Out-of-State Rental Investing When Your Market Won’t Cash Flow

If your home market won’t cash flow at any reasonable down payment, out-of-state rental investing stops being a preference and starts being the only version of the math that works. Lindsay Barrientos ran that calculation in Los Angeles as a working nurse: every house was around a million dollars, and even $200,000 down wouldn’t produce positive cash flow. She now owns 12 rentals in Northwest Indiana, all acquired since 2022.

The useful part isn’t that she went out of state. It’s the order she did it in — pick a market on landlord law and price point rather than hype, install a property manager before the first closing, and budget for the remote rehab going wrong.

Below: her market-selection filter, how she manages a manager from 2,000 miles away, the full numbers on a $40,000 BRRRR that caught fire three days before the appraisal, and how she’s financing deals now that the W-2 income is gone.

From the Real Estate Pros Show

This article draws on an interview with Lindsay Barrientos of LinDoesInvesting on the Real Estate Pros Show, hosted by Issa Hanna.

Why a Million-Dollar Market Pushes You Out of State

Barrientos bought her first Los Angeles single-family home in 2019 and immediately doubled to tripled her housing costs. On a single nurse’s salary, that mortgage was not survivable long-term, so she started renting rooms to traveling nurses to offset it. She didn’t know the term house hacking at the time — she just looked at what she had and who she knew.

That worked for the primary residence. It did not solve the bigger problem. When she looked at buying a second property in LA, the math was closed: every house was around a million dollars, and even putting $200,000 down, the property would not cash flow.

This is the decision point for anyone in a high-cost metro. You are choosing between three options, and only one of them produces monthly income:

• Buy locally and accept negative or break-even cash flow, betting entirely on appreciation and your ability to feed the property.
• Make your primary residence pay for itself through rooms, a midterm rental, or an ADU — which caps out at eliminating your own housing cost.
• Buy where the price-to-rent ratio works, which means somewhere else.

Barrientos ended up doing the first and third simultaneously. The rooms and, later, the ADU handle her housing cost in California. The out-of-state doors generate actual income. If your local market can’t do both jobs, split them across two markets rather than forcing one to do something it can’t.

How She Picked Indiana: Landlord Law Over Hype

She used her job to scout the market. In 2022 she took a travel nursing contract in Chicago specifically to evaluate it as an investment market from the ground, not from a spreadsheet. Chicago proper didn’t survive her filter. The surrounding area did, and she landed on Northwest Indiana.

Her reasoning was blunt and timing-specific. Eviction moratoriums were still in effect. Tenants weren’t paying rent and owners weren’t paying mortgages. She wanted something safer, which to her meant a landlord-friendly state. That single criterion moved her across a state line while keeping her inside the same metro’s economy.

Turn that into a repeatable screen:

1. Metro gravity. Stay inside the commuting and employment orbit of a large metropolitan area. Barrientos deliberately looked at competitive markets, and competitive markets are bigger metros. A town with one employer is a different risk.
2. Landlord law. Evaluate how the state and county handle non-payment and eviction timelines. This is the variable that determines what a bad tenant actually costs you, and it varies more by state than almost anything else in the deal.
3. Price point. You want entry prices where a rehab budget is a meaningful fraction of the purchase and the rent supports the debt. Her first BRRRR was a $40,000 purchase.

Notice what isn’t on the list: five-year appreciation projections, population-growth rankings, or anybody’s top-ten-markets article. Those are forecasts. Landlord statutes and current rents are facts you can verify before you wire earnest money.

When I came into this, I thought it was going to be a passive investment, and it turns out it’s not a passive investment. I have a property manager and I’m the one that calls the shots, but I’m also the manager of the manager.

— Lindsay Barrientos, LinDoesInvesting

Hire the Property Manager Before the First Closing

Barrientos offloaded management from her very first out-of-state property, not after she got overwhelmed. The reason was operational, not philosophical: she was working hospital shifts, and you cannot step away from a patient and a physician to answer a tenant’s question. If your day job has that shape — shifts, surgeries, client meetings, courtrooms — hiring a property manager out of state is a prerequisite, not an upgrade.

Her cadence is light. She checks in weekly, mostly around a report, rather than daily. She describes her role as the manager of the manager: she calls the shots but isn’t operating the properties. The vendor list extends past the PM — property manager and contractors both, built deliberately so things run when she isn’t looking.

She is also honest about the sales pitch she bought into. She came in from the FIRE community expecting passive investment, and it turned out not to be passive. Separation from the day-to-day was something she needed for her own mental health, not a sign the business was fully automated.

One useful stress test: ask yourself what you’d walk back into after 30 days completely offline. Her answer was late rent payments. Not chaos, not vacancies, not a flooded basement nobody told her about. If your honest answer is “everything would be on fire,” you have a team problem, not a market problem.

Keep rebuilding the bench. Her realtor of four years filed for bankruptcy — proof that someone being great for four years doesn’t guarantee the next four. Keep meeting new contractors and agents before you need them.

Anatomy of a BRRRR That Caught Fire

Here is the full sequence on her first BRRRR, property number three overall.

• Purchase: $40,000, off the MLS, Northwest Indiana. Two-bed, one-bath brick single-family with a full basement.
• Rehab: roughly $35,000 into bathrooms, kitchen, flooring and carpet.
• Rent: tenant found, lease signed, not yet moved in.
• Refinance: appraisal scheduled for Wednesday.

On Monday, her property manager called to say there had been a fire. Faulty electrical wiring in the kitchen sparked. Nobody was in the house. The fire itself was small — most of the damage came from the fire department knocking the door down and blowing out the freshly painted drywall with a high-pressure hose.

Her move was to tell the lender immediately. She called her broker and said plainly that she didn’t know what she was going to do yet but couldn’t refinance, because there was nothing in appraisable condition. He told her to figure it out and come back. That conversation is the one investors avoid and shouldn’t; a lender who finds out from the appraiser instead of from you is a lender who stops answering.

She rehabbed the property a second time. Her comps said $90,000, so she had accepted she’d leave roughly 20% in the deal and called it an unsuccessful BRRRR she just needed to finish. It appraised at $160,000, and she pulled her capital back out.

Three lessons that generalize: carry adequate coverage on vacant properties mid-rehab, tell the lender the day it happens, and don’t treat a booked appraisal date as money in hand.

Deal Flow and Financing After the First Few Deals

Her last three acquisitions came from three different channels: a wholesaler, a seller-finance deal, and one at 0% down. She credits building an online brand for the seller-finance deal in particular — people came to her saying buy my house, rather than her soliciting them.

That is her experience, not a formula. Content builds inbound over time and most of it doesn’t convert. But the broader point is sound: by deal three or four, your sourcing should no longer be one channel. The MLS deal that started her BRRRR, a wholesaler relationship, and direct seller contact are three independent pipes, and any one of them can go dry.

Financing deserves the same honesty she applies to it. She’s been able to get 10% down and 0% down on recent deals, and she describes that as luck more than a system — she notes she only has 12 properties, so the sample is small. Nobody should plan a portfolio around repeating a 0% down close.

Her current constraint is instructive. Having left the W-2, with capital committed to the ADU build, she’s clear that a new Indiana deal would have to be 0% down for her to take it. That’s a real buy box, not an aspiration: she knows exactly what structure she can execute right now and will pass on anything else.

She also hasn’t paid herself a cent from the real estate business. Everything gets reinvested. Flipping in Indiana is on her list once the financial situation stabilizes post-W-2.

The Local Play: Using an ADU to Kill Your Own Housing Cost

Back in Los Angeles, she built a detached ADU on her primary residence and rents it as a midterm — the same traveling-nurse demand she served when she was renting rooms in 2019. She has since permitted a second ADU, a three-bedroom two-bath, essentially a house. California build timelines being what they are, she expects it to take about a year.

The architecture of the whole portfolio becomes clear here. The ADUs negate her housing costs. The 12 out-of-state doors cover her cost of living. The telehealth practice she recently opened is the active income. Each piece has one job, and she doesn’t ask any of them to do two.

That’s worth copying as a structure even if your numbers are different. An ADU in a high-cost market is rarely going to out-earn a cash-flowing rental in a cheaper one on a pure return basis, but it does something a remote rental can’t: it attacks your single largest personal expense directly, using land you already own.

Her closing advice fits the same logic. Real estate is broad — pad split, fix and flip, BRRRR, short-term, all of it. Her instruction is to close the door on things, including good things, so you can narrow where you’re going. Then find the people doing that specific thing and learn from them. Tasting every strategy because all the information is free is how investors stay busy and stay flat.

Frequently asked questions

How do you choose an out-of-state market if you’ve never invested outside your city?

Screen on three things you can verify today: whether the area sits inside a large metro’s employment orbit, how landlord-friendly the state’s eviction and non-payment law is, and whether the entry price supports rent after debt service. Barrientos took a travel nursing contract in Chicago in 2022 purely to evaluate the market in person, then narrowed to Northwest Indiana because she wanted a landlord-friendly state inside the same metro economy.

Avoid choosing on appreciation forecasts or top-market lists. Those are predictions; statutes and current rents are facts.

Should you hire a property manager on your very first out-of-state rental?

If you have a demanding day job, yes — before the first closing, not after the first problem. Barrientos handed off management from property one because as a hospital nurse she could not step away between patients to answer a tenant question.

Plan on a weekly check-in against a report rather than daily involvement, and understand you are still managing the manager. Expect to replace team members periodically; her realtor of four years filed for bankruptcy.

What happens to a BRRRR refinance if the property is damaged before the appraisal?

The refinance pauses, because there is nothing in appraisable condition. Barrientos had an appraisal booked for Wednesday when her PM called Monday about a kitchen electrical fire. She called her lender immediately and told him she couldn’t refinance and didn’t yet know her plan; he told her to come back when she did.

Tell the lender the day it happens. Then repair and reschedule. She rehabbed a second time and refinanced successfully afterward.

How much capital does a small out-of-state BRRRR actually require?

In her Northwest Indiana example, the purchase was $40,000 off the MLS and the rehab roughly $35,000 for bathrooms, kitchen, flooring and carpet — about $75,000 all in on a two-bed, one-bath brick single-family with a full basement.

Budget for the rehab happening twice. Hers did, after a fire, and she had already accepted leaving about 20% of a projected $90,000 value in the deal before it appraised at $160,000. Entry prices and rehab costs vary widely by market and year.

Is building an ADU in California worth it compared to buying another rental out of state?

They do different jobs. An ADU on land you already own attacks your largest personal expense; Barrientos expects her detached midterm-rented ADU plus a newly permitted three-bed, two-bath second unit to negate her housing costs entirely. Her 12 out-of-state doors cover her cost of living instead.

Account for the timeline. She expects the California build to take about a year, and the committed capital means a new Indiana deal would have to be 0% down in the meantime.

The bottom line

Before you underwrite a single property in another state, write down the landlord-law and price-to-rent criteria that define your market, interview property managers in that market, and pick one — then start making offers. Choosing the operator before the asset is the sequence that keeps a remote portfolio functional when the rehab, the appraisal, or the tenant goes sideways.