Homeowner · Sherman Oaks, CA · Member since 2012 · 6 posts · 0 votes
12y
@Chris K. - Sorry, what I meant was that I would be willing to sacrifice some cash flow if it meant the property would be in an up-and-coming area with larger projected appreciation. This kind of goes along with a preference for A-quality neighborhoods.
Without a doubt Midwest cities like Indianapolis and Kansas City. Both are strong cash flow markets but also, the Midwest is seeing unusually strong appreciation rates. Indy is up 9.8% YOY. Clear Capital predicts that the Midwest will see 8.4% growth in 2015 which is the second highest region in the nation. I recently did a webinar on what are the best markets today. I'll be happy to send you a link to it if you'd like.
Investor · Los Angeles, CA · Member since 2012 · 108 posts · 23 votes
12y
@Brian Youshimura
Just wondering, have you ever travel out of state? I'm sure there is lot's of Great places to invest in, but without doing your homework you'll just be wasting money. Ever thought of invest at places you went to before? The way your asking, is like give you a city and you'll go and start there. Each city has good and bad, and if you never been there and no connections you can really screw yourself over. California is over price, but places that's too cheap and far can be a really PITA.
Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
12y
we are buy and hold in lemoore/hanford ca. They are a plus properties with professional tenants. We are in it for the long run so the appreciation and low tax/insurance is awesome. The area has a great transient population being close to federal prisons and the military base. The area in my opinion has been steadily improving. I definitely have a unique investing view as I explain on my website. We follow the south west model so we are able to be succesful on tighter margins by having low vacancy, maintenance and self management (possible bc of clientele).
I think the answer is 'it depends'...if you are trying to buy and hold, the market is pretty important. And what you want for a total return (blend of cash flow, appreciation/capital event, tax benefits, etc). Austin? Pretty expensive, and cash flow is min. Maybe Memphis? Atlanta is promising. Some markets in the midwest? Just remember to check vacancy rates, unemployment and job growth.
The best city I could find within a 90 minute drive.
What's your criteria for "best," Ned?
Wow Jon that is a tougher question then I thought at first!
For rentals I want an area with low enough prices I can afford it and it will cash flow. However for wholesaling it is less price dependent, you can wholesale at any price range. I would probably look for an area that had houses old enough to show physical distress just be virtue of age. To rehab I would want homeowner areas and probably avoid rental areas becuase their may not be prices high enough to justify rehabbing. These aren't necessarily the same areas.
If I think a little deeper what I want is an area that has inefficiencies in the market that I can take advantage of. For example I would want an area that had variability of both price and condition of product.
Couldn't agree more with Ali. I live here, so I'm a little prejudiced, but the market in Dallas is terminally stable. Even during the crash, we saw no appreciation for a couple of years and - in some areas - a marginal correction to market values, but no huge correction, because there was no "bubble". Now we are seeing excellent appreciation, but not uncontrolled to the point it is unsustainable. Dallas in particular has seen phenomenal job growth in 2014. Inventories are at record lows. People are renting simply because they can't find a home the really like to buy. At the same time, job growth is such that rentals are in high demand, even in very nice areas and neighborhoods.
Bottom line...if you know how to find deals, Dallas is great place to be, regardless of the strategy you're looking to employ. I'm farming a couple of SFR areas centered around highly rated school districts. The neighborhoods are predominately nice blue collar to moderate white collar, mostly 3/2/2 anywhere from 1,200 to 2,400, and an ARV sweet spot of $125K - $300k.
If you want some additional information on the market or need boots on the ground here, I'd love to help.
I'm a big fan of Dallas, and own a bunch of real estate there. Property taxes in the areas I invest in are 2.5% - 3.5% of the 'assessed' value, and increases/decreases each year/every other year. Do you think the appreciation and increased property taxes will exceed rent increases? I've been monitoring lately....
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
12y
@Account Closed everyone who isn't from Texas always starts every conversation with some mention of property tax rates. Honestly, I don't get it, but I've only ever lived in Texas and North Carolina.
According to the Dallas Central Appraisal District...
In 2013 Dallas County properties were taxed at approximately 77% of market value.
Dallas Country showed a 4.6% appreciation between fiscal year 2012 and 2013, not including adjustments for new construction.
The 2013 tax rate for Dallas County was 0.2431. The estimated rate for 2014 remains unchanged.
City tax rates are all over the board, but average (by city, which doesn't account for the # of properties within the city) around .75
Each school district taxes real property, and those rates are also all over the board, but average around 1.2.
