San Diego Investor looking to invest out of state, BUT WHERE?

Question

Hi All!

I am an agent and investor in San Diego, but I like cash flow and a little appreciation of course. Where are places to invest? I prefer landlord friendly states. Where do you invest, do you have good agents to find deals, lenders, property managers, contractors/handymen?

Thanks in advance!

Anthony

Dan H. · Answer

I am an investor in San Diego area (not an agent, lender, or in any way profit from what market you choose).   I would put my cash flow against any residential (<5 units) against anywhere if we were using purchase cost versus realistic estimate of expenses (note this would be as though I had not extracted any value, in reality my cash flow is modest because I have extracted value regularly).

How would my cash flow be so great?

There is poor correlation between initial cash flow and actual long term cash flow.  The reason for this is that RE market prices are based on numerous criteria.  Some of the big ones are expected appreciation, expected rent growth, and risks.  In most markets, the market with the highest rent to price ratio is the lowest class areas.  This is because of the risks and effort to have rentals in that market.  Similarly, the markets with the best initial cash flow typically have poor historical appreciation and rent growth.  The properties with poor initial cash flow often have good/great historical appreciation.  Rent growth has a strong relationship to appreciation. The higher rent growth market will always surpass a market with better initial cash flow but lower rent growth given enough time.  On a long term hold, the rent growth is much more important than the initial rent growth.  If I invested $100k in the year 2000 using the same leverage and no extraction of value in both San Diego and Cleveland, which investments do you think would have the better cash flow over the hold?   Which do you think would have appreciated more?   If the answer is not obvious, remember the relationship between appreciation and rent growth so the answer is the same for both questions.

My worst appreciating property has appreciated $2700/month over its hold.   I have a couple (maybe 3) that have appreciated over $10k/month over their hold.   What do you think has happened to their market rent?

If you decide not to invest locally (my suggestion would be a house hack of a detached duplex), I still highly recommend looking at appreciation and rent growth forecasts instead of  the initial cash flow   Do you think if I invest $200k today in San Diego RE and $200k in Cleveland RE at same point of leverage, which do you think will have the better cash flow over the next 20 years (assuming no extract of value)?  Which do you think would have the higher appreciation?  Do not over value the initial cash flow.   Look at population trends, available housing stock, areas to build, robust/diverse economy, etc to project likely future appreciation and rent growth.

Case Shiller used to publish a list of top performing total return (cash flow, appreciation, etc) residential RE in large markets since the year 2000.  I have not seen this list in quite a few years (maybe 5 years, probably a bit longer).  The first one I saw was maybe 2012 (I suspect that was not the first year of their data).   Every one that I saw had San Francisco #1, Los Angeles #2, San Diego #3.    A Look at the list showed a relationship between appreciation and rent growth.  The top of the list had both good appreciation and good cash flow.  note none of those top markets had good initial cash flow.

good luck

Samuel Diouf · Answer

Have you looked into Ohio markets such as Columbus or Cleveland? A lot of investors based in markets like California and New York are choosing to purchase their investments OOS in the Midwest because of the affordability and numbers making more sense.

Prices in Columbus are still low enough to find 1% rule deals and there's a ton of appreciation happening in this market as well. I actually moved from Florida to Columbus for the real estate. I saw how fast the city was growing and decided to make the jump.

Luka Milicevic · Answer

Queue everyone recommending their market as the best market to invest in....

We all like cash flow and appreciation. Is that not the holy grail of what we are all looking for? It's a difficult combination to come by in today's market. Prices remain stubbornly high, rents are decreasing some, rates are remaining high...

My market of Nashville, for example is a long term park your money in a safe market play. Cash flow is possible, of course, but you will need to put down more than the traditional 20% if you want day 1 cash flow, or invest in an STR but again you will need a larger down payment.

It's difficult for someone to recommend multiple markets unless they actually are in said markets. I can't compare Nashville to anywhere else because I don't invest anywhere else!

Anyway....

Keep in mind anyone posting here that their market is the best market is also most likely selling something to you. If you're interested in exploring more about Middle TN let me know I'd be happy to discuss.

Melissa Justice · Answer

@Anthony D'Angelo,

Great question! If you're looking for cash flow with a side of appreciation in landlord-friendly states, there are several solid markets worth looking into. Personally, I’ve focused on the Midwest and Southeast, where entry prices are lower, rents are strong, and investor infrastructure is already in place.

Some markets to seriously consider:

Akron, OH – Great for turnkey rehabs, low entry prices, and solid rent-to-price ratios.

South Bend, IN – Consistent rental demand, especially around Notre Dame. Investor-friendly with a growing economy.

Birmingham, AL – Landlord-friendly laws, strong Section 8 demand, and steady appreciation in key neighborhoods.

Memphis, TN – One of the best cash-flowing markets year after year, with both new builds and turnkey rentals widely available.

Locust Grove, GA – Just south of Atlanta, this area is growing fast with new builds and solid long-term rental potential.

All these markets have established networks of agents, lenders, and property managers who specialize in working with out-of-state investors. Whether you're looking for turnkey rehabs or new construction rentals, there’s strong infrastructure in place to support you remotely.

Always here for support!

Best of luck,

Melissa

Jimmy Lieu · Answer

Hi Anthony! If you're looking for a landlord friendly state, I personally would recommend Columbus Ohio - it's as landlord friendly as it gets and evictions typically take 30-45 days. They're super easy and quick to do here! With that being said, the Columbus Ohio macroeconomics are on fire here - population growth, job growth, and companies moving and developing here. For example Intel headquarters, Google, FB, Amazon, Nationwide, Honda, Anduril, Microsoft, LG, and many more. Additionally, the price point is still cheap enough to find the 1% rule and positive cash flow and there's amazing appreciation potential. Lastly, the price point is still very cheap here in the sense that you can still find investment deals that hit the 1% rule for 120-180k! Happy to connect and answer any questions you have!

PS - would love to connect you with my team of PMs, lenders, contractors, etc (these are all referrals who have done a lot of work for both me and my clients!)

Marc Rice · Answer

Hi Anthony, you can try Columbus OH as it has a steady appreciation rate of 3-5% yearly. On my BP profile you can learn more about my experience in Ohio and resources I have in the local area. Please let me know if you have any questions or if I can help with anything.

Kyle Vogeler · Answer

Anthony, I have used 2 methods to find my out of state investments.

1 - I research city trends (population, income, crime, etc.) and find areas I would want to invest. Then I get in contact with realtors in that area to send me properties that fit my criteria.

2 - I search all properties that come up for the type of building I'm looking for, no matter the location. Then, once I find a suitable property at a suitable price with a promising return, I do some basic area checks to make sure that the location meet my standards.

Both have worked for me so far, and the second method adds some excitement because you never know where your next property will be.

Sam McCormack · Answer

Hey Anthony, going to shoot you a message real quick

Jeff Roth · Answer

Hi Anthony in El Cajon, CA-

Congratulations on being an agent and already investing in San Diego.

You like cash flow and wonder where to invest out-of-state.

There are many markets in Michigan that offer both cash flow and appreciation.

We partner with the best property managers in each of these areas to provide the best ownership and tenant experience, as well as, managing for strong ROI with in house maintenance teams.

To Your Success!

Kerlous Tadres · Answer

I'd recommend looking at a few key markets that balance cash flow, appreciation, and strong landlord protections. I personally invest in Midwest and have built a reliable network of agents, lenders, property managers, and contractors that make the process smoother and more profitable.

San Diego Investor looking to invest out of state, BUT WHERE?

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