Where to invest for decent cash flow and appreciation rates?

Vik G.

OP

Member since 2022 · 4 posts · 9 votes

3y

Sorry that's not true statement @Chris Seveney. I live in SF bay area, and it is impossible completely to find a 5% CoC :D in a A/B neighborhoods. I will be lucky to even find positive cash flow in the first place in a D- neighborhood.

2 Reply

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

3y

Seems like you want it all -- no market gives you all that. You'll need to compromise a bit.

2 Reply

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

3y

Quote from @Vik G.:

Sorry that's not true statement @Chris Seveney. I live in SF bay area, and it is impossible completely to find a 5% CoC :D in a A/B neighborhoods. I will be lucky to even find positive cash flow in the first place in a D- neighborhood.

I bet renting some tents in the street can get you those numbers.

7e investments53 Reviews

Becca F.

Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes

3y

@Vik G.

I’m in the Bay Area and invest here and the Indianapolis metro area. In the current market you’re asking for a lot. I think you’ll need to compromise on some of these.

1) I won't attempt to calculate my CoC return on my Class A Indiana SFH. I've refinanced it a few times, the last time with a cash out refi to help pay for renovations to my Bay Area property. I've owned it for 10 years. It has more than doubled in value. My initial cash flow was about $400 a month (rent - mortgage PITI/property management fee/small monthly HOA fee). It's now $162. I'm raising the rent on current tenants. My property taxes have gone up significantly since home values have soared in the past 3 years. The cash out refi also resulted in slightly higher loan payments. I didn't factor in capital expenses since I've had little vacancy (3 weeks) but did replace the HVAC and water heater 5 years ago.

I recently bought a Class C property (different county) potentially moving up to B, turnkey, projected cash flow $176. Tenant just moved in. I used a Realtor who works mostly with investors.

Here is some information on Indianapolis:

https://www.threaltyinc.com/wh...

2) If you're looking in $150k - $300k price range Indy would meet that criteria. Very few duplexes. My Class C SFH was $130,000. If you go to $250k to $300k it's Class A to B but you'll likely be in negative cash flow with a move in ready home (not upgraded kitchen/bath but in good condition). Ex: $300,000 suburban house will rent in $1650 - 1700 range. Appreciation is great in the suburbs and the "hot, trendy" areas of the city (Broad Ripple, Fountain Square being the most well known).

3) I just flew to Indy and drove around the areas. Some of its street by street. Might be 50/50 on one block. Revitalized areas with homes with ARV of $350,000 to over $500,000 You'll have rough looking homes next to these nice looking ones. I'm considering doing a fix and flip in these areas instead of buying another long term rental.

4) Sorry you’re not going to get Class A with no renovation. Don’t discount Class C. You can find homes that need a lot of work for $80,000 to $120,000. Or turnkey around $135,000 to $150,000. These areas are developing - they might look a little rough but those homes will go up in value as people with higher incomes move in.

My Bay Area investor friends are flipping in California now. Flipping in Indy is less risky to me - the mortgage payment is reasonable if I had to hold it as a rental. Feel free to PM me for details.

Peter Dorinsky

Real Estate Agent · Columbus, OH · Member since 2020 · 149 posts · 193 votes

3y

Checkout Cleveland, Ohio

Mason Liu

Financial Advisor · Boynton Beach, FL · Member since 2019 · 127 posts · 80 votes

3y

My advice would be to first start off analyzing deals in areas you have a comparative advantage in. Whether it be relationships, understanding of the market, etc, if you have a comparative advantage in finding a deal in specific market, your odds of being able to find and execute on a deal to preserve equity is greater. If you don't have a comparative advantage in any market, tyr and determine what markets you would be able to develop that advantage in.

From then on, filter out which of those areas have properties where the numbers make sense. For example, if the area's price to rent ratio is way too high, you probably won't be able to get much of a COC return there unless you buy at a very large discount.

But as a generalized answer, you could probably look towards some of the midwest markets to find what you are looking for.

Bob S.

Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes

3y

Cleveland of course. Over the last 10 years I have seen dozens and dozens of investors from around the world get 20% net caps with more than double triple or more in value. Still are able to get 10% net caps. All my personals are 20% net caps all 100% hands off,

All the best

https://www.dispatch.com/story/business/2022/01/21/intel-ohio-building-computer-chip-factories-licking-county-jersey-township/9173472002/

Austin Steed

Real Estate Agent · Columbus, OH · Member since 2016 · 593 posts · 664 votes

3y

Columbus OH is a great location and I've seen a ton of out of state investors buy here.

In my personal portfolio I've bought in C- locations and yes they are the 1% rule but by the time you have evictions, turns, and damage the numbers don't shake out.

My sweet spot are the C+ / B- areas. Hard to find anything in the A locations with a decent cap rate.

