Where should I invest? (buy and hold, multi-family)

Question

Hello Bigger Pockets Family!My name is Veronica and I am brand new to the BP community. I have been enjoying the podcast and blog content. Okay, the truth is I have been obsessively listening to and reading bigger pockets content. I am looking for advice on how to narrow down my location for rental property investing. I live in Miami, FL. My investing partner lives in NYC. We are willing to invest anywhere in the U.S.. Where should we look? We have discussed Florida at length since I live in the state and can check in on the property from time to time. The concern with FL is the pricey homeowners insurance and high taxes. Financial Goals and Assumptions:- Big goal is to cash Flow 12k per month eventually- Looking for a cash flow of $100-$200 per month, per door- Want Cap rate of 9%+- We have 70k to start investing- We want to invest in small multis- Willing to do minor rehab and reno (cabinets, flooring, upgrades)- Will hire property management company at 10%Questions for the community:- How do I find a great investment area for rentals? - What is the criteria for evaluating a rental property location? (jobs, population, crime?)- Should we invest in Florida? If so, where? (I have heard good things about Lake Worth, Tampa and Stuart)- If not, where is a good place to look for deals? Thanks everyone!Veronica

Samuel Awosolu · Answer

Hello @Veronica Zayas ,First I want to congratulate you on taking action and taking the steps necessary to start your real estate investing journey. That is usually the hardest part for most people. I live in South Florida and there are deals here but you will have to work really hard to get them. It is very competitive and sellers are pricing their properties a little high in hopes of cashing in on the high demand. However, you can come across some distressed assets or off market properties but you will also be competing with other investors for them as well. Here are some answers to your questions:( - Should we invest in Florida? If so, where? (I have heard good things about Lake Worth, Tampa and Stuart) )I currently flip properties in Orlando with a few investors and properties are still reasonably priced there. I like the Tampa area also. Investors are starting to flood the area but you can still get properties to buy and hold or flip at good prices right now. I feel the city of Jacksonville is a sleeper. No one is looking there and it has so much potential from my vantage point. There are many misconceptions about its image which I think is why many people overlook it. When I drive around and see the economic growth from Fortune 500 companies moving in, neighborhoods being revitalized, new home construction being built, etc, I can see the potential there. I use to live in Atlanta and I like anywhere around the metro area inside I-285 and 10-15 miles outside of the perimeter. Atlanta is an another great affordable city for young couples that like the tall trees and greenery of the country and the skyline of a city. There has been tremendous growth there over the last decade and it is a great place for picking up rentals. ( -How do I find a great investment area for rentals? )I personally drive around neighborhoods and watch for any new home construction areas, houses being renovated or increased neighborhood revitalization activity, access to major highways, transportation and airports. I also look to see if there is a Wholefoods, LA Fitness, Publix or Starbucks in the neighborhood. They usually will put their stores in areas they know will perform well based on their demographic research. People like to be close to these things and limit driving. So access and convenience to shopping areas, highways, the gym are usually high on a residents list. I also will get out of my car and chat people up in the neighborhoods I'm researching. Find out if they like the area, is it safe, would they continue to live there or somewhere else, etc. - What are the criteria for evaluating a rental property location? (jobs, population, crime?)I know there is a general answer for this but I think it also depends on the specific area you are looking to invest in. With that said, I would suggest speaking with a real estate professional or someone that can give you more detailed info on the unemployment rate, crime, and population of the area you want to invest in. When I research neighborhoods for investors or myself I get this information from a database and it will give me updated and current data that I will use to evaluate an area.Hopefully this helps. Much success to you and your partner on your endeavors!

Brandon Battle · Answer

Indianapolis,Cleveland,Toledo,Memphis,and Kansas City are good for small multi properties in growing rental communities.

Jack Inman · Answer

@Veronica Zayas a good way to find good deals on properties is to contact real estate agents in the area where you are considering buying. I have used agents to find properties for me in the past; sometimes wholesalers are a good source but you should try to negotiate the price down a lot when using them. I think Memphis is a great market and the city is certainly on the upswing. Good Luck!

Mike D'Arrigo · Answer

@Veronica Zayas You're right about the high taxes ad homeowners insurance in FL. TX has the same problem and it's a cash flow killer. Start by defining and quantifying your objective. What is your goal and what do you want to achieve? If your objective is cash flow, the most important economic and demographic factors to consider are 1. Population growth, 2. Job growth and 3. Incomes. The U.S. Census Bureau and Dept of Labor Statistics are the best sources of info. The next thing to look at are price rent ratios of the market, and as you've already done, the operating expenses like taxes and insurance. If your objective is cash flow ROI personally I think that Kansas City and Indianapolis are the two best markets in the country right now. Both have very affordable prices and strong rents with good economic and demographic fundamentals. We sell turn key properties in both markets and know them well. I'd be happy to share my insight and experience if you'd like

Jason Hawk · Answer

Kansas City is a great market for buy and hold! With great returns. Feel free to give me a shout!!! Love to help.

Jabbar Thomas · Answer

@Veronica Zayas The journey of a thousand miles, starts with the first step. That is what you are doing, taking the initiative to look and begin. Having invested personally and working daily in this market; Tampa has a lot of potential and an untapped area for investors. I have a lot of double digit returns on the properties that have come across my desk. If you have any questions on this particular market; feel free to reach out. Much success to your investing endeavors.

Christian Salazar · Answer

Agree about KC! Find a partner on the ground!

Donavon Davies · Answer

Hi @Veronica Zayas! Great listing of what you are looking for. I would suggest to maybe start with looking at those criteria and LOCKING 1 in at a time. One that stuck out to me was that you are hiring management, maybe try looking into finding a management company and running your other criteria past the for additional input. Also consider are you going to put the entire 70K on one property or multiple, that may help narrow you search as to how much you can purchase, which would also narrow the geographical criteria.

Bob Razler · Answer

Hello @Veronica Zayas . Congrats on your decision. As said above, it's a rough market here but there are deals. However, there are also great markets across the country where you may find better value (or at least more opportunities per day).I highly recommend attending some of the local REI Meetings. You will meet lots of great people and get great advice.Bob