Where to invest for out of state investors? You can’t go wrong with this list.

The number one question for real estate investors is LOCATION. Now that you find out your local market doesn’t have deals you like, or doesn’t cash flow, you want to find a location that makes more sense.

As an investor myself, I spent months trying to figure this out. And I paid dearly for my mistakes. I suggest most new out-of-state investors stick with the proven EIGHT secondary markets, namely

  • DFW (a little late in 2016)
  • Indianapolis (I am so in)
  • Atlanta (Personally I don’t have good experience there)
  • Kansas City
  • Birmingham
  •  Memphis
  • Carolinas
  • Ohio
  • Florida

If you are new to out-of-state investment, don’t try to recreate new wheels and bury yourself in numbers. It only gives you an excuse not to do anything (worth than losing money).



I’m a Brentwood guy who started buying up SFRs in 2011-2013 time fame and the return over roughly the past 3 to 4 years has been breath taking. I do wonder how much longer that will last, we are experiencing a big surge in building out here again, so I am looking for growth in underlying prices to cool (maybe quite a bit). I won’t be selling what I already have in Brentwood because I think long term its still a very positive place to be, plus rents here on my original cost are great (they are up about 40% during this same period).

However, my new money will be going elsewhere. I have a spot in the Midwest where I once lived that’s doing quite well and I already have all the infrastructure in place there (prop mgr/agent, ins guy, etc.), and that helps immensely. Rental rates there are at least twice as high as in Brentwood. Growth won’t be anything like it has been in Brentwood over the past 3 to 4 years, but I’m anticipating underlying appreciation to be around 5%, plus another 8% to 9% on the rental income side. Not a home run shot by any means, but it gets me solidly on base, plus I can get near turnkey quality properties there at a small but not insignificant discount from market. I just give my prop mgr there POA and he does almost all of the rest other than setting final acquisition prices – I still do that part.










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333books.com 湾区房价






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Landlord Raises Rent from 2600 to 4000: how I turn a under rented bargain to a cash cow

Forwarded from a forum post, good advice.

I purchased a 4-plex that was drastically under market rent in 2014. I am in Everett, WA, which is 25 min from Seattle/King County, which a lot consider to be the next San Francisco in terms of real estate and rent prices.

We are in a very similar situation where rents are increasing faster than they ever have. If you haven’t done rent increases every year, you are at least 5% under market. If you’ve waited longer than a year (such as your property), you are way under market.

My 4-plex collected ~$2600 when I purchased and my goal was to raise to to ~$4000 within 3 years with minimal vacancies. The units were in rough shape so I pushed the rent increases to see if the tenants would move out since I wanted to update anyway. I raised them 3 months after purchase, 6 months after that, and one more time 6 months after. I’ve experienced three move outs in 16 months but currently collect $1100 more each month between 4 units since purchase. Because the rents are still rising, I have added another $450 to my initial goal and hope to achieve these rent raises in the next 2-3 years.

The good thing about rising rents is that it means your property is wanted. If you have money to do repairs, I would not be afraid of someone moving out. My last 3 move outs combined I had about 17 days total vacancy. If you plan right, it should not take you longer than 7 days to move a tenant in AFTER cleaning up.

Communication is KEY during this process. I always try to be as friendly as possible with the tenants I inherited. People’s emotions are often times directly linked to their money situation. No one in the world likes to hear their landlord tell them rent is going up. You might see it on the news everyday and hear it from your friends, but the problem is not real until your actual landlord tells you its happening. Local government is a great scapegoat, I usually blame the increases on rising property taxes.

To help answer all your questions, I would post a test ad on Craigslist for one of the properties you want to raise rents for. Run the ad for 2-7 days and see what kind of response you get. If you get 20 calls/emails a day, your price is too low. If you get 5-10, your price is probably appropriate and I would consider this “market rent.”

The day you run this ad matters. You will get more responses on Thursday-Saturday than on Monday-Wednesday. In a market like the Bay, this really shouldn’t matter too much. Just more of something to keep in mind if you see huge differences in numbers day to day.