2 Reply

Joshua JanusBusiness Member

Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes

3y

Quote from @Vik G.:

Hello all - I have invested in Memphis, TN and Jacksonville, FL markets. But, looking to diversify into other markets in the country. Please help suggest markets (as well as will appreciate any investor friendly realtor + property management names - I realize there is the 'find an agent' feature on BP, but that doesn't seem to be comprehensive). What I am looking for:

1. Cash on Cash and appreciation expectations: I am primarily going to optimize for Cash on Cash (CoC) metric that ensures I have a positive cash flowing rental property i.e. after all expenses including the mortgage debt service (with say 20-25% downpayment with say 6-7% interest rates). I will be looking for a 5%+ CoC and decent history of atleast 3-5% appreciation. Not looking for the next Austin, but just decent market which will weather the recession if there is any. Don't want to invest in tier 3 (unknown/unheard/middle of nowhere) cities.

2. Open to SFH/Duplex/Triplex/Quadplex: I have invested in SFHs until now in other markets, but very much open to investing into a 2/3/4 plex as well. Cost range can be $150K-$300K for SFHs. Realize that 2/3/4 plex will be higher in price.

3. Neighborhood: I am open to A+/A-/B+/B- neighborhoods. Will want to avoid C category neighborhoods.

5. Rehabs: I like to minimize rehabs and prefer to have homes that are move-in ready. Don't mind short/small rehabs

Columbus, Ohio is a great market to invest in. The population has been growing here year over year over the last decade, it is home to The Ohio State University which has over 50,000 students that live here along with those that visit, and it also holds a diverse range of young professionals and traveling nurses to fill the demand of the multiple business corporations and hospitals stationed here. The appreciation rate in Columbus has been 8% higher than the national average over the last year. Tech companies are continuously moving here and establishing a footprint in Columbus as well. Intel is a great example, who is building the largest chip manufacturing plant in the US right here, and it will be a $20 billion dollar investment that brings a few new thousand jobs.

Another example of economic growth is the upcoming Ohio State University Wexner Medical Center Inpatient Hospital which is a 1.9million square foot hospital that will bring over 800 new beds and a thousand new jobs.

https://abc6onyourside.com/news/local/new-osu-hospital-expected-to-transform-health-care

Here are a few more recent investments

https://www.10tv.com/article/money/business/hydrogen-power-company-hyperion-bringing-700-jobs-to-columbus/530-25907aab-5517-4661-a9f3-d2ed2d5be6b0

https://news.wosu.org/news/2022-02-08/rumpke-to-build-50-million-recycling-facility-in-columbus

Check out The Complete Guide to the Columbus, Ohio Real Estate Market which goes through the Columbus, Ohio market in depth and will give you a better scope of where the highest levels of growth are taking place and where to look to invest.

[email protected]614-502-5316 Podcast Guest on Show From DoorDasher to $1.5 MILLION in Real Estate (All at 22 Years Old!)

[email protected]614-300-7535

Jimmy LieuBusiness Member

Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes

3y

Quote from @Vik G.:

Hello all - I have invested in Memphis, TN and Jacksonville, FL markets. But, looking to diversify into other markets in the country. Please help suggest markets (as well as will appreciate any investor friendly realtor + property management names - I realize there is the 'find an agent' feature on BP, but that doesn't seem to be comprehensive). What I am looking for:

1. Cash on Cash and appreciation expectations: I am primarily going to optimize for Cash on Cash (CoC) metric that ensures I have a positive cash flowing rental property i.e. after all expenses including the mortgage debt service (with say 20-25% downpayment with say 6-7% interest rates). I will be looking for a 5%+ CoC and decent history of atleast 3-5% appreciation. Not looking for the next Austin, but just decent market which will weather the recession if there is any. Don't want to invest in tier 3 (unknown/unheard/middle of nowhere) cities.

2. Open to SFH/Duplex/Triplex/Quadplex: I have invested in SFHs until now in other markets, but very much open to investing into a 2/3/4 plex as well. Cost range can be $150K-$300K for SFHs. Realize that 2/3/4 plex will be higher in price.

3. Neighborhood: I am open to A+/A-/B+/B- neighborhoods. Will want to avoid C category neighborhoods.

5. Rehabs: I like to minimize rehabs and prefer to have homes that are move-in ready. Don't mind short/small rehabs

Hi Vik, I personally love Columbus Ohio and as someone who works with a lot of out of state investors - there's so many catalysts for why you should invest here. Specifically, there's job growth (Intel, Honda, Amazon, Nationwide, etc) and the population is growing (unlike Cleveland or Cincy). I really see Columbus Ohio as an extremely safe bet for the next 10-20 years. Plus, there's still so many positive cash flowing and 1% deals here in Columbus Ohio. Just this month, I’ve gotten under contract for my clients for multiple 20%+ cash on cash rental properties so there’s definitely tons of opportunity here. As a local investor and agent here in Columbus, let me know if you have any questions or want to connect.

