Midwest VS. Atlanta VS. Arizona Investing?

Question

HEY all! I am a Columbus, Ohio Investor following the BRRRR strategy. I am investing in Ohio for the obvious reasons (low price, high rental demand, equity potential, ETC) but I am investigating moving to Arizona (outside of Phoenix) , outside of Atlanta or somewhere in Texas (San Antonio or Austin area). The reason I want to move is simply the quality of life (I don't like the cold) and for me, I have to live where my investments are.

I really want to make the move but it is hard to let go of what I know. I would plan to move, learn the market as quickly as possible and get to work!

Investors in Arizona, Atlanta or Texas (I know a wide range but in growing areas) what is your impression of the rental market and opportunity for increasing values?

I'd love to hear your experience.

Thanks!

Ali Boone · Answer

I can't speak for the BRRRR strategy specifically in those markets because I do turnkey-- numbers would be different. For the turnkeys, Arizona basically has no cash flow anymore, Texas does have some but not so much in San Antonio and Austin, and Atlanta does but inventory is low and prices are high so the returns are squeezed. How that translates to BRRRRs- buying the distressed properties, I don't know. But if you know maybe it can help some.But more than that, I would say your primary focus should be thinking about where you want to live. No market will always be the best for investing and even if it's the best or even just good at some point, it may not stay that way. You could move to a great investor's market now and set up shop and boom, couple years later it's not that advantageous anymore. But where you want to live- that can stick around for the long haul. So that'd be my primary consideration, and then once you know that, you can decide how to make investing work there if applicable. To me, it's never worth living somewhere I don't like just to invest. And then it's that much worse if you don't like living there and then suddenly it's not a great place to invest. Double whammy.

Jim Cummings · Answer

@Brandon Wynn. Most Metro areas of Texas are doing well. Held up well during the recent recessions - meaning lost only a few percentages of value, and came back strong as the economy improved. Also of note it doesn't get "California Crazy" Appreciation either. Come on down and enjoy the freedom and the 69 Degree Weather on November 28 in College Station TX.

Brandon Wynn · Answer

Well Mike, that is pretty amazing! Never really thought of it that way! That is super interesting! How long have you been investing in the AZ market? Have you seen any market cooling recently?

Ali Boone · Answer

There you go! ;) Are those cash purchases or with financing? What kind of properties?

Account Closed · Answer

In my case I buy Single Family Properties that are more than 1000 sq ft and less than 2700 sq ft that are in "normal neighborhoods" where people have families and "normal" people want to live with "normal" incomes and "normal" housing costs. I don't do "D" class or "A" class properties and I focus on properties that don't require a lot of work. I don't buy with cash. (Who would and why?) I don't borrow from banks (Huh? what does that mean?) I take over the financing using Subject To, Wraps, Lease Options, Land Contracts, Owner Financing, etc. I then sell on Lease Option getting $20k to $25k down, and I charge going rental rates and the difference between a 4% loan that has been paid on for 4 or 5 years gives me instant equity and a payment that allows me to to cash flow from $500 on up depending on the property. Sometimes I sell them as Turnkey to folks from California, and Arizona, sometimes I hang onto them, just depends. I also know people who buy properties using the old school way (using a bank and putting 20% down, ugh!) that are cash flowing, just not as much as I am cash flowing. Here is a sample spreadsheet of cash flow in Phoenix:https://www.biggerpockets.com/forums/600/topics/58...

Account Closed · Answer

Your Comment: "Arizona basically has no cash flow anymore" THAT is not accurate information. I cash flow from $500 to $1,000 a property in Arizona. I just picked up three properties that cash flow more than $500 each in Phoenix. Not quite sure why you are making that comment. On second thought, don't tell anyone. why should I give my secrets away? ;-)

Ali Boone · Answer

What is the cap rate on those properties you're buying? You mentioned the cash flow amounts but not the purchase prices.

Brandon Wynn · Answer

@Ali Boone I am referring to the cap rate when I look my opportunities. Properties that are purchased for cash are refinanced so I in the end I am in the same(relative) boat.

Ali Boone · Answer

Well then your suggestion that cash flow is readily available because you are cash-flowing is inaccurate then. I could buy a $2M property here in LA and if I pay cash for it, it will cash flow. Doesn't mean the returns are good on it.

Brandon Wynn · Answer

Yes these are mainly cash purchases :)