June 2014...median price for sold homes reflected a 7.4% increase over median price of homes sold in June 2013. In one of the specific areas I farm, the median price has increased by 34% or $70k. That increase is driven by the quality of the school district and is entirely sustainable.
Overall, the major metropolitan areas of Texas experienced price stagnation, during the crash. Because the market in Texas as been historically stable, we didn't experience the "bubble" or the crash. In fact, my personal belief is that the price stagnation was due to the unavailability of funds, as banks overreacted to pressures from other markets. (I worked for Wachovia & BofA, during that time. It was carnage!) The rules suddenly changed on what it took to qualify for a mortgage, so people couldn't buy houses. No demand meant prices didn't rise.
So...yes...I am an admitted Texas homer. But, I know my market, and I would rather invest here than anywhere else in the country, property taxes and all.
Lender · Redmond, WA · Member since 2014 · 553 posts · 490 votes
12y
One thing to look at is population growth. You can find future projections online, but recent history is a strong indicator as well. Here are the top 50 cities for population growth from 2010-2013 from the US census. The right hand column is percentage growth over that timeframe.
Investor · Westminster, CO · Member since 2009 · 1k+ posts · 1k+ votes
12y
This question comes up 3-5 times per DAY. I know, I asked the same question when I first joined. There are houses to buy, in nearly EVERY city in the United States, that you could make money on. And by CITY, I am NOT talking about small towns, I would never look at any city under 10,000 population, except for very unique circumstances.
First off, you need to answer some of your own questions. Do you want cash flow OR appreciation, and if a combination, how much chance for each. Like, would you accept a 6% Cap Rate if there was a better than 50% chance of good appreciation? Would you want a 10% Cap Rate if there was only a 10% chance of appreciation? The questions could be endless.
While there is a LOT of good advice on BP, remember, everyone looks at investing through their own prejudices. Some people only want properties close to where they live. Others, like @Ali Boone and myself, wouldn't care if the property were on Mars or Jupiter, as long as it cash flows. Personally, I am way beyond looking at houses and talking with tenants. I did that for decades and now I want to truly be PASSIVE!
My last purchase was in Forney, TX, a suburb of Dallas, Texas. Before that, I purchased in the Central Valley of CA, TN, AZ and OK. I would also look at Indianapolis, Kansas City, Charlotte, NC and maybe even some areas of Florida.
While it is getting more difficult to find deals, there are still many deals out there, and EVERY WHERE! There will always be desperate sellers. There will always be foreclosures. There will always be investors wanting out. The hardest part is building a good team on the ground of the area you want to invest. But once that team is set up, deals will come your way.
As my signature line states, RESEARCH or you may be the FIRST mouse!!
Homeowner · Sherman Oaks, CA · Member since 2012 · 6 posts · 0 votes
12y
@Mike D'Arrigo - Thanks, I'd be very interested see your webinar. I'll be sure to add you a collegue.
@Shuai Zeng - I've been out of state and would enjoy the opportunity to visit other cities. I posed this question because I would just like to narrow my options down to a few cities to research and visit. That being said, I would like to focus on A class neighborhoods, because my long term goal is to have multiple properties in the same city/area.
@Account Closed - Thank you, Andrew. I plan to look into Atlanta. Are there particular areas you would suggest? Also, other posts that I have read appear to agree with your comment - that the prices are getting pretty high in Austin.
@Ali Boone - Thank you, Ali. Are there particular areas in Dallas you would suggest?
@Hattie Dizmond - Thank you, Hattie. I plan to look into Dallas. You mentioned inventory is low and you've experience decent appreciation. I guess that's on par with most of the country, but I wonder if it could it be too late for the area.
@Shawn Holsapple - Thank, Shawn. I see you're from Indianapolis. Are there particular areas I should focus for my research?
The only thing you would be too late for in Dallas is to get in at the low point of property prices. The DFW area is experiencing phenomenal job growth, and home builders are not able to meet current demand for additional housing. "Decent" appreciation is probably underselling a bit, particularly for some seriously high demand school districts where appreciation is currently around 30% over 2013 and still climbing.
Homeowner · Sherman Oaks, CA · Member since 2012 · 6 posts · 0 votes
12y
@Mike McKinzie - Thank you, Mike. I definitely plan to do my due diligence, and you're right, I should probably better define my goals. I think I just needed to get a list of cities to narrow down my search to start. I figure I'd rather understand the market in a handful of cities really well, than a truckload of cities very poorly. I also appreciate the list of cities. I've already started research on Charlotte.