Jimmy Lieu, Red 1 Realty4.9120 Reviews

Caleb Brown

Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes

3y

Happy to chat on Kansas City, it has a good mix on both

David Leggett

Real Estate Broker · Cleveland, OH · Member since 2018 · 227 posts · 133 votes

3y

Hey Vik! Don't listen to all the noise, you're a person you knows what they're looking for! As someone with boots on the ground in the Cleveland market, I'm seeing a lot of what you're looking for. This hasn't traditionally been a strong market for appreciation, but not for my clients who bought prior to 2019 where there properties are worth 20-30% more now. Appreciation can be hard to forecast, but there's still strong cash flow in this market for what you're looking for. My recommendation is to find an expert realtor / broker who specializes in investment real estate who can help you identify the best neighborhoods around Cleveland you're looking for.

Aj Parikh

Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes

3y

Hi Vik , I have found value investing in Cleveland, OH because it is home to Cleveland Clinic, lot of good neighborhoods, landlord friendly laws, stable appreciation and good cash flowing properties. There are also abundant opportunities for small multi family and SFH. I have been able to scale up to 12 doors in 2 years so definitely recommend this area. Feel free to reach out and we can discuss.

Gloria N GearBusiness Member

Realtor · Indianapolis IN · Member since 2018 · 464 posts · 339 votes

3y

Hi Vik G.

@becca F is my client -- she said is so well, I am not going to add to it. My team just spent 3 days with her exploring Indiananpolis. I would be happy to hop on a call with you to talk one on one about Indy with you. I will PM you my calendly link.

[email protected]859-443-4952

Sam McCormackBusiness Member

Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 833 votes

3y

Quote from @Vik G.:

Hello all - I have invested in Memphis, TN and Jacksonville, FL markets. But, looking to diversify into other markets in the country. Please help suggest markets (as well as will appreciate any investor friendly realtor + property management names - I realize there is the 'find an agent' feature on BP, but that doesn't seem to be comprehensive). What I am looking for:

1. Cash on Cash and appreciation expectations: I am primarily going to optimize for Cash on Cash (CoC) metric that ensures I have a positive cash flowing rental property i.e. after all expenses including the mortgage debt service (with say 20-25% downpayment with say 6-7% interest rates). I will be looking for a 5%+ CoC and decent history of atleast 3-5% appreciation. Not looking for the next Austin, but just decent market which will weather the recession if there is any. Don't want to invest in tier 3 (unknown/unheard/middle of nowhere) cities.

2. Open to SFH/Duplex/Triplex/Quadplex: I have invested in SFHs until now in other markets, but very much open to investing into a 2/3/4 plex as well. Cost range can be $150K-$300K for SFHs. Realize that 2/3/4 plex will be higher in price.

3. Neighborhood: I am open to A+/A-/B+/B- neighborhoods. Will want to avoid C category neighborhoods.

5. Rehabs: I like to minimize rehabs and prefer to have homes that are move-in ready. Don't mind short/small rehabs

Cincinnati. Generally known for a mix of the 2, what you are looking for. Specific parts of the city will sway one way or the other more, but areas have a mix of the 2 still. On and off market, which I have access to right now, a couple I can get to you asap. Let me know if Cincinnati sounds like something you would want to look into!

Sam McCormack Realtor

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Vik G.

OP

Member since 2022 · 4 posts · 9 votes

3y

Thanks all for the replies. Seems like Columbus, Cleveland, Indianapolis and Kansas City are the ones to focus on based on the responses here.

Account Closed

Columbus, OH · Member since 2023 · 427 posts · 254 votes

3y

Quote from @Vik G.:

Thanks all for the replies. Seems like Columbus, Cleveland, Indianapolis and Kansas City are the ones to focus on based on the responses here.

If you're looking for appreciation, and are opposed to going into C class neighborhoods, Columbus is probably a better option for you in Ohio than Cleveland. Stronger appreciation driven by a booming job market and growing population.

Bob S.

Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes

3y

Quote from @Vik G.:

Hello all - I have invested in Memphis, TN and Jacksonville, FL markets. But, looking to diversify into other markets in the country. Please help suggest markets (as well as will appreciate any investor friendly realtor + property management names - I realize there is the 'find an agent' feature on BP, but that doesn't seem to be comprehensive). What I am looking for:

1. Cash on Cash and appreciation expectations: I am primarily going to optimize for Cash on Cash (CoC) metric that ensures I have a positive cash flowing rental property i.e. after all expenses including the mortgage debt service (with say 20-25% downpayment with say 6-7% interest rates). I will be looking for a 5%+ CoC and decent history of atleast 3-5% appreciation. Not looking for the next Austin, but just decent market which will weather the recession if there is any. Don't want to invest in tier 3 (unknown/unheard/middle of nowhere) cities.

