best cities now for multi-family investment

Multi-Family and Apartment Investing
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best cities now for multi-family investment

Mike Xiao
San Diego, CA · Member since 2016 · 17 posts · 8 votes

I currently have a home in Tooele, UT.  It's paid off, but I'm wanting to sell it, and take that money to use towards the down payment of a multi-family property. After everything, I think I might have $150K-$200K to put down. 

I live in San Diego, and the market here is just sky high. 

I'd like to know which cities in the US are good investment options now, and why.

Preferably an area where the cost for permits to build new buildings is high.....as to keep away new developers from diluting the market.

Thanks!

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Account Closed
Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
10y
Originally posted by @Account Closed:

Try Some markets in Texas, in older neighberhood or college towns Ohio or Indiana, Might work

 How would you suggest a CA investor deal with the high real estate taxes in TX while still paying the high income taxes in CA on those properties?

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  • Account Closed
    Real Estate Investor · Rancho Santa Fe , CA · Member since 2016 · 323 posts · 107 votes
    10y
    Try Some markets in Texas, in older neighberhood or college towns Ohio or Indiana, Might work
    0Reply
  • Tyion Bridgeman
    Real Estate Agent · Atlanta, GA · Member since 2014 · 135 posts · 40 votes
    10y
    College towns are always a good bet. A good place near campus 100% occupancy.
    1Reply
  • Mike Xiao
    OP
    San Diego, CA · Member since 2016 · 17 posts · 8 votes
    10y

    Thanks all

    1Reply
  • Mike Xiao
    OP
    San Diego, CA · Member since 2016 · 17 posts · 8 votes
    10y

    Does anyone have some good recommendations for Utah and Texas?
    For Utah, I was looking into Provo, since BYU is there.

    For Texas, there are tons of colleges....but any town in particular stand out?

    1Reply
  • Jacob Cogswell
    Real Estate Agent · American Fork, UT · Member since 2016 · 46 posts · 17 votes
    10y
    Provo is a great rental market. There are two universities in the area. The demographic breakdown is that 60% of the population are renters there.
    0Reply
  • Ben Dao
    Rental Property Investor · Saint Louis, MO · Member since 2016 · 123 posts · 84 votes
    10y
    I live now in St Louis and it is a great cash flow market. I have a few multi- families here myself.
    0Reply
  • Mike Xiao
    OP
    San Diego, CA · Member since 2016 · 17 posts · 8 votes
    10y

    @Ben Dao, what's in St. Louis making it such a great rental market? Sorry, just not familiar with the area.

    @Jacob Cogswell, just doing some quick searching on loopnet, didn't appear to be any properties more than 4 units.  Is there a reason for that?  Any particular area in specific that you recommend in Provo?

    0Reply
  • Sam Levin
    Realtor · Provo, UT · Member since 2016 · 119 posts · 73 votes
    10y

    I sell specialize in new construction and pre-construction multi family buildings in Utah County. The cap rates range from 6.5% to 7.5%, depending on exactly where and how (pre-con or resale) you buy. These properties have management available through us at 7% of gross rents. The whole thing is 100% turn key. I have San Diego based clients that own fourplexes here and they absolutely love it. All they have to do is get their cash flow check in the mail each month.

    If anyone is interested please send me a connection request, or your email address, so I can send you all of the information on what's currently available.

    1Reply
  • Account Closed
    Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
    10y
    Originally posted by @Account Closed:

    Try Some markets in Texas, in older neighberhood or college towns Ohio or Indiana, Might work

     How would you suggest a CA investor deal with the high real estate taxes in TX while still paying the high income taxes in CA on those properties?

    3Reply
  • Linda LabbePro Member
    Investor · North Bay, Ontario · Member since 2015 · 709 posts · 262 votes
    10y

    I love Toledo in Ohio have had great success there

    1Reply
  • Rebecca G.
    Real Estate Agent · Dayton OH (dayton, oh) · Member since 2016 · 194 posts · 123 votes
    10y

    I have to agree with linda, toledo is a hot market right now! 

    1Reply
  • William Hochstedler
    Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
    10y

    @Mike Xiao

    What's your relationship to Utah?  There's plenty of good opportunities here.

