Major Metro City Buy/Hold Investing???

[Ryan Rogers]

Hey all!  Hopefully everyone is well!

Just curious to those out there who are investing for long term holds in extremely high priced cities like Boston, San Fran, New York, etc..

Seems like the numbers are so hard to cash flow,  with the high sale prices with exponential demand driving up purchase prices.

It seems like trying to get property under intrinsic value seems extremely difficult.  (Possible but...) The 2% or even 1% Rule/Evaluation doesn't come into play at all.  I'm seeing approximately .5% in Downtown Boston.  Granted the appreciate seems to be very respectable long term.

Do you investors with experience just avoid downtown major cities?   I'm sure someone is succeeding in this atmosphere.  Hoping you'd be will to share some insight to how you operate in (what seems to me) a tough long term hold market segment. 

Thanks as always for your input!  What a great community we have here at BP!

-Ryan

[Patrick Kelly]

@Ryan Rogers I would be careful about buying in the downtown market in the hopes of continued appreciation. You said it your self that buying at negative cash flow in the hopes of appreciation is a speculative move. That is they type of thinking that got a lot of investors in trouble in 2008. I would look at some rent to income ratios in certain areas around downtown. People have to be able to afford to live near by and work in lower service sector jobs to tend to all of those people living in these high priced properties. In every city you will see emerging pockets that are worth investing in. I recommend Dave Lindahl's book Emerging Real Estate markets to get an idea on what you should be looking for. One of the things he talks about that real sits with me in the path of development and investing on the fringe of that path and letting it wash over you, to get that rapid appreciation. Look at where development is in boston and see what might be adjacent to it that would be a promising area. Boston.com, Bostonherald.com, and boston.curbed.com are good sources in their real estate sections to see where development is happening.