2. Open to SFH/Duplex/Triplex/Quadplex: I have invested in SFHs until now in other markets, but very much open to investing into a 2/3/4 plex as well. Cost range can be $150K-$300K for SFHs. Realize that 2/3/4 plex will be higher in price.

3. Neighborhood: I am open to A+/A-/B+/B- neighborhoods. Will want to avoid C category neighborhoods.

5. Rehabs: I like to minimize rehabs and prefer to have homes that are move-in ready. Don't mind short/small rehabs

Cleveland of course, You should have been there 5 or so years ago, pricing has tripled or more in most areas, but still able to get 10% net caps on cash purchases around 100k

All the best

Teesh L.

Member since 2023 · 25 posts · 14 votes

3y

Quote from @Vik G.:

Thanks all for the replies. Seems like Columbus, Cleveland, Indianapolis and Kansas City are the ones to focus on based on the responses here.

I wouldn't rule out the areas around Atlanta! The turnkey property management company i work with has shown me some SFH deals around Covington and Decatur that are move-in ready and <$220K. In B- and above neighbourhoods. I'm Canadian so heavily rely on this company to help me and my partner source and manage our portfolio.

Devon Shaw

Real Estate Agent · St. Louis, MO · Member since 2017 · 77 posts · 68 votes

3y

Hi Vik! I'm an investor focused agent in the Indianapolis market and my company also does full service property management.

I personally don't think CoC is the best metric to judge real estate if you're looking for long term wealth building strategy. You'll definitely miss out on good opportunities if that's a key driver. In my opinion you need to look at all the profit centers that real estate provides which goes beyond cash flow (Appreciation, principal paydown, tax benefits, inflation hedging, etc.)

Indianapolis is a fantastic market though. We have a very strong local economy and strong rental demand in most areas. You will also get solid appreciation in most neighborhoods around Central Indiana.

My investor clients have had great success in Anderson, IN the last few years and on paper the city is less than stellar, however, everything I've helped purchase there has performed pretty well. There is solid rental demand, good tenant quality, very affordable properties and appreciation to boot.

Definitely important to have experienced boots on the ground that has the real world insight into where to buy.

I would be happy to connect and be a resource if you have any further questions about Indy!

James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

3y

Quote from @Account Closed:

Quote from @Vik G.:

Thanks all for the replies. Seems like Columbus, Cleveland, Indianapolis and Kansas City are the ones to focus on based on the responses here.

If you're looking for appreciation, and are opposed to going into C class neighborhoods, Columbus is probably a better option for you in Ohio than Cleveland. Stronger appreciation driven by a booming job market and growing population.

Homeboy ain't lying.

[email protected]254-718-4249

Taylor DaschBusiness Member

Real Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votes

3y

I like Temple TX because it does provide strong cash flow but has appreciated more than the surrounding areas. Central TX as a whole has pretty good cash flow in my opinion - however I havent compared it to other markets to be honest - I think if you get really familiar with a market, I would just invest in that one.

Taylor Dasch | EG Realty561 Reviews

Ricardo Hidalgo

Real Estate Agent · Member since 2019 · 569 posts · 257 votes

3y

Quote from @Vik G.:

Hello all - I have invested in Memphis, TN and Jacksonville, FL markets. But, looking to diversify into other markets in the country. Please help suggest markets (as well as will appreciate any investor friendly realtor + property management names - I realize there is the 'find an agent' feature on BP, but that doesn't seem to be comprehensive). What I am looking for:

1. Cash on Cash and appreciation expectations: I am primarily going to optimize for Cash on Cash (CoC) metric that ensures I have a positive cash flowing rental property i.e. after all expenses including the mortgage debt service (with say 20-25% downpayment with say 6-7% interest rates). I will be looking for a 5%+ CoC and decent history of atleast 3-5% appreciation. Not looking for the next Austin, but just decent market which will weather the recession if there is any. Don't want to invest in tier 3 (unknown/unheard/middle of nowhere) cities.

2. Open to SFH/Duplex/Triplex/Quadplex: I have invested in SFHs until now in other markets, but very much open to investing into a 2/3/4 plex as well. Cost range can be $150K-$300K for SFHs. Realize that 2/3/4 plex will be higher in price.

3. Neighborhood: I am open to A+/A-/B+/B- neighborhoods. Will want to avoid C category neighborhoods.

5. Rehabs: I like to minimize rehabs and prefer to have homes that are move-in ready. Don't mind short/small rehabs

Panama City and Panama City Beach should have long term and short term rental options with higher appreciation historically than 5% (we have had over 8%). I have found some options that have grossed 10-15% of the purchase price too! Let me know if you would like to connect.