    The fundamentals are very strong and there's a wide range of opportunity types along the Wasatch front.  @Sam Levin has a great product that's worth looking into.  Ogden is the municipal equivalent of the worst house in a good neighborhood.  Provo will always remain a great rental market, but is super competitive right now and may not have terrific returns.

    I always recommend people stick with what they know before venturing too far afield.

    1Reply
  • Ben Dao
    Rental Property Investor · Saint Louis, MO · Member since 2016 · 123 posts · 84 votes
    10y

    @Mike Xiao St Louis has high rents compared to home price. You can get rental property for under 100k and rent  for around the 2% rule. The job market here is strong with big companies such as Boeing, Budweiser, Scottrade, Edward Jones ,etc. . It is not a high appreciation market but for cash flow definitely one of the best markets in the US. Good Luck!

    0Reply
  • Jered Sturm
    Investor/Syndicator · Cincinnati, OH · Member since 2014 · 470 posts · 599 votes
    10y

    @Mike Xiao

    As our company is now expanding into a new market my business partner is constantly reviewing the multifamily outlook and what markets are strong and which are weak and why. 

    He sent me a link to some really easy to read, useful information the other day on specific markets for multifamily and data behind the projections. 

    You can find the report Here. It is well worth the read if you're researching markets for multifamily nationwide.

    This report is focused on growth potential. Picking a market depends on your goals. If you want cash flow you may look to the midwest or other strong cashflow areas.  if you want wealth preservation and potential appreciation than the strong markets of Orlando, Phoenix, Atlanta, Fort Lauderdale, or Vegas might fit your needs. 

    Best of luck on your venture. Let me know if I can be of help. 

    2Reply
  • Faun Perdue
    Investor · Columbus, OH · Member since 2014 · 37 posts · 12 votes
    10y

    Columbus, OH is a good market for multi family as well.

    0Reply
  • Account Closed
    Investor · Orlando, FL · Member since 2016 · 1k+ posts · 780 votes
    10y

    I recently moved to Orlando FL and the market is really great. I am wholesaling lots of properties all over Florida including small MF. Look into Florida. 

    0Reply
  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    10y
    Originally posted by @Linda Labbe:

    I love Toledo in Ohio have had great success there

    Hi Linda,

    Do you own SFH or Multifamily in Toledo?

    Thanks

    Podcast Guest on Show #89
    Oz Realty4.5367 Reviews
    WebsiteView Page
    0Reply
  • Linda LabbePro Member
    Investor · North Bay, Ontario · Member since 2015 · 709 posts · 262 votes
    10y

    I do both

    1Reply
  • Adam Adams
    Podcaster & Multi-Family Apartment Investor · Denver, CO · Member since 2016 · 273 posts · 138 votes
    10y
    Originally posted by @Mike Xiao:

    I currently have a home in Tooele, UT.  It's paid off, but I'm wanting to sell it, and take that money to use towards the down payment of a multi-family property. After everything, I think I might have $150K-$200K to put down. 

    I live in San Diego, and the market here is just sky high. 

    I'd like to know which cities in the US are good investment options now, and why.

    Preferably an area where the cost for permits to build new buildings is high.....as to keep away new developers from diluting the market.

    Thanks!

     Tooele eh!? I used to live in Salt Lake, I had a Cabin Lot just south Tooele and a multi unit investment property In Orem (between UVU and BYU). Small world!

    Good Places to invest: I currently own in ...CO, FL, and OH...

    Utah is amazing! it is unique because it isn't nearly as volatile as other markets. it is a slow and steady increase and doesn't get hit hard like 90% of the markets out there. There isn't a ton of competition and the cap rates work (7%-10%)

    Ohio is great, tons of competition, high cap rates (10%-30%), wholesaling is easy because there is a lot of buyers interested. They got hit really hard when steel dropped in value and they will probably take several years to recover in price so holding now is not only good on rents but I feel your value will have a difficult time going down much further.

    Colorado is getting close to a bubble pop, so I would be careful to buy and hold without a lot of equity but flips are good right now and will be for another 2 years or so as long as you get the equity.

