Markets with highest ROI

[Account Closed]

1) Which markets have the best ROI as of right now as well as properties (SFR, condos, townhouses) that are still considered reasonably priced? I'd like to use an available $400,000 in cash and diversify into multiple properties that have a very good cash on cash return, but living in Orange County doesn't help and even if I could, the purchase to rent ratio is just horrendous. I've done as much research as I could on my end and from what I see, correct me if I'm wrong, cities like Houston, Atlanta, Cincinnati, and Baltimore all seem to be very good options with the exception of Houston's higher property taxes.

Also...

2) Was wondering if you guys would provide some feedback regarding the markets that are best from a landlord and owner's perspective? In other words, states that have landlord and owner-friendly laws.

As always, thank you in advance for your answers and feedback.

[David Thompson]

Hi Zaki,

Like Kathi I'm biased towards some of the larger TX cities.  I like Dallas and San Antonio for MF.  My question to you is ....have you thought about apartments and MF investing?  I agree its harder to find value all around even in great growth cities like Dallas, Austin, etc. but I think its especially difficult w/SF.  However, with apartment investing, you can force appreciation if you are willing to invest in these markets, look for properties that need some work where you can re-position from one class to a higher class in solid areas. Apartments are commercial property and are valued differently (based on income) rather than comps like SFs.  

We recently closed on a 320 unit in north Dallas w/10% CoC and IRR expectations of over 20% for the five year hold. These are typically 1980s vintage properties that have not been upgraded w/the times but w/a solid business plan you can close that gap. Value and upside can still be had w/this approach. We are targeting more in the area.

Several ways to participate.  Always encourage to read up on some good books (MF millions - Dave Lindahl; Complete Guide to Buying and Selling Apts by Steve Berges).  Since you have capital, you are bringing something to the table.  You could form a team w/partners that have the experience, credibility to take out a smaller apt or if you want to go big, you could look at participating as a limited partner in syndicate deals.  Scale wins, MF wins !