If you could invest in SFR buy & holds in any U.S. market, which would you choose?

Question

Hi All,

As I look into new markets to invest in, I would like to poll the vast geographical diversity of the BP forums to get an idea of where investors and agents are seeing great deals for buy and hold of single family residences. This can either be from actual personal experience or second hand sources.

The things I am looking for in this new market are:

1. Moderate to high rental demand

2. Moderate to high supply of undervalued homes (<$150,000)

3. A good ratio of rental rates to home values

4. Moderate to high economic strength

5. Moderate to low investor competition.

If you know of a local market, big or small, that has any 2 of the 5 I'd like to look into it in more detail.

Thanks in advance! I look forward to seeing where in the U.S. your responses lead me!

Ned Carey · Answer

I would choose the market I know best. For most people that means within 1-2 hrs of where they live.

Troy Smith · Answer

I edited my last post to add to it, and it looks like you posted at the same time as i was editing. Anyway, you're right about the hammering, and the comeback.

I bought my residence in 2007 for 300k (bad timing, face-palm!) and it's been worth far less than that since then, until now. I am just now selling it for....drumroll.... 300k.

Curt Davis · Answer

Here is the majority of what your responses will look like:

Memphis, Dallas, Houston, Atlanta, Indy, KC, Charlotte, Cleveland

The best markets will always have higher investor competition.

Memphis has 3+ of your listed question criteria.

Alan Vieyra · Answer

@Ryan Hammel I can only speak for Houston since I know the market really well. With market appreciation increasing by 10% per year at least that is how 2013 was. And having Exxon HQ moving into town, this is just a clear booming on RE. As previously mentioned on other post by other member Houston is definitely not the only city with this potential.

Ed L. · Answer

If I had the cash laying around I'd dump it into a Condo at the Whalers Village on Kaanapali Beach in Maui.

Best beach in the USA, Best location on the best beach, All the beachfront property is full developed out, Direct flight from America's wealthiest state, and there's a lot of room for increases on the vacation rental rates.

I can't help but think that price appreciation is likely to occur on those properties due to the  unique setting and basic laws of supply and demand.

Why foreign investors are dumping money into homes into places like Vancouver, and London over Maui just astounds me....

Jay Hinrichs · Answer

My reason for bend as well is its under the radar... prices did get hammered. and there could be some nice appreciation.  Not to mention your tenant pool is far cry different than what you will experience in the CASH flow markets of the mid west our southeast.

Troy Smith · Answer

@jay hinrichs I'm surprised you say Bend. I live in Bend and am interested in buying rentals. I've been watching for a year or so and don't see many properties that would do very well as rentals. There is huge potential for appreciation if you time it right here, and big losses if you don't. But as far as buy-and-hold strategies, it doesn't seem like a very appealing market to me, due to high purchase prices and not particularly high rents.

The college will bring in renters, for sure, but will probably drive property values even higher also. I'm not sure what the net effect will be. We've recently had very low (<1%) vacancy rates and a spike in rents, but I think it will ease. There's a lot of building happening again. It's a very volatile/unstable market and economy here. If you're clever enough here you can probably make a fortune. For a simpleton like me, it's a bit daunting to try to predict how things will go.

To my mind, a more appealing buy-and-hold market would be a very stable and predictable one.

Jay Hinrichs · Answer

I was not referring to SFR's I was referring to Multi family.  Also I like Hood River for vacation rentals.  Bend got hammered and its on it way back up from what I know.

Rich Weese · Answer

Most areas in Texas. i like Rio Grande Valley and own a lot of rental homes there as well as a Subdivision I build in.

Rich

If you could invest in SFR buy & holds in any U.S. market, which would you choose?

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