All Forum Posts by: Tasha Barnes

@Tasha Barnes

We think the Midwest is a GREAT place for OOS investors to consider!

YES, we may be a little biased, but check out our blog here on BP comparing Detroit to other cities and Deep Dives on Metro Detroit cities & neighborhoods: https://www.biggerpockets.com/...

Your biggest question shouldn't be WHERE to invest, but HOW you will invest!

Many OOS investors set themselves up for failure because they don't truly take the time to understand:

1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

2) The Class of the PROPERTY they are buying - which is relative to the overall area.

3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

7) That OOS property Class rankings are often different than the Class ranking of the local market they live.

8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.

9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.

10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.

11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799

Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?

As an out-of-state investor in Buffalo (and in two other states), I agree that it's not the most landlord friendly. This is an important factor you should consider, but I want to add few more thoughts:

1. If you grew in Buffalo, you have a big advantage of knowing areas and neighborhoods better than any other out-of-state market you will invest in

2. You might have family members that can help you should you need something urgent, check someone's job, or be present for you.

3. There are ways to mitigate the risk that comes from a non-landlord-friendly state. To name a few: rent to section 8 and the rent is almost guaranteed, purchase B+ properties - tenants tend to stay longer, have pride of ownership, and pay rent, and, lastly, have a good property manager that can navigate swiftly with the tenants to prevent turnovers, evictions, etc.

Whatever you choose, good luck!

We just did an Airbnb in Orlando (I'm located in Charlotte) it has been a struggle to oversee any of it. Specially the renovations! We bought the property off-market so it needed some work and it's been difficult to oversee contractors from far away. When we went to the property the brand new tiles were scratched, the lighting fixtures were installed wrong, they painted the windows....

So maybe if you are going to invest out of state get a move-in ready property!

Dear Tasha, please make sure your PM is well vetted. I bought a rental from an investor and a PM was already in place.  I "assumed' the PM was good, but turned out to be the contrary. You really need a good PM especially if you're out of state, along with a good agent or someone who can keep your PM in check.

Hi Tasha - My #1 criteria is landlord friendly states. I'm not in the business to fight local and state governments. A good PM is worth their weight in gold so I'd interview and connect with as many as possible in the market you're looking in.