Emerging Markets for SFR purchases?

[Jeff Trevarthen]

Hello BP,

I'm looking for emerging markets for single family homes which can be purchased for $100,000 or less.   The properties should cash flow (even just a little) when purchased with 20% down.  The locations should be in and around major cities with the potential for economic growth in the next 3-5 years which will push up values. 

I've identified a couple in the mid-west part of the US and wanted to ask the BP community for your advice?  Where should I be looking and where are you looking?  Why are you looking in the markets that you recommend?

Thanks in advance for any and all feedback,

Jeff

[Rob Cee]

I would take it with a grain of salt if someone who sells turnkey properties to out of state investors is claiming the area where they sell properties is a great emerging market.  Get some opinions from disinterested 3rd parties.  Find out what is happening in that city.  Population growth?  Job growth?  Are incomes rising or falling?  What will drive people to want to move there?  Demographics changing?  Are those super cheap properties in ghetto areas with chronic perpetual poverty?  Was that house going for $20k still going for $20k 20 years ago (maybe there is a good REASON it is still only $20k!)?  

If you sell in 3-5 years you are going to have transaction costs (Realtor commissions, closing costs, fix up costs, etc..).  If the property doesn't go up at least 10% in value when you sell you will lose a lot of money just selling it for what you bought it for because of transaction costs.  If you want to sell in 3-5 years you want to try and find an area that is under valued right now or a property that you can add value to.