BEST market to build buy and hold portfolio?!

[Bill Goodland]

I'm sure this question has been asked many times on the forums, but I'm curious what market people think is the best market to build and buy and hold portfolio in?

As a bit of background on myself, I am from long island, NY and currently in physician assistant school outside of Philadelphia. Once I am out of school, I can go and get a job just about anywhere due to the increasing demand for PAs(especially in smaller markets and rural areas) and am single so nothing is really holding me back from doing so. I plan to house hack and continue living frugally as I save to allow me to aggressively build a portfolio. I love the idea of the BRRRR strategy and plan to incorporate it as much as I can with finding properties in need of rehab. With that being said, ideally I would want to pick a market with strong returns, multi-family inventory, and solid demographics. I wouldn't be opposed to staying in the philly area, however the returns and inventory of Ohio markets such as Cleveland, Cincinnati, and Dayton intrigue me. I love the demographics of Atlanta and some Texas markets, but wonder if they will soon be too hot to find the kinds of returns I would find in mid-west cities. I know eventually I may not want to live in one of these markets long term, but spending 5 years or so developing relationships and boots on the ground before going to a coast seems like my plan as of right now.

So if you love the market you currently invest in, or would pick a different one if you could do it all over, I would love to hear it and why. While I understand I should focus on my primary career first(which I can literally do anywhere in the US), which I have every plan of doing, any other thoughts on strategy or mindset of building a buy and hold portfolio to achieve financial freedom would also be greatly appreciated.

[Mike H.]

Its funny to hear people say that they think texas has high property taxes. What exactly do you consider high? Aren't texas property taxes like 2 or 2.5%? Try coming to Illinois and talking to us about property taxes. :-)

I'm in some towns where the taxes are 4 and even 5%.  And I'm not talking about their crazy 1/3 multiplier silliness. The rates are technically 12 to 14.5% in some of my towns (crete, monee, beecher, etc).

As far as buy and hold. I would like for any area where the state economy is good. Where price to rent ratios are solid. Where school districts and the area itself is good. And then try to find something with enough of a population base so you're farm area will offer enough of an opportunity for growth. I'd also look at landlord laws. 

Those are the things that are going to determine how much success you have.

Personally, I would stay out of areas like memphis that have such a high renter population. Might be ok for cash flow, but I don't see how appreciation can really hit there.  And stay away from the 30k houses. 

I would want to be in an area that your portfolio can return you money in all the ways real estate makes you money. Equity capture on the purchase. Rental profits. Principal paydown (there is none on 30k houses), and appreciation.

By scaling up and being in areas that will produce returns from all four ways, you should be able to build some truly generational wealth.

btw: I'm a big fan of the smaller towns myself. You have to spread yourself out to a handful of ones. But if you can get them in a nice cluster and find them where the price/rent ratios are still good, I think you'll have a better chance of scaling.  Trying to scale in some of the more populated areas can be tough because you're competing against some really deep pockets these days.  But those deep pockets don't tend to venture into mayberry towns because they can't scale big enough fast enough there.  But if you can fit say 7 or 8 small towns within a 30 min radius, you'll be surprised how well you can scale as an individual. :-)

The areas I would pick based on what I've read/listened to: Indiana (low taxes, good landlord laws, state economy strong), Cinci (price to rent ratios seem strong, landlord laws), Texas (landlord laws, state economy, growth).