition are very different markets which leads me to think that you haven't clearly defined your criteria which is where you should start. For instance, Detroit and Scottsdale are on entirely different ends of the spectrum and couldn't be more different. I recommend considering markets that not only cash flow well but have opportunities for consistent price appreciation and rent increases over time. Markets with growing populations, growing jobs and modern/diverse economies will have the best opportunity for that. Personally, I like Kansas City, Indianapolis and the Quad Cities. You might want to take a close look at them. 

@Emily Capozzi It really doesn't have to be that hard so be careful not to get caught up in analysis paralisys and never doing anything. There are 3 keys to success in my opinion. 1. Buying in a good neighborhood, 2. Buying a good property, 3. Having good management.
Be sure to know the neighborhood you're buying in and what type of tenants you can attract. Don't buy in cheap neighborhoods just because they look affordable. In the long run, they will cost you a bundle. Get a good home inspection so that you know the condition of the property and know that it doesn't have a bunch of CAP Ex in the near future. Then be sure to hire great property management. Don't nickle and dime them about their monthly management fee. That makes very little difference. Understand what their tenant screening process is and what their eviction rate is. Find out if they manage a lot of properties in rough, high crime areas. Don't worry if they put a small mark up on maintenance. That's no big deal. Instead, try to find people on here who have used them and find out if they have gotten exhorbitant, unreasonable repair bills and turn overs.

Keep in mind that due diligence only mitigates risk. It doesn't eliminate it. Keep enough in reserves for when things go wrong, because eventually, something will. Good luck! 

@Aruna Abdool we work entirely with out of state investors and the biggest piece of advice I tell every one of them is to get to know the neighborhoods. The worst mistake you can make is buying in bad neighborhoods because properties are cheap. Any mistake you make or anything that can go wrong in real estate investment can be oveercome except for buying in the wrong areas. You can't move the house. So, before doing anything, spend some time familiarizing yourself with the neighborhoods and even the streets in your chosen market. Keep in mind that one persons C class neighborhood is often someone else's D class and some unscrupulous sellers will over state the area. Once you've found a property, make sure to get your own independent inspection. With a good property in a good location, you'll be setting yourself up for success. Another piece of advice is to select markets with good economic and demographic factors that are landlord friendly. Cash flow is important but it won't make you wealthy. Real wealth comes through income aand equity over time. Markets with growing populaltions, growing jobs, modern/diverse economies give the best opportunity for appreciation and increased cash flow through rent increases. Good luck and feel free to connect if you want more advice. 

@Becca F. You pointed oout a lof of good things that will hopefully help newbies. I'm glad you didn't throw your money away on a guru. Most anything you need to know, you can learn right here in BP. BRRRR can be a good strategy, but like any strategy, it's not for everyone and right now it can be a real challenge. Having a good contractor that you can really trust is one of the key pieces to making it work. There's a real labor shortage right now nd finding good, reiable and honest trades people is a challenge. Thanks for sharing your expeirence.

@Aruna Abdool the biggest mistake out of state investors make is not knowing the neighborhoods and buying in bad areas. Any other mistake you make or anything that goes wrong can either be fixed or overcome. You can't move a house from a bad neighborhood. Here's a link to a blog that I wrote for BP that might help. https://www.biggerpockets.com/...

@Becca F. your response here could very well save a lot of inexpeeeeerienced and naive investors a lot of money and heartche. Your experience is not uncommon at all. There are a lot of moving parts involved in a BRRRR and numbers that you have to get right to be successful. Even experienced turn key companies lose money, or don't make money on some deals. For someone to get their money out of a BRRRR, they have to be able to do the deal for 75% of ARV. That's no slam dunk. Doing it from out of state is very risky. I'm glad you shared this,

@Alon A. I don't know the Columbia market but the big problem that I think you'll find in TX is that they are among the highest in the nation on both property taxes and insurance. FL is among the highest for insurance. Personally, I look for markets with lower operating costs which is why I like Kansas City a lot. Indianapolis and the Quad Cities on the Iowa side also cash flow well.