Up until about nine years ago, every investment property I owned was in Washington State.
Then the local market shifted. Investors started paying irrational prices on properties that didn't pencil at any reasonable underwriting. The properties I wanted weren't producing the returns I needed, and the properties that did produce the returns weren't ones I'd want to own.
So I went out-of-state. It wasn't an easy decision. Local was controlled. We had our entire team here. Recreating what we'd built in Washington from a thousand miles away felt like starting over.
Nine years and dozens of out-of-state properties later, here's the system I use every time we open up a new market. If you want the wider framework first, my complete guide to out-of-state real estate investing covers the why and the numbers behind it. Indianapolis, Nashville, Birmingham, and a handful of others all got opened with the exact same playbook.
Step 1: Pick a market on the data, not the hype
Every investor's criteria are slightly different. Here's the filter I use.
Population growth over the last 5 years. Job growth and employer diversity (you don't want a one-company town if that company can leave). Low crime. Decent schools. Moderate weather (no extreme winters, no hurricane alley, no perpetual fire season). Properties priced so that a 15 percent cash-on-cash return is realistic with the rents the market supports.
That filter rules out most coastal cities (too expensive), most desert-extreme cities (Arizona, Nevada), and most boom-bust markets (Florida, parts of California). It leaves you mostly in the South and Midwest.
From there, I pick a handful of cities and start doing individual analysis. In my last sweep I narrowed down to Indianapolis, Nashville, Little Rock, Birmingham, Kansas City, and Oklahoma City. A few of those moved to the front of the line based on step 2 (team availability) and the rest got benched.
I deliberately skipped Memphis. I'd been there before, didn't like the feel of it, and felt it had become too popular with investors which often creates an oversupply of rentals fighting for the same tenant pool. Could be wrong. But the point is: trust your gut on a market, especially if you have on-the-ground intuition that contradicts the listicles.
You can use DoorProfit to pull neighborhood-level intel and crime data before you commit to a market. I run every property through DoorProfit before I make an offer because the city-level filters get you in the door, but the block-level data is what tells you whether a specific property is a hold or a pass.
Step 2: Build your local team (this is the hard part)
This is by far the most difficult step. And it's the step most out-of-state investors skip, which is why so many of them get burned.
The team I need in every market is small. A great investor-friendly realtor. A phenomenal property manager. A reliable contractor or handyman.
I usually start with the property manager. The PM is the most important first hire because they're going to filter every deal the agent shows me and they're going to run the property every day after the close. A bad PM is a slow-motion disaster. A good PM is a quiet asset.
Here's the exact pattern I use. I call local property management companies. I tell them I'm an out-of-state investor looking to pick up 5 to 7 properties over the next year, and I'd love a referral to a great investor-friendly agent. Great people know other great people. If a PM can't refer you to anyone, that's a yellow flag. Keep calling.
When I get the agent referrals, I call those agents and start with one question: "What kind of returns are you seeing on rentals in this market?" If the agent doesn't know what I'm talking about, I pass. If they default to "cap rate this, cap rate that" without context, I keep them in the running. I want an agent who understands return-on-investment thinking, not just transaction thinking.
Then I ask them three more questions:
- What are the best neighborhoods to invest in?
- Where is the gentrification line right now?
- Can you send me your five best deals from the last 90 days?
I tell the agent up front that I'm targeting 15 percent cash-on-cash, that I'll do moderate repairs if the math works, and that the more repair is required the better the all-in return needs to be. That number comes straight out of the buy box I describe in how to underwrite a multifamily deal. That single conversation filters more agents than any "interview" framework I've tried.
Once the agent sends me deals, I run them by the property manager and through my own due diligence process before I get attached to any of them, the same one in the real estate due diligence playbook. If the PM agrees with the rent estimates and the deal still pencils, we have a team. If the rent numbers don't match what the PM is actually leasing for in those neighborhoods, the agent doesn't know the market well enough yet.
I then ask both the PM and the agent for referrals to contractors and handymen. Same logic: great people know other great people.
