Top 5 Major Cities for Buy-and-Hold Investment Properties - True?

Question

Curious to hear thoughts regarding this article.

https://www.mashvisor.com/blog/top-cities-buy-and-hold-investment-properties/

Aaron Sigmon · Answer

@Michael Seeker

I bought at the peak of the boom back on 07 for 139k, then it slumped to 100k during the recession.  Units like these are selling for 170k now.  Hasn't been the best appreciation, but I bought it back in the 100% financing days with no closing costs.  This has been my best performing rental because after refinancing (at no out of pocket cost) to increase cash flow, my COC return is now 74% (only cash spent was minor renovations).

Francis A. · Answer

@Aaron Sigmon

You planted your flag in the right place before the rest came calling. Just like I thought. Great call. Enjoy your run!

Michael Seeker · Answer

@Francis A. - I've been to most of these cities in the last year or so and here's my general thoughts on each:

Atlanta - Huge, sprawling city.  You'd probably do just fine investing here and should see steady, growing returns.  The city is big enough that you should be able to find great resources to work with.

St. Louis - I was surprised to see this one on the list, but definitely like the dynamics of StL.  This will most likely be the next market I look at.  You won't see huge appreciation, but there are lots of properties in the urban core that would work well for a small (i.e. non-institutional) investor.

Las Vegas - Seriously?  I can't imagine trying to own rental property in Vegas.  It is a very cyclical city and completely dependent on tourism.  A slight downturn in the national economy would quickly result in higher vacancy, lower rents and lower property values.

Charlotte - I absolutely loved Charlotte, but I couldn't imagine being a smaller investor trying to own rental property there.  It's a beautiful city and I'd love to live there, but there are brand new, 100+ unit apartment complexes every couple blocks.  If you're in the market for those sorts of properties then Charlotte would be great.  If you're a small-time investor then probably not.

Washington D.C. - I have a business partner and CPA that both live in/around DC and invest out of town.  The returns are not good and I'm shocked this made the list.

All-in-all, it depends on what you're looking for.  If you're strictly looking for cashflow, then any of the mid-sized cities in the Midwest will work quite well.  If you're strictly looking for appreciation, then head to the coasts.  If you're looking for a mix, then your best bet might either be the burbs of a coastal city or urban core of a Midwest city.

Hope this helps!

Francis A. · Answer

@Aaron Sigmon

After reading your latest post, I posted another link from the same site that I read as a separate topic.

I believe the question of cash flow will always be one either the #2 or number #1 concern for any and all RE investors. The other concern being the topic of appreciation. I think this is especially so depending on if the investor purchases in markets where RE appreciation tends strangle cash flow at the time of purchase.

@Michael Seeker

https://www.biggerpockets.com/forums/311/topics/39...

@Russell Brazil

Michael Seeker · Answer

That makes sense!  I definitely think the larger complexes tend to boost rents in the area and attract a lot more renters to areas they may not have been interested in before.  That being said, if you were already there then it's great but if you're looking to buy now then the numbers may not work nearly as well.  I'd be curious what you bought your condo for and what it rented for 10 years ago (ballparks would work) vs. what one would rent/sell for today.

Aaron Sigmon · Answer

@Francis A.

My condo complex was the first one to be built in that neighborhood about 10 years ago.  Since then, they have built 3 large apartment complexes in that neighborhood that charge 1650-1800 for a 2/2 around 1000 sq ft.  Condos in my complex were rented between 900-1300 for the same size (different owners charge different prices).  I am getting 1450 for mine and could probably get 1500 pretty easily.  This would not have been possible without those new apartment complexes being built.

Francis A. · Answer

@Aaron Sigmon

I understand what you mean regarding the large apt buildings near your condo however, do you mind giving the specific reasons peculiar to your case? As far as you can tell exactly how did those large apartment buildings affect your rental? Were these mixed use buildings or did they attract higher heeled tenants to your Condo's location etc? I am looking at a duplex that might be in the beginnings of a similar situation are you've benefitted from. The traffic isn't quite there yet so there are choices to be made. Thanks!

Par Attaran · Answer

Vegas Really?

I have no personal experience, but know many friends who have gotten burned in Vegas or have terrible returns.

That city is completely dependent on tourism and the economy, odd choice IMO.

Aaron Sigmon · Answer

@Michael Seeker

Those large apartment complexes have actually helped me to increase rent on my condo in the NoDa area.  I raised the rent $150 higher than the market rent for a 1000 sq ft. 2/2 and still had around 30 people contact me within a 2 week period.  I would've filled the unit faster but I went out of the country for a week.

Francis A. · Answer

@Michael Seeker

I was also shocked Vegas was on the list! I'll have to make the trek there again to see for myself. Nice synopsis!

Top 5 Major Cities for Buy-and-Hold Investment Properties - True?

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