Cannot decide where to buy, DFW, Indy, Atlanta or Charlotte?

[Nina M.]

Newbie here is trying to get started. Wasted the last a few years because my husband keeps saying the big crash is coming and refuses to even do some researches. I guess he's now tired of me nagging all the time. He agreed to give it a try, finally!

My goals are cash flow through buy-and-hold.

My situation:

• Long distance
• Plan to have a property manager

My preferences:

1. SFR only, no HOA
2. Can make money from day 1
3. Newer homes with decent schools
4. 1% rule
5. Traditional finance, 25% down. If the first one works fine, will buy the 2nd one.
6. Target purchase price is flexible, as long as it's a right deal

Looking to invest the first one in following places:

• DFW or Austin, TX
• Indianapolis, IN
• Charlotte, NC
• Atlanta, GA

Did some research, but hard to make a decision. How do you guys take your first step? throw a dart on the map? :)

[Joel Owens]

I do not work on residential but commercial. I have lived in GA all of my life. Texas is about the only state outpacing us for growth. We are slated to add about another 5.5 million people over the next 10 to 12 years to the state.

To give an idea the whole state of SC population is about 5 million for 2018 so we are dropping a whole other state's worth of population on our state from what is already here.

The 3 you mentioned are in warm belt states. Indy while initial cash flow may be higher there is also more maintenance with a cold belt state and long term rent growth and other metrics tend to not be as strong as warm belt states.

Most out of state investors fly in and look around about in a 1 hour direction from the airport at each state's main hub.

Austin is expensive to buy in right now for rentals. Both might meet the 1% you are looking at but purchase price might be way different.

Why not purchase a quad? You get long term finance and if one renter goes out you still could possibly have cash flow to pay the note.

Another option is to buy a house in stage zero of a new home development where homes are just going up. Say 200 homes are being built over 2 years time. You could buy stage zero say for 200's and by the time stage 4 the last few homes are being sold prices are now in 300's. You have instant equity gains that eclipse the cash flow potential and a brand new product with a warranty. The key is that the builder is a known brand and stable to finish out the development even if an economic slow down happens nationwide. If it is a small builder then you can be left with a fractured development if they do not finish.

SFR developments many do have HOA's. If anything they can help keep values of the properties up. Some HOA's can be way overboard but those are few and far between.

You might want to stay away from older houses and lower income tenants. People get sucked in by low price points because they think of buying for 70k and putting down 17,500 versus putting down 50,000 on a 200k property.

The 70k property the tenants do not pay and then the property gets trashed. It's older so needs constant work and problems.

The 200k property instead of the bad parts of Atlanta the quality areas you spend more but tend to get better rent growth over time and equity growth.