Better Market for Out of State Investor: Phoenix or Indiana?

[Thomas Lo]

I am currently invested in a small MF in Phoenix in a great area, and am now looking at further investment opportunities in Phoenix in SFRs and 2-4 units. Having driven the market before buying, I know that there is a ton of activity in this area and BRRRR would work for me with the right deal. But, I also sense that there is a lot more competition--please correct me if I'm wrong or have a limited perspective here.

However, I also like Indiana--specifically W. Lafayette/Lafayette, home to Purdue University.  I went to school there, so know that it's a very stable and good market with a lot of solid economics there.  The prices for 2-4 units are much cheaper, and I can get in with the same strategy for good cash flow.

I'd love feedback on going one way or the other, since I know Phoenix will be more pricey, more time to manage rehab, and more slogging through potential deals. But the appreciation is there on the right deals and it's within driving distance for me. Just not sure if the market is too saturated and ARV prices are stalling a bit. Whereas in Indiana, I know the prices are slightly higher than where they were three years ago in Lafayette, but this is a super niche market so I will be choosing solid cash flow and little appreciation--just not sure how to pull equity out on these types of properties to develop a system for this market.

Any feedback would be greatly appreciated!