Denver, CO · Member since 2011 · 13 posts · 0 votes
I live in the Denver Metro area and just got my first rental property. I am looking to acquire more, but with my price range and the Denver market it is hard to find deals that work right now. I am exploring the options of buying outside of Colorado and specifically in the midwest. I have family in Iowa, so I am somewhat familiar with that area. Overall I am having a hard time deciding where to start looking. Any feedback on areas to start looking at would be much appreciated. I would lean towards something that is rent ready, but not afraid of a little sweat equity. I am using a property management company on my first property and would probably look in to doing the same especially with it being in a different state. Thank you
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
8y
@Nicholas Denning If I were in your shoes (and you're committed to out-of-state investing) I'd start looking in Iowa. I don't know the fundamentals of the city, property tax rates, etc. but at least with family there someone can tell you "you don't want to go west of _____ St. after 10:00 p.m." Just crossing off deals that look good on paper because of some local knowledge will be a huge help to you. And if you've visited the family back there over the years you might have a good sense of where new developments have gone in, major employers, what areas have gotten worse, etc. Again, some of this isn't about trying to define the "path of progress" as much as it is to scratch off the "path of implosion" areas. The reason I would start there is because most people in areas like Denver (or me in San Diego) are looking outside of the state because we want cash-flow. The best pro-forma, on paper, spreadsheet numbers tend to skew us non-locals in the directions of really bad areas. Not to mention it's no the worst thing in the world if Uncle Eddie can drive by the property every once in a while and make sure there isn't a gaping hole in the roof.
You can, of course, repeat this process with any of the popular geographies: Cleveland, Akron, Memphis, etc. but you're not going to have someone local there (with no commission to be earned) to tell you a good vs. bad area.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
8y
@Nicholas Denning If I were in your shoes (and you're committed to out-of-state investing) I'd start looking in Iowa. I don't know the fundamentals of the city, property tax rates, etc. but at least with family there someone can tell you "you don't want to go west of _____ St. after 10:00 p.m." Just crossing off deals that look good on paper because of some local knowledge will be a huge help to you. And if you've visited the family back there over the years you might have a good sense of where new developments have gone in, major employers, what areas have gotten worse, etc. Again, some of this isn't about trying to define the "path of progress" as much as it is to scratch off the "path of implosion" areas. The reason I would start there is because most people in areas like Denver (or me in San Diego) are looking outside of the state because we want cash-flow. The best pro-forma, on paper, spreadsheet numbers tend to skew us non-locals in the directions of really bad areas. Not to mention it's no the worst thing in the world if Uncle Eddie can drive by the property every once in a while and make sure there isn't a gaping hole in the roof.
You can, of course, repeat this process with any of the popular geographies: Cleveland, Akron, Memphis, etc. but you're not going to have someone local there (with no commission to be earned) to tell you a good vs. bad area.
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
8y
I agree with @Andrew Johnson but will add one item to his good list of reasons to invest in Iowa near your family.
When you go to your OOS investment areas to build team, find properties, deal with any unexpected issues, etc. you will get to visit family. Most Midwest cities only have a few places worth seeing (they are not high tourist locations). It is nice to have family to visit and maybe they can assist with some of the minor issues/problems that could pop up.
I live in the Denver Metro area and just got my first rental property. I am looking to acquire more, but with my price range and the Denver market it is hard to find deals that work right now. I am exploring the options of buying outside of Colorado and specifically in the midwest. I have family in Iowa, so I am somewhat familiar with that area. Overall I am having a hard time deciding where to start looking. Any feedback on areas to start looking at would be much appreciated. I would lean towards something that is rent ready, but not afraid of a little sweat equity. I am using a property management company on my first property and would probably look in to doing the same especially with it being in a different state. Thank you
The Midwest is really great right now. Some of the cities (such as Cleveland) have been seeing a renaissance, but housing is still very affordable for an investor! Best of luck to you!
Denver, CO · Member since 2011 · 13 posts · 0 votes
8y
Thank you everyone for the great feedback. @Christopher Derr I have family in the Des Moines area and in northeastern Iowa. But I would probably be leaning more towards the Des Moines area since there is a stronger economy with bigger corporations in the area. I am looking at somewhere around $100k, single family, 3 bed 2 bath.
Investor · Des Moines, IA · Member since 2014 · 44 posts · 33 votes
8y
Hey @Nicholas Denning - been following this thread. Just as a heads up from an active Des Moines investor, $100k for 3BR/2BA is going to need quite a bit of work to get rent ready. You can get some near turn-keys in the 2BR/1BA and $105-125k range, but the market is pretty hot at the moment, by Des Moines standards. Most respectable 3BR/2BA are going to be in the $140k+ range. That said the rental market is strong, so I think you can spend a little more, get something nice, and find renters willing to pay a little more. Central Iowa economy is humming along pretty nicely.
Investor · Garner, IA · Member since 2013 · 70 posts · 36 votes
8y
Yeah my buddy is in Des Moines and its tough he paid 90k for a condo that rents for 1100 but he paid all cash to get in.
Our rental market in the more rural areas but still 30k people I can buy for 40-60k and rent $700-800 all day. My appreciation wont be Des Moines quality though.
Makr sure you know the areas well... you can find 2% but its usually not where I would go.