Where to invest? Tallahassee, Jacksonville, Atlanta, Midwest?

Question

Hey all!

I live in Seattle, Washington and have a small house hack here. I want to pick up some cash flowing rentals and have accepted that the region I live in does not have many properties that cash flow very well. My current full time job is full remote so I am planning on identifying an area to invest in and spending a few months out there to find, purchase, rehab and rent properties.

I lived in Tallahassee, FL for many years and have a good friend who does quite well with college rentals out there and is a property manager I trust. I know the market, have a network and the location has good cash flow and growth prospects. The down side is college housing, so more property damage and turn over and reliance on the future prosperity of the university which I think is a pretty safe bet.

That being said I came across the list of top locations to invest based on cashflow and appreciation forecast:

https://www.realwealthnetwork.... and started reconsidering to look in the Atlanta or Jacksonville area instead (I like the idea of sticking around the SE since I have a network in the area).

Any thoughts on the above markets? Where would you invest if it didn't have to be local? We are moving out of Seattle into an RV so will be transient for the coming future so everything is 'out of state' investing since we will be always on the move.

I am looking to invest around $500,000 after financing and cash flow is my main focus but of course in an area with stable growth and appreciation. Value add multifamily is generally what I am looking for but could be convinced otherwise.

Thank you for any tips and suggestions!

Patrick V. · Answer

@Marc Rice Ive always been bullish on Colombus multifamily. How has the Columbus market been impacted by Covid? Have folks migrated to or away from Columbus? Is it a competitive sellers market due to lack of inventory and low interest rates?

Some of the FL markets I am involved in have appreciated dramatically due to an influx of folks going to warmer weather for Covid triggered remote work. This leads to a very competitive sellers market and makes the numbers for an investor a bit harder to make work.

I am under the school of thought that these migrations are going to be largely temporary in relation to things normalizing. It makes these markets a bit riskier in my opinion as there may be a small price correction when folks return to their pre covid cities of origin. I imagine Columbus may not have this particular problem.

Gregg Cohen · Answer

@Patrick Volum .  The reason investors come to Jacksonville is because you get both positive cash and above-average home price appreciation.  Most markets across the country that give you positive cash flow will be below the national average when it comes to historical appreciation.  This is especially important if you are planning to buy and hold for a full market cycle or longer (10-20 years.)

Many investors choose to ignore home price appreciation but I think that's a mistake.  The reason is because home price appreciation rates tend to repeat themselves in a given market over a full market cycle.  If you know what your historical home price appreciation rate is and you plan to hold on for 10-20 years or more, chances are that you going to experience similar home price appreciation.

When you factor in both positive cash flow and home price appreciation, you'll find that not all markets are created equal.  For example, Cleveland, OH has appreciated at a rate of 2.3% per year on average since 1991.  Jacksonville has appreciated at a rate of 4.3% per year during that time.  The investor who purchased his/her rental properties in Cleveland missed out on hundreds of thousands of dollars in return from home price appreciation.

I'd suggest looking up the historical home price appreciation rates in the markets you're considering and factoring that into the equation (assuming you are buying and holding for a full market cycle.)  You can do this by going to the Federal Housing Finance Agency website - www.fhfa.gov.  Make sure the market offers positive cash flow first but then look into home price appreciation to make your final decision.

Hope this helps.

Brian Hatcher · Answer

Patrick,

I am located in the Atlanta market and can't recommend it enough. Still a lot of room left for growth here in the city and a lot of big players still investing. Microsoft recently purchased 20 more acres on the westside of the city where there is still a lot of growth left. read more about that here ->https://www.biggerpockets.com/...

The city provides tax benefits which is why a lot of company HQ's are coming here which further reinforces the population and investment increases.

All of these factors are positive for the Real Estate market and if you would like to connect and discuss further, please feel free to reach out.

Marc Rice · Answer

@Patrick Volum

Columbus is still very competitive and growing. Covid initially caused a decrease in inventory which led to houses increasing more rapidly. There’s been some micro migrations away from the core of downtown due to the protests throughout the past 6 months but things are settling. It’s still a sellers market, especially for multifamily and most listings have multiple offers.

Marc Rice · Answer

@Patrick Volum

I’d recommend checking out the multifamily market in Columbus, OH to invest. Lots of 1% rule properties here and the appreciation is fantastic due to the job and population growth.

Where to invest? Tallahassee, Jacksonville, Atlanta, Midwest?

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