Crossroads: Stick with New England or Branch out to the Midwest

[Jahan Habib]

Please feel free to direct me to the correct sub-forum if this is not the correct one.

I have been steadily investing buy and holds in southern New England (MA, RI, CT) with some decent success. However, when I look at the Midwest (primarily Indianapolis, Canton-Akron, OH markets), I really like the price stability, cash flow, and the opportunity to purchase many high quality single and multi-families (Class A-B areas).

Some additional background, I truly enjoy my current (non-RE) day job, prepping for the CPA exams, so my time is limited. I went ahead and created a pros/cons list:

New England Pros:

• Close to home base (drive within 2 hours max) and comfort with the region (know the cities/towns)
• Good opportunity for price appreciation (not that I am looking for some huge increases)
• As a result of price appreciation, I am considering taking out a HELOC to do more deals.

New England Cons:

• High acquisition costs (purchase price/down payments/reserve requirements)
• Lower cap rates/slim cash flow
• Expensive repair costs

Midwest Pros:

• Great cash flow/cap rates
• Price stability (prices don’t increase or drop significantly)
• I can scale the portfolio and really achieve my goals rather quickly (more on that later)

Midwest Cons:

• Investing distance (I’ll need to get on a plane rather than jumping in a car and going to see the houses, whenever)
• Low familiarity with the region. I will need to make multiple trips to get comfortable (which is fine) however I would still not feel as comfortable as areas change, industries leave etc. With New England, I live/work here and can visit very frequently. Please keep in mind, I have been busy with the non-RE endeavors.

What pros/cons list would be complete without a goals discussion? My goal is to achieve $5,000/month in cash flow (post tax money in my pocket). Thankfully, I don’t need that kind of money live on, as I have my day job, however I would like to accelerate the payoff on that expanded RE portfolio with the mindset that all mortgage debt payoff will entail my retirement.

I would love to get your thoughts/critiques regarding my plan. In particular, if you have invested in the Midwest/outside of your home region – I was gearing up for it earlier this year however my partner ran into financial issues/got cold feet with respect to the Midwest.