Recommendations for a Duplex under $200k

[Salman A. Rai]

Hello BP community. This is my first post on this platform and I can't be more excited having been recently introduced to this website. I recently immigrated to the US and currently living and working in San Diego, CA. Based on my research, I see a lot of potential in investing in multi-family homes primarily from a cash flow perspective. Given the extremely high property rates in San Diego, I am forced to look out of state to purchase my first rental property. My budget allows me to buy a property under $250k  (25% down payment and conventional mortgage for remaining 75%).  Can the awesome and experienced folks here recommend hot areas in the US that would allow me to invest in a duplex while staying in this budget range? 

P.S. I would prefer to buy a property with decent/ good condition ideally.

Thanks everyone and looking forward to staying in touch! 

[Account Closed]

@Salman A. Rai 

I like a portion of Indiana just bordering Chicago quite a bit for cash flow. A lot of big rental property investors much more intelligent than I right now are looking closely at the midwest and south for high yield properties in less volatile markets that probably won't crash as hard as major cities will in the event of a correction in nationwide property values.

I looked at @Tim Herman's list. Note that this is a realtor.com article and in its introduction establishes a context of hottest markets for retail real estate sales. The only city I would come close to considering is Grand Rapids (which is still a bit expensive for its rent/expense ratio).  Every other city on there has too low of a rent to value ratio to be considered "cash flow" markets. Miami and Boston are just ridiculous assertations- you may as well buy in San Diego. Note that PHX and LV were two of the most severely impacted cities in the 2008 crash. 

Careful with "hot" and "appreciating" markets. We're due for a correction- you want to be in a market that isn't so volatile when expecting potential depreciation in the future. You also want markets where tenants and rental dynamics can survive a recession.

The 1% rule is only a rule of thumb, and in most markets doesn't cash flow well enough either. I mocked up a 1% deal with some very reasonable expense numbers and you can see how good your cash flow is here. Let me know if you have any questions about that sheet :)

https://docs.google.com/spreadsheets/d/1MXdYGiA-qe...