Top 5 Markets for Cash Flow vs Appreciation

[Alexandra Feig]

I've committed to buying my first investment property in the US by end of this year.  I just purchased a condo in Singapore which is my primary residence but I hope will also be a rental property in the future, but am wanting to invest in US.

My stats:

Budget: ~100k SFH or ~150k for MFH (maybe up to 200k)

SFH vs MFH: Since I live abroad, I thought MFH would make more sense. However, given my budget I'm thinking SFH might make more sense.

I'd be curious to see what you would say are the top 5 markets for cash flow vs appreciate for both SFH and MFHs.

The ones that have popped up on my list (more for cash flow) are Indianapolis, Kansas City, Birmingham, Huntsville, Jacksonville.  For appreciate I was looking at Orlando and Tampa.  I have family in Florida and Illinois, so I was thinking I'd prefer to invest closer to those locations.

Thanks for the help!

[Danielle Jackson]

Florida is also very landlord friendly, and no state income tax. 

[Corina Eufinger]

Right now Midwest markets are some of the strongest. Wisconsin (Kenosha, Janesville), Indianapolis, Cleveland. I would steer clear of Illinois. (Briefly, companies and people are starting to leave Illinois. Second, the laws in the state are positioned definitely in favor of tenants.) Florida would be good I believe. Though possibly more expensive than the other markets it offers the added benefit of dabbling in STRs if you buy SFH. It also is a popular state for California and New York ex-patriots right now.

Good luck! I admire your steadfastness in being not only as OOS but a OOC (out of country) investor.

[Mike D'Arrigo]

I agree with @Corina Eufinger about steering clear of Illinois. She correctly points out that people are baling out because of property taxes and unfavorable landlord/tenant laws. We're active in the Quad Cities but stick to the Iowa side of the river--primarily Davenport which is also much more business friendly which is why Amazon has selected Davenport as the site for a new $250M distribution center that will create 1000 new jobs. 

[Alexandra Feig]

Funny you mention Davenport, I'm from the Des Moines area!  I think I am looking more at cashflow at this point.  I have my condo in Singapore which is more of an appreciation play, so seems like it might make sense to look more at cashflow.

Quote from @Mike D'Arrigo:

@Alexandra Feig you might need to refine your criteria a little further. Is your primary objective cash flow of appreciation? What kind of balance are you looking for? When considering appreciation, you'll need to look at historical trends. Currently, virtually every major market has been experiencing unusually high rates of appreciation. Today's appreciation is not sustainable and isn't indicative of the future. When you're evaluating markets on the bases, you'll want to keep this in mind. The appreciation rates in most markets are artificial. Of the markets that you've mentioned. I like Kansas City and Indianapolis a lot. Both are solid cash flow markets but have seen strong appreciation rates in recent years. Additionally, they have good population growth, job growth. modern/diverse economies, reasonable property tax rates and favorable landlord tenant laws. Additionally, I would add the Quad Cities, particularly Davenport, IA to your radar. Davenport is a great sleeper market that hasn't been oversaturated by investors and is a great cash flow market also. 

[Mike U.]

Quote from @Corina Eufinger:

Right now Midwest markets are some of the strongest. Wisconsin (Kenosha, Janesville), Indianapolis, Cleveland. I would steer clear of Illinois. (Briefly, companies and people are starting to leave Illinois. Second, the laws in the state are positioned definitely in favor of tenants.) Florida would be good I believe. Though possibly more expensive than the other markets it offers the added benefit of dabbling in STRs if you buy SFH. It also is a popular state for California and New York ex-patriots right now.

Good luck! I admire your steadfastness in being not only as OOS but a OOC (out of country) investor.

 I can attest to the Illinois comment. I have a property there right now that I am selling for this reason. Also, depending on which market you're in, you may find it not making sense due to the ridiculous property tax rates (as I did). 

[Henry Lazerow]

Both IL and FL have good cashflow areas. With FL being more a growth state.

Invest where your family is. Be very careful investing in places you have not been and sadly the second a contractor finds out your from singapore they will jack up prices and rip you off. Best to get referrals from family or an agent you trust. 

In regards to people leaving IL. Real estate is very location specific not broad state wise. My 4 unit in Rogers Park has had rents go up 10% a year for last few years and not had any vacancy for 2 years now with all 680+ credit. It's strong demand for rentals in good areas with many areas seeing rapid growth as they gentrify such as Pilsen, Avondale and Albany Park.