Step 3: Develop rapport before the best deals show up
You don't get to the top of any agent's deal flow on the first call. Realtors and property managers want to see you actually buy something before they send you their best deals or their off-market inventory.
This is where most out-of-state investors quietly fail. They call once, get sent a few mediocre deals, don't bite, and the team slowly stops returning their calls.
The fix is patience plus appreciation. Once you've bought a property, send a thank-you. When the PM does something hard well, recognize it. When the agent finds something good, tell them so. Pay invoices fast. Refer other investors to them if you can. Make the relationship pleasant on the team's side.
After we'd been buying in Indianapolis for about a year, our agent started sending us off-market deals before they hit the MLS. We'd built enough trust that they knew if they sent us a real deal, we'd write the offer. That's the position you're trying to get to. It takes time but it changes the kind of deals you see.
Step 4: Layer in additional deal sources
Once your local team is solid, it's reasonable to start adding wholesalers to the deal-flow mix.
I'd skip wholesalers entirely until you have a team that can vet them, though. A few reasons.
Wholesalers are not realtors. There's no fiduciary duty. There's no professional liability insurance. There's no licensing oversight. Their job is to find a property, lock it up, and sell their position at a margin. Their interest is in maximizing what you pay, not in making sure you get a good deal.
When you work with an experienced investor-friendly realtor, you get the opposite. The realtor has a fiduciary duty to you. They carry errors and omissions insurance which means if they fail to disclose a material defect that affects the property's value, you have recourse. They have legal training around contracts and disclosures. And 99 percent of the time, the seller is paying their commission, so you're getting a fiduciary-bound negotiator who knows the market and the paperwork, for free.
Once your team is established, add yourself to local wholesaler lists. Get the deals. But never write an offer on a wholesaler deal without your realtor and PM blessing the numbers. That single rule will save you from most of the bad wholesaler deals out there.
Step 5: Visit the city
If you've done the first four steps, your team is probably better at evaluating the market than you are. But you still need to visit.
Some investors visit before they buy anything. Some visit shortly after the first close. I've done both, and I've even bought a property I never visited when the team and the numbers were right. There's no wrong order. The point is to go.
What a visit gives you that no spreadsheet can: a feel for the neighborhoods. The vibe of a street between a "good" comp and a "bad" comp. Whether the gentrification line your agent described matches what you see when you drive through. Whether the city is a place you'd be comfortable owning property in for the next 20 years.
It also lets you meet your team in person. The relationship gets meaningfully tighter after a single dinner. Future calls land differently. Decisions get made faster. And you'll know whether the people you've been emailing for six months are actually who you thought they were.
I visited Indianapolis after our first duplex closed there. I spent a weekend driving every neighborhood I'd been writing offers in. Came home with a much sharper buy box and a much better relationship with the PM. The trip paid for itself on the next deal.
What this doesn't work for
Out-of-state investing is not a fit for every investor. A few honest disqualifiers.
You don't have time to build a team. This is months of phone calls, deal review, and relationship work before the first close. If you can't put that time in, buy local or buy turnkey.
You can't tolerate the loss of physical control. Some investors need to drive by their properties on Sundays. If that's you, out-of-state will make you miserable. The whole game depends on trusting your team to handle things you can't see in person.
Your local market is still penciling. If you can still get 15 percent cash-on-cash within an hour of your house, go do that. Out-of-state is a strategy for when local stops working. It's not a status upgrade.
You think wholesalers are a shortcut. They aren't, especially early. The investors who blow up on out-of-state deals overwhelmingly do it by writing offers on wholesaler deals before they have a team to vet them. Don't be that person.
The pattern that keeps working
Nine years in, the system is identical every time. Pick a market on the data. Build the team starting with the PM. Develop rapport before the best deals show up. Add wholesalers and other sources after the team is solid. Visit the city.
The investors I see succeed at this aren't the ones with the best spreadsheets. They're the ones who do the team-building work first and then trust the team they built. The investors who fail are the ones who keep trying to do the agent's job from a thousand miles away.
Pick the market, then commit to it for at least 18 months. Build the team like it's your most important hire (because it is). And go visit.
When the system is right, out-of-state isn't harder than local. It's just farther away.