    South Florida is PERFECT RIGHT NOW. Increasing in value Quickly, TONS of buyers, Easy to get rid of a deal. 15,000 people moving in each month. Lots of Foreclosures, Lots of Vacant Homes, Lots of demand, I feel they will be increasing in values for the next 4 years. Decent cap rates (4%-25%)

    Indiana, Illinois, Tennessee, Georgia, are great Many similarities to Ohio (and Florida), I feel they are hybrids. they got hit hard, they have good cap rates (9%-20%), they hit bottom and will take a while to recover. lots of exit strategies (rent, lease opt, sub to, flip, etc).

    I could go more into detail on any of these if you'd like?

    I really hope some of that was helpful. Good Luck

    Adam Adams

    1Reply
  • Mike Xiao
    OP
    San Diego, CA · Member since 2016 · 17 posts · 8 votes
    10y

    @Linda Labbe what is making Toledo such a great area for MF?  Looks like some decent sized employers over there.  Some medium sized colleges as well? I assume homes don't appreciate much there, but you get good cash flow on rent?   Any area in specific in Toledo you recommend?

    @Ben Dao, in terms of St. Louis, is there a specific area you recommend for some great deals?

    @Jered Sturm, Good info, i'll take a look at your report

    0Reply
  • Mike Xiao
    OP
    San Diego, CA · Member since 2016 · 17 posts · 8 votes
    10y

    @Adam Adams, I'd like to hear more on south Florida options

    0Reply
  • Darius Hollis
    Atlanta, GA · Member since 2016 · 30 posts · 21 votes
    10y

    @Mike Xiao @Adam Adams South Florida is absolutely on fire right now. I was acquainted with a few investors in the area that are making great returns consistently in smaller less developed parts, such as Homestead; however be weary of parts Miami as its heading towards becoming a crowded rental market, especially in the Downtown / Brickell areas and the bubble will burst faster than most investors expect. At the same time, there are some good opportunities in Miami as well, it's always about proper due diligence.

    I would also recommend looking into Atlanta and surrounding areas in Georgia. I am an agent here working with all types of investors. The market is growing at an unprecedented rate as several infrastructure, commercial and luxury residential developments are underway to accommodate the cities increasing presence as an international business hub. If anyone is interested to know more, don't hesitate to shoot me a colleague request and connect with me.

    0Reply
  • Mike Palmer
    UT · Member since 2013 · 164 posts · 55 votes
    10y
    Originally posted by @Adam Adams:

    Utah is amazing! it is unique because it isn't nearly as volatile as other markets. it is a slow and steady increase and doesn't get hit hard like 90% of the markets out there. There isn't a ton of competition and the cap rates work (7%-10%)


    Perhaps you have not been here recently or are not as familiar with how the market has been (or you are talking about Ogden, Logan, or smaller places outside of the SL/UT county metro area)--there is a TON of competition around here, and it is very difficult to find anything with those cap rates that isn't fairly run down...

    0Reply
  • Account Closed
    Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
    10y
    Originally posted by @Adam Adams:
    Originally posted by @Mike Xiao:

    I currently have a home in Tooele, UT.  It's paid off, but I'm wanting to sell it, and take that money to use towards the down payment of a multi-family property. After everything, I think I might have $150K-$200K to put down. 

    I live in San Diego, and the market here is just sky high. 

    I'd like to know which cities in the US are good investment options now, and why.

    Preferably an area where the cost for permits to build new buildings is high.....as to keep away new developers from diluting the market.

    Thanks!

    Ohio is great, tons of competition, high cap rates (10%-30%), 

    Adam Adams

    High cap rates means there is little competition.  If there were tons of competition the cap rates would be low.  30% cap rate pretty much means NO ONE wanted it. 

    2Reply
  • Sam Newell
    Real Estate Agent · Lehi, UT · Member since 2016 · 136 posts · 91 votes
    10y

    I just bought 3 long term investment properties in Lehi Utah in the last 1.5 years, the Silicone Slopes are bringing in jobs and an upward trending economy with high job growth an a housing shortage.

    If you're looking for steady rents in a great area with large equity gain potential then I'd look close to Lehi.

    http://www.fig.us/single-post/2016/07/14/As-a-rival-of-Silicon-Valley-Utah-has-become-known-as-Silicon-Slopes

    1Reply
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