Best Market for Long Distance Small Multi-family Rentals

[Nick Hulme]

My wife and I are renting out the basement of some close relatives in San Jose, CA. We're comfortable and are in no rush to leave. We both have good jobs in the south bay. I also grew up in this area and most of my family still lives here, so we would like to stay in or around San Jose... We also want to start investing in real estate, and the bay area isn't exactly a friendly market for people in their mid-twenties just getting started.

We've done some research, and the best strategy seems to be long distance long term rental properties. I like the idea of small multi-family and would like to use the BRRRR method if possible (might be difficult from another state though).

That said, what are the best markets to consider? We're looking for the best combination of job growth, population growth, vacancy rates, equity forecasts, rent prices, multi-family home prices, weather, and tax burdens. Please let me know what other factors I ought to take into account!

Some spots I've been considering so far:

Florida - Jacksonville / Orlando

Tennessee - Nashville

Texas - Austin / Dallas / San Antonio

Alabama - Birmingham?

Missouri - Kansas City / St. Louis

North Carolina - Raleigh / Charlotte

Utah - Salt Lake City / Provo

Arizona - Phoenix

[Chris Martin]

@Nick Hulme another factor to consider is the size of the market opportunity. For the Raleigh area, consider that there are very few 2-4 family properties in the Total Available Market. See also this BP post I wrote four years ago: Total Available Market - 2, 3, and 4 units. Unfortunately, BP removed all the graphs. 

With few properties and a lot of potential buyers, unfortunately there are generally not many good opportunities in the Raleigh 2-4 family market.