Best states to find a cheaper cash flowing fourplex?

Question

Looking for my first investment. I want to buy a fourplex with a little value add that cash flows at least $150 a door. I haven’t nailed down an area yet. I have just been using realtor.com and searching multi family with 5+ beds and at least 3000sqft and going over the whole country a little at a time. When a property has rent numbers in the description I use the 50% rule to do a quick analysis and save what fits.

Does anyone have a better way or any suggestions that could help my search? Thank you in advance.

Does anyone have a better way or any suggestions that could help my search?  Thank you in advance.

Account Closed · Answer

@Rodger Fore "where do we find more cheap fourplexes with high cash flow" is literally the question my business partner and I spend half of our work hours seeking the answer to.

We like select secondary markets, usually half and hour to 2 hours outside of major cities, in the following states:

IndianaWisconsinKentuckyTennesseeAlabamaArkansasNorth Carolina

We find that it is not difficult to find 10% cap rates at market value in the right regions of these states (not all though), using pro formas with actual expense ratios +15% reserves for vacancy and maintenance. We are able to fill units consistently in less than 30 days and find tenants that often stay for a second and third lease term.

We currently avoid:

- Major hubs with out of state investor saturation. we tend to kill good deals when too many of us get to the party.- States with tenant friendly laws and/or dubious court process- Markets with an oversupply of rentals in working class areas and thus low rental demand and high turn.- Markets with inherently high taxes and owner paid utilities. Higher rents rarely offset them enough.

Zeke Liston · Answer

I second @Abe McLaurin, Columbus, OH would be a good market to consider @Rodger Fore!

Abe McLaurin · Answer

I agree that the Midwest is where you should look. Im based in Columbus OH and find awesome cash flowing opportunities for duplex's and 4+ units.

Chris Gawlik · Answer

I have also been looking for areas that cash flow well. I have been looking towards Jacksonville FL. I wanted to find an area that may also appreciate well in the next 5-10 years. After watching some Bigger Pockets vids, one of the guests found a cool web site / tool that would show you the rank of schools to help you find nice areas / neighborhoods to invest. Its called school digger. Not sure if they will post the link but its SchoolDigger.com.

On a side not I wonder what covid will be doing to values over the next year. Im sure there are 5000 posts about this so I will go and have a look around and see what the pros are saying about it. Im thinking theres prob people on both sides of the fence. Those who are waiting on the side lines and those who will just plow on through the ups and downs of the market. It has to take some toll on value though right. Even if its only a small one.

Gary Carver · Answer

@Rodger Fore. Michigan . Lots of inventory . Great price points

Rodger Fore · Answer

Thank you for all your posts.  With my scrolling the US map on my Realtor.com app the midwest is where I have been seeing an abundant of properties that meet initial criteria to do some quick analysis on it.  I keep seeing the same cities pop up Cleveland, Akron, Detroit, Flint, St. Louis, Memphis.  Using the data from BP on cash flow vs appreciation markets. I was looking into Buffalo since it had both.  The cash flow in Flint and Detroit are tempting but I don’t know if I want to jump into those markets that were hit so hard with appreciation. I have watched the Hilton-Wise TV and love what y’all do.I was not looking into a rehab, just a little cosmetic value add turnkey is probably what I would feel comfortable with for my first property.  I was looking to purchase with conventional financing under $120k.I know I said I am looking for a 4 plex but have viewed some duplexes and triplexes that’s meet $200 per door with the fifty percent rule.  So my question is do 2 duplex =1 fourplex if they would cash flow the same or no because it takes up 2 mortgages rather than 1?  I had the idea to take turns putting mortgages in my wife’s name, then the next one in my name to double the amount we could get.  I’m pretty sure we can qualify on our own with the reserves and credit scores we have.  Thank you for all of y’alls time.

Erin Elam · Answer

To those suggesting Cleveland, aren't there POS requirements in some of the cities that make it very expensive for an investor especially an OOS investor?

Caleb Brown · Answer

Midwest would be best. KC is a pretty stable market. Happy to help!

Remington Lyman · Answer

That is a broad search. I would pick a market first

James Wise · Answer

Midwest is where you'll want to look....Decent chunk of this stuff in Cleveland, although the 4 unit apartment building isn't as common as a similarly priced per unit 2 unit building will be.