ONE LAST POINTER! I would make sure to increase the security deposits for current and future tenants if you haven’t done so already. Security is usually 1-2 months rent. If you are under rented by that much, the security deposits may not be appropriate. This was one of the first things I noticed when I took over. The rent was $800-1000/month and everyone’s security deposit was $300-500 because they’ve been there for years.

Hope this helps! Feel free to message me if you need any help. I’ve got some more random pointers for achieving max rent and low turnover.

地主必备:这几条addendum加在你用的agent’s lease agreement

地主必备:这几条加在你用的agent’s lease agreement,事半功倍。

这是我自己根据常遇见的问题特别加上的。主要是为了免责。发现加了后, 并不影响签约。

Snow Ice removal:强调HOA不管的地方tenant负责,如steps, patio, parking place. 已经有两起相关的 sues了.

Delay:地主免reponsiblity, 比如上个tenant没有按时搬出,public work,

Long Term: 一个HOA开始有rent control, 新的rent可能要有waiting list. 和tenant签了5年lease,每12个月可以提出termination.

Habitable Place: 强调地下室和attic不能住人. 实际假装不知到.

Room Tempture: 最低60, 冻了水管tenant负责

Habitable condition: 如果不能住了,不能很快修好,lease terminates, 地主不管tenant任何事儿.

Temporary Heating: 修的时候,tenant用他们的电heater.

[这个黑]Minor Maintenance: Tenant自己管。 ¥50, 如果叫地主。列出items, 比如清理elbow.

Insurance: Tenant 买rental insurance,保他们自己的东西



所有开发,建筑成本加起来,为$160 一尺;

这是比较有经验的行家的数据,能做到这样才算合情合理,即使如此, 5.51%年回报率大家看了都没兴趣。因此,我们能看到大兴土木的,大多是有规模和边际效应的开发商,散户动不动求杠杆,想都不用想

然而假如在少数高度发展的城市,如纽约附近,湾区和南加等地区,或者大城市的中心地带,情形就不同了,同样的例子,只是地价大大的贵了,而租金却成倍增加。我们假如把地价设在二百万而租金设在二千一个月,年回报率就变成10.26%, 再或者可租到二千五一个月,那么年回报率就高达13.34%了,如果更牛的地王,租近三千,回报率就超过15%。妙的是,预期回报率高,就可以使用扛杆,扛杆把回报率抬到更高。不选对的,只选贵的


Must Read for Bay Area Investor:  San Francisco Real Estate Cycles in past 30 Years

The original article is here: http: / / paragon – re.com/ 3_Recessions_2_Bubbles_and_a_Baby

Chart one and two: recession and recovery time span

The first chart below charts changes in dollar values, according to the Case-Shiller Index method (January 2000 = a home value of 100). The second chart graphs ups and downs by percentage changes at each turning point.


How I read (guess) chart 1&2:

  1. Peak most likely will take place at 2017 or 2018.
  2. At the worst it does down -27% (2008-2011), probably 2014 or 2015 level.
  3. With 1 and 2, you may “lose money” if you buy at median price in 2016.

Chart three: rebound in recovery

This Recovery vs. Previous Recoveries

The light blue columns in the above chart graph the home-value appreciation that occurred in the first three years of each recovery.

How I read (guess) chart 3:

Peak of this recovery/bubble will go over 100%.

Chart four five six: decline magnitude

Chart 4 below tracking the S&P Case-Shiller Home Price Index for the 5-County San Francisco Metro Area, the data points refer to home values as a percentage of those in January 2000. January 2000 equals 100 on the trend line: 66 means prices were 66% of those in January 2000; 175 signifies prices 75% higher.

4. 1983 through 1995
(After Recession) Boom, Decline, Doldrums


5. 1996 to Present

(After Recession) Boom, Bubble, Crash, Doldrums, Recovery

Across the country, home values fell 15% to 60%, peak to bottom, depending on the area and how badly it was affected by foreclosures — most of San Francisco got off comparatively lightly with declines in the 15% to 25% range.

6. The Recovery since 2012 (Case-Shiller)

Chart 6 above looks specifically at home price appreciation since 2012 when the current market recovery began. Generally speaking, the spring selling seasons have seen the most dramatic surges in appreciation.

