Thoughts on These Markets for Buy and Hold Income Properties?

Question

I am selling property in Southern California and looking to invest in other markets.  Are there property investors in Atlanta, Orlando, Houston, Omaha or Baltimore who can comment on if their particular market is a good one for rentals?  We're looking primarily at single family homes and looking to maximize our cash flow and long-term appreciation.  If there are investors who are doing well in other markets I'm open to hearing about those markets too!  Thanks in advance!

Ali Boone · Answer

Of the markets you list, I recommend looking at Atlanta and Houston over the others, of those two, definitely Houston. Great deals there, Houston has more growth potential as Atlanta experienced a lot of it's growth a couple years ago.

Kiya Smith · Answer

Atlanta is great for rentals, the best areas are downtown Atlanta near colleges and Cobb county which is near downtown Atlanta but just more more upscale. Also buckhead is a great growing community for single family rentals.  If you need help locating some properties here in atlanta, you can email me kiismith@hotmail.com

Robert Taylor · Answer

Hi Roger,

Yes, here in Milwaukee, things seem to be going well for the various people I know currently in the landlording biz, including myself (in a small scale as of now) As Nathan mentioned, here on BP Milwaukee has been getting a fair amount of attention lately, or even for a while now but I'd agree that there are probably a number of various mid sized metro areas that can be good places, or certainly in our current market conditions, which seem to be a very good time frame now for owning residential rental units.

Yesterday, I commented one of my favorite comments I've made several times now on BP, which is that I've often seen where I think some of the people commenting or asking questions here on BP end up far too wrapped up in all of the many ratios, %'s etc and not paying enough attention to factors that can't be judged with ratios, etc. I have a thought that's sort of along the same lines as far as looking for "hot" markets to buy whatever in, sure there may be certain ones that get "hotter" than others at times for a wide variety of possible reasons, but I'd also say that there will be a long list of markets that you will do just fine in, provided you handle your end of the rental business as well as you possibly can. Depending on just how much available time you have for this business, I'd put at least some time into researching the various metro markets of course, but at some point I'd then take that list of acceptable areas and move on to whatever you need to do to make sure that you're running your business as smart and efficiently as you possibly can.

PS-Ironically, with this extra attention that my area has been getting here on BP recently, I just thought I'd throw in that if by hard work and/or some luck, I'm able to hit a real "home run" or multiple home runs if necessary and I was then able to move anywhere and be able to afford a nice home in any metro area, I'd be moving somewhere near to where you are now! I've spent a fair amount of time in SoCal, from LA County down to the border and I really LOVE that whole area! Its not cheap though, so I'll have to hit that home run, or a few of them before I start packing!

Ned Carey · Answer

Baltimore is generally considered a good market for rentals. People who live there are happy to rent and many have no desire to own.

Currently prices are extremely low relative to rents. Returns are great. However Baltimore government can be a pain to deal with.  There are a lot of bad tenants so you need to screen well and buy in areas that will attract decent tenants.

Nathan Eckles · Answer

The Omaha market has cooled off a bit. Two-bed REO houses in C neighborhoods were selling for under $20k 18-months ago, and renting for $650-700. The REOs have dried up a bit, and now those houses are closer to $40k.   I don't have much experience with A properties.  I only have one B and three C's, so that's what I watch. I can't really tell you how the higher end is doing.

I'd say the rents are strong here overall. 2% ratios are still not uncommon. I'm optimistic.  I'm looking to try a flip right now, just to help to get more capital for rental.

I'm not a big time investor yet, so don't go on my word alone, but I'd endorse Omaha. The job market is strong, and the population is growing for a Midwest city.  Don't expect a ton of appreciation in Omaha. You have to make your money on the rents.

Also, on the podcasts, you also hear a lot of people talking up Milwaukee. It sounds similar to Omaha's situation.