Are there areas that offer the best price-to-rent ratios?

[Marc Roberson]

Hello, 

Am looking to purchase a four unit but where I live those are going for $700k + and it is out of my price range, nor would it make financial sense because it wouldnt cashflow at all. That said, where Im originally from, four plexes are much cheaper and cashflow much better, but I would like to continue to head West, not back East. Anyone have any ideas for finding specific areas where the price-to-rent ratio tend to be better for cashflow? Is it generally the midwest? Best deal ive found are about 125:1 out West whereas in the midwest, Im seeing 95:1 and better. I am somewhat mobile and am considering relocating. Tia.

[Arn Cenedella]

@Marc Roberson

While rent to price ratio is a useful metric, I’m not certain it should be the primary criteria.

In my experience, higher rent to price ratios are found in “slower” less dynamic markets - higher rent to price ratios are found in lower quality properties with financially weaker tenants which generally increases vacancy & credit losses and higher repair and maintenance expenses. So often numbers that look good on paper are not met in real life.

I would suggest you consider your financial goals and overall financial situation.

Should growth of your capital and equity be the primary focus at this time?

Will the cash flow generated from a fourplex have a major impact on your overall income?

Just asking the questions…….