Cities with high ROI and low vacancy rates

[Ashley Willis]

I am a new investor looking for the perfect investment opportunity. I am looking for a property for around 50k. In which cities can I find the best ROI with low vacancy rates. I am looking into Cleveland OH, Waterbury CT, Memphis TN, St. Louis and Houston. Are any of you investing in these cities? What's your experience with ROI and vacancy rates? Thanks for your feedback!

[James Wise]

Originally posted by @Ashley Willis:

I am a new investor looking for the perfect investment opportunity. I am looking for a property for around 50k. In which cities can I find the best ROI with low vacancy rates. I am looking into Cleveland OH, Waterbury CT, Memphis TN, St. Louis and Houston. Are any of you investing in these cities? What's your experience with ROI and vacancy rates? Thanks for your feedback!

 You can get something in the $50k range in a C-Class neighborhood in the Cleveland market. To understand what I mean when I say C-Class neighborhood take a look at The Ultimate Guide to Grading Cleveland Neighborhoods. Outside of Cleveland you should be able to obtain those numbers in other similar markets such as

• Dayton, Ohio
• Toledo, Ohio
• Youngstown, Ohio
• Cincinnati, Ohio
• Memphis, Tennessee
• Birmingham, Alabama
• Kansas City, Missouri
• Saint Louis, Missouri
• Indianapolis, Indiana
• Detroit, Michigan
• Erie, Pennsylvania
• Louisville, Kentucky
• Milwaukee, Wisconsin
• Jackson, Mississippi

Each of these markets is popular with investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.