Chart seven: buying a house? Don’t wait to the next year.

Chart eight: house vs condo

The Current Recovery: 2012 – Present

Chart nine: this recovery appreciates much faster

Longer-Term: 1993 – Present

Chart ten: San Francisco very expensive comparing to CA and US median

Comparing San Francisco, California & National
Median Price Appreciation

Chart eleven: rent is appreciating faster than price

San Francisco Rents

Besides, home prices, home rental rates are major indicators of what is occurring with housing costs and the local economy. If anything, rents have appreciated even more extremely than home prices in San Francisco (and other areas of the Bay Area) – and, of course, renters get no advantages from low interest rates, multiple tax deductions and advantages, or home-price appreciation over time. One classic indicator of an overpriced home market is when prices outpace rents. So far, this has not happened in San Francisco: Both types of housing costs have soared in recent years.

Chart twelve, thirteen: interest rate

Mortgage Interest Rates since 1981

Interest Rates: 1993 – 2015

Chart fourteen: still affordable?

Housing Affordability Index (HAI) Cycles, 1991 – Present

Chart fifteen: real money, inflation and interest rate adjusted

Chart sixteen to nineteen: most likely to pickup low/mid priced house cheap at a crash

Different Bay Area Market Segments:
Different Bubbles, Crashes & Recoveries

2000 to 2014

Updated Case-Shiller Price-Tier Charts
Low-Price Tier Homes: Under $587,000 as of 9/15

Mid-Price Tier Homes: $587,00 to $950,000 as of 9/15

High-Price Tier Homes: Over $950,000 as of 9/15


  1. Price appreciation will slow down in 2016, but no crash.
  2. Look for signs like lower tier houses prices surpassing 06/07 high, or rents going up but house price lagging.
  3. When recession comes, there’re 2 to 4 years to pick up good deals. Single family houses in higher tier will withhold value much better than lower tiers.
  4. If you are investing for cashflow in 2016, almost anywhere in US is better than bay area. I.e., invest in out-of-state rental.


Landloards: How to Profit Help the Needy by Renting to Section 8 Tenants

I am about to invest in an out of state property which is going to serve section 8 tenants. I found this article very helpful.

It can make a lot of sense for a landlord to rent to tenants who qualify for Section 8, or government subsidized, housing. In California, the Section 8 program is sponsored by county governments and subsidizes the rent payments for citizens unable to afford the entire amount of a market rate rental. The idea is that over time the tenants in the Section 8 program will become self-sufficient and essentially won’t need government assistance.

Subsidized housing in general has a certain negative stigma associated with it. There is this notion that subsidized tenants are worse tenants because they will “trash the place” or “won’t pay rent.” In my experience renting to hundreds of Section 8 tenants, I have encountered a very high quality of person and renter. In fact, focusing leasing efforts on subsidized renters was one of the biggest things that made my single-family business successful.

Section 8 can be a little tricky because different counties can have different rules. There has also been an increase in bureaucracy in the program, which is obviously a deterrent for landlords. On the whole, though, I still really believe in the Section 8 program.

Related: Rent to Section 8 or No?

Here are the six best reasons to give subsidized tenants a chance at your next rental.

6 Reasons for Landlords to Rent to Section 8 Tenants

1. Higher Rents and Built in Increases

Section 8 tenants pay a fixed percentage of their income, and the government or Section 8 program pays the difference. When I was trying to raise rents on a number of homes in my portfolio by increasing asking rental rates, I found that there were a lot of Section 8 tenants applying to the homes that were on the higher side of market rate. This actually makes a lot of sense because whether the Section 8 tenant rents a home that is $1,000 or $10,000, their portion of rent actually stays the same.

For example, if a Section 8 tenant makes $2,000 per month, they will only pay about 40% of that as their portion, so about $800 in this case. If this person rents a house that costs $1,000, then the government will pay $200, and if they rent a house that costs $10,000, the government with pay $9,200. The tenant pays $800 in both scenarios.

There are obviously limits to how much the government can pay, and there is also some diligence to make sure that the rental rate is around market, but as long as it’s close, there usually isn’t an issue. In some cases, I have been able to get about $100 over the nearest market rate comp.

Many Section 8 programs also have built in rent increases that the landlord can apply for on an annual basis. The tenant is indifferent because they only pay the fixed monthly rate. Again, the rent increases need to be around market, but any increase is a good thing for an owner.

2. Tenants Will Stay Longer

The key here is to make sure the homes you are leasing out are in really good condition and that you are a really good landlord. If something is broken, then fix it! I’m not saying that you should put in gold plated countertops, but it is important to make the home nice and a really good place to live. If you do this, then it is likely that the tenants will stay longer.

My Section 8 tenants stayed over three years on average. One of the main reasons is that I was a good landlord, but it was also due to the fact that it takes a while to make enough money to get off of the Section 8 voucher. This is by no means a knock on the tenants – they were great people; they just didn’t make a lot of money and couldn’t afford a place that was better.

The other reality is that there aren’t going to be many better places if you take care of your property and are a good landlord. There are loads of Americans who will be renters for life, and if you are a good landlord, this will end up benefitting you.

The real thrust of this point is that you make more money as a landlord if you can keep your tenants in place. Vacancy and turnover costs are killer. Section 8 tenants are more likely to stay long term, and remember that you also get a higher rental rate.

3. County-Guaranteed Rent

This is obviously a safe net. Many Section 8 tenants have lower credit than an ideal tenant. However, if the tenant loses their job or comes up short on a payment, then the county, or in some cases the city, will step in and pay you the entire amount owed.

Related: Section 8 Success Story

I was somewhat shocked when I found this out. I was renting homes in lower end cities that were partially guaranteed by other cities in the same county with ten million dollar homes. While you never want a tenant to be unable to pay, it helps reduce risk if you know you have a wealthy guarantor (particularly in the form of the government).

4. Lower Maintenance

I have heard people say that “Section 8 tenants destroy the place!” In my experience of renting to hundreds of Section 8 tenants, they are actually less likely to destroy your home, and they also require less maintenance! The reason is that most of my requests for maintenance happen within the first month of a tenant moving in.

This makes sense because we have just done repairs, and the house hasn’t been lived in for a while. As a landlord you expect this for the first month, and usually the maintenance issues iron out over time. Since Section 8 tenants stay longer in a home, the average maintenance costs end up going way down.

The other part of this is that many Section 8 tenants realize that they will never own their own home. I won’t get into the social issues of this point; it is just a financial reality. Because of this, many Section 8 tenants end up taking “ownership” of the home they rent… once they are there for a while. This is a key point because it is important as a landlord to make the home nice and fix the things that go wrong so tenants want to stay.

I’m not making a social comment, but purely a business one. If you do your job as a landlord, then the maintenance will be lower with Section 8 tenants as compared to regular tenants.

5. Tenant Accountability and Extra Screening

It is really hard to get a Section 8 voucher in many communities. There is far more demand than there is supply of vouchers and homes willing to take Section 8. This creates an environment of accountability for the tenants once they get into a good home – they will do everything they can to keep it. Again, it goes back to the point that it is important as a landlord to be a good owner.

Along with accountability, Section 8 tenants go through extra screening in order to get their voucher. Due to the high demand to get a Section 8 voucher, the program can be selective with its criteria. Some municipalities will do background checks and that type of thing. You should be doing your own screening of Section 8 tenants, but it is always nice to know that they have been screened by the government already.

6. You’re Helping People and Making Money at the Same Time

I’m in real estate to make money. I have to be because it’s my business. However, I also feel a responsibility to give back to society and the communities where I do business. If you read most of my blog posts, you will know that I’m usually against most things government.

The Section 8 program really is a good thing, though. One of the most fundamental needs of humans is to have a safe place to live, and this is particularly true of children. It is the responsibility of the community, which includes businesses, to take care of those who are less fortunate. The selfish reality is that giving back is also good for business. The biggest bang for your buck in terms of giving back is to provide a great home for a family who couldn’t otherwise afford it.

Embrace the Section 8 program, and programs like it. It will be good for your wallet, and your soul.

Landlords, weigh in: What do you think of renting to Section 8 tenants? What has your experience been with this?