Best Market RIGHT NOW for Long Term hold? Are there any?

Question

Hi everyone- I just joined Biggerpockets and we are starting to explore potential OOS markets to invest into.

We would prefer to buy in our own backyard, but we live in Honolulu and the prices/taxes make even the thought of positive cashflow impossible even with 20-30% down.

We have been researching all the buzzy markets like #Boise, #Austin, #Nashville, #Tampa, #Houston...but the more I read on Biggerpockets, the more it seems these markets are tapped out and too difficult to find deals (even read a post from someone in Nashville saying it is 7-8 years too late!).

We'd like to identify a long-term city/trade area to invest into 3-10 SFR of multifamily rental units (in 2021) and continue investing into over time (goal would be 1 property per year). Ideally we would like to build a small team (with a great property manager) and visit a few times a year.

My question to Biggerpockets community is....are there any untapped markets left? Or is everything in all of USA just too crazy and expensive to get into right now? Should we hold our cash and wait?

Look forward to hearing what is out there.

Mahalo from Hawaii.

Russell Brazil · Answer

The best market is the one you are in.

Shawn McCormick · Answer

Hi @Jordan Brant I'm here in Orlando and we have the same issue here with less that one month of inventory there are just no points of entry to get something at a deal. There is so much cash out there that people financing can't compete with, let alone a 'deal'.Something to consider would be STR in highly sought after, year round markets. They are performing very well coming out of the pandemic and cash flow great. You can still scale these, but having the right PM is key to success.Just a thought, if you would consider this, let me know and we can schedule a call to talk over options in Orlando.Good Luck!

Victor Steffen · Answer

Different assets will serve different strategies. For me and my personal long term portfolio I'm buying in New Braunfels TX. I can buy recently built homes (min cap ex), in affluent areas (80k+ median income), with highly rated schools (key ingredient for appreciation), in the path of progress (directly between Austin and San Antonio along I35), and cash flow positive from day 1 due to a favorable price-to-rent ratio.

Stephen Brown · Answer

Hello Jordan. Although we may not be the best market, I would highly recommend you to check Toledo for long term buy and holds. Depending on the street and neighborhood you can do very well here. Our city has seen over $2 billion in investment last year, which is expected to create about 3,500 jobs. We have new amazon facilities coming in, and we have some of the best schools in Ohio. Many people rent here, in fact over 50% of the city is rented. One huge plus for us is that we have a great health care system and an aging population so there will always be a demand for healthcare workers, because of this we have many traveling nurses and doctors that move here and rent for a few years. They make great tenants. I know one guy who strategy is to rent out 4 bedroom homes for over $2000, one of his tenants is a traveling doctor and he has zero headaches. We also have long term tenants because of our factory jobs here. Many folks work and rent, a lot of landlords that I talk to have had the same tenants for more than 10 years. So I'd recommend you giving us a look. Although I know the population and crime statistics say one thing, that's just the surface, if you look into our market you can find the sweet spots and do very well!

Chris Davidson · Answer

@Jordan Brant For every statement out there about being late to the game you will find another investor closing on a deal in the same area. While not all strategies will work in every market, I am a believer of every market has an opportunity for an investor. It really comes down to what your criteria and constraints are. If you have any question about the Boise market shoot me a pm would love to chat.

Jordan Brant · Answer

@Chris Davidson Chris I am still considering Boise and I have actually been in touch with someone from your office, I look forward to seeing what is out there! I love Boise and my dad has property in Bend so would be a natural market for us. Prices do seem a little on the high side as ratio to rent, but I realize the market is stable and cash flow will eventually come @Scott Esmail If only I had your insight and courage back in 2014 to start investing. What markets do you like in Florida and do you still think there are deals in this economy? Also my mom lives in Tampa so that market could work for us. @Victor Steffen Admittedly I have never heard of New Braunfels but I just googled it and realized I have been there! (went to Schlitterbaun when I was about 12 years old). I like both San Antonio and Austin, and this appears to be in between both markets as you mentioned. Do you think there are still good deals in New Braunfels, and have you been able to assemble a good team there?

Shiva Bhaskar · Answer

They're not untapped markets, but for long term growth in values and rents, I think few markets have held up as well as over the 40 or 60 year time horizons (to date) as New York City and California (especially San Francisco and Los Angeles). Limited supply, large population centers, tend to be strong markets. Folks can dislike the politics or culture of these places as much as they like (I have my issues with them too) but reality is reality. I do still think that places like Texas, Tampa, Nashville have plenty of upside if you're buying good deals. There's tons of opportunity out there. Maybe he best is your local market. Buy the very best deals you can there, which only a local person can do IMO. Keep pushing!

Christopher Abele · Answer

@Tony Kim are you speaking of the Amazon structure in S. Toledo where the old Southwyck Mall was?While it’s a great step in the right direction, it brought 100 part time jobs to the area and only a handful of full time positions. I’m not knocking growth for the area but it is important to look at what the business brings (in terms of jobs) and not just the business name.

Nick Robinson · Answer

@Jordan BrantIf you have the down payment to buy 3-10 SFR why not just buy a commercial MF(5+ units)? Its my opinion that it is a more stable investment then SFR. Not just because the numbers pencil out better but because of how they are valued. SFR are valued on comps so especially in this market as people are going crazy going $30k, $40k, $50k over appraised value (Just saw a house go for $165k over list price) it is going to be harder to make the numbers work. For MF the building is not valued by comparable it is valued by its NOI, like a business. Since it is valued by its NOI that keeps the prices from going to out of control. Also spreading the risk over more doors will protect your capital during uncertain times.

Tony Kim · Answer

Toledo is probably one of the few often mentioned areas here on BP where good cash-flowing deals can still be found. Any news or updates on when the Amazon delivery station in Toledo will be up and running? If I lived in one of the neighboring Toledo suburbs (some beautiful houses there, BTW), I'm pretty sure I'd be FI and living comfortably right now as I agree with @Russell Brazil.. the best market to invest is the one you are in.