Hottest states to invest in

Investor · Santa Clarita, CA · Member since 2015 · 40 posts · 34 votes

What are the hottest states to invest in rental property right now? People seem to moving out of California to Texas, Idaho, and Colorado. Are there any other states that are hot right now?

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Jon Schwartz

Realtor · Los Angeles, CA · Member since 2018 · 952 posts · 1k+ votes

Originally posted by @Michael Bell:

What are the hottest states to invest in rental property right now? People seem to moving out of California to Texas, Idaho, and Colorado. Are there any other states that are hot right now?

Californian here to defend my state!

It seems like Californians are flooding out of CA into Texas, etc., because there are SO MANY OF US! For example, anecdotally, Boise, ID is overrun with Californians. Do you know how big Boise is? 229K people! California's population is 39.5M. So a few Californians moving to Boise make it feel (to residents of Boise) like an exodus.

Another fun fact to illustrate my point: in 2018, 118K Californians left the state for other states. But 188K people moved into California from other countries (source: https://calmatters.org/explainers/california-population-migration-census-demographics-immigration/)

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Klint Ruud
Investor · Nashville, TN · Member since 2019 · 92 posts · 96 votes
6y
Hands down the Nashville market has seen one of the most exponential growth curves in the country. You know how people say, "Damn, I wish I bought amazon stock when it was $30 a share..." People are already saying that about the Nashville market.
2 Reply
Charlie Rushton
Real Estate Investor · Dallas, TX · Member since 2015 · 50 posts · 11 votes
6y
Anyone investing in hattiesburg?
1 Reply
Harrison Smith
Real Estate Agent · Biddeford, ME · Member since 2017 · 213 posts · 150 votes
6y
Maine is absolutely a market that everyone should be considering. We have experience 50% increases in rent over the last 3 years and appreciation that is nearly equivalent over that same period. We just sold a property for 20% over asking price with 27 offers (cash buyer from Boston) and over the weekend we put another one under contract after 17 offers.
Our tenant base also remains strong. We are leased up well in advance of turnovers and have more applications than we can handle in some cases. Our owned portfolio of 504 units has been 100% rent collected throughout this whole situation and our managed portfolio of 1000 units is nearly 100% collected as well.
We are seeing a steady flow of out of state interest. We have always had some of that but its increased dramatically the last several months. In a post-Covid world, people will trade their condo in a 20 story building with a shared HVAC system for a traditional home in Maine with some land. Even when the market cools nationally it is likely Maine will continue to show steady increases from the migration pattern.
If you are not considering Maine in your research than you will be missing an opportunity.
Here is an example of the national press we are receiving
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Bonnie LowPro Member
Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Kunal Mishra - I'm an investor from CA looking at out of state markets. We've previously been focused on Pocatello, ID where we would buy low, rehab and hold for cash flow. But we're noticing a weird trend where the rents aren't really increasing much and ARV on improved properties just don't produce enough appreciation to justify the investment of rehab costs. So we're looking elsewhere. The information you shared on other markets is really helpful, especially categorizing them into CF, appreciation or combination of both. Would you mind sharing what sources you're looking at to pull that analysis together? I'm searching BP but forums but it's a bit of a slog.
[email protected]
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Bonnie LowPro Member
Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Sheryl Sitman