Best "cash flow" investment market for $100K?

[Matt Smith]

I would like to invest either $100K or $200K in cash in real estate in 2016. My goal is to maximize cash flow on day 1. What cities would you recommend? Would it be better to invest 100% in cash of cash + loan?

Thank you!

[Joe Bertolino]

I am currently investing in Sacramento's Oak Park neighborhood (95817,95820).  It's a transitioning area adjacent to some of the most desirable areas in Sacramento including Midtown,  Land Park, Curtis Park and the UC Davis Medical Center.  It is in the "path of progress" and has great architecture with a bit of a hipster vibe with restaurants,  coffee shops, breweries, art studios, etc opening up.  The current mayor hails from Oak Park so there has been a ton of recent investment in the area ($10-30m mixed use projects).  

You can still pick up houses for $80-120k that rent for $1150-1400. Those on the lower end need a lot of work but I prefer to buy low and rehab to my standards from the start to take the capex hit up front. Like most transitional areas, it's street by street so you have to learn the area. There have been 5 sales of over $300 per sq foot in the past 120 days so the profit potential is high on the right block. I am using direct marketing and flipping the houses I can get on the more desirable streets and using the BRRR strategy for those that are a little farther down the path of progress. I suspect those $100k houses will suddenly by $200k in the next 12-24 months. With the way rents are rising dramatically in Sacramento, there is a lot of pricing pressure on the low end of the market.

In my opinion, the area is like buying in Brooklyn or Oakland 15 years ago.  It can't help but improve due to the location near the major investments being made in downtown and midtown and the expense of living in East Sac,  Land Park and Curtis Park.   The spillover into Oak Park is unavoidable.  I have been impressed with the tenant pool,  mostly late 20's/early 30's state workers or UCD Med Center employees that are tired of midtown  rent increases and want a house with a yard but don't want to commute from the burbs.