Need help with market and strategy for next purchase

[Jeffry Valencia]

I recently bought a house (LI, NY) with my girlfriend (we're expected to close in May). We are intending to house hack and then eventually rent out both units which will at least cover the mortgage. We are both anxious to make moves for our next property, but we are struggling to decide our next move. We know we want to buy out of state because NY is just way too expensive, but we are struggling to pick a market. We've been doing research on the markets suggested by BP (specifically, Goldsboro, Brownsville, and Cincinnati), but, ultimately, I think we are going to have to fly out to these different areas to scope them out. If you have purchased out of state, how did you come to a decision on the market? We have a call with a property manager (who is also part of a group with RE agents) this week and hoping to get some insight from them. 

Also, because we are planning to buy out of state, would you suggest something that's turn key? We wanted to fix and flip for a quicker return but we can't take extended time off from work to do renovations. I suppose if we connected with contractors and trusted them enough we'd be able to leave them to it.  Any advice on what our next move should be? 

I should also note that we are planning to do renovations to the home we just bought. We have not yet come up with a budget and not all renovations need to be done at once, but I think we're looking at around $10k within the first few months. Perhaps our next move is wait and save up some more money.  

Thanks in advance!

[Joe Hammel]

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I personally make well over $100k/yr cash flow from 21 properties here. All of which, I’ve purchased within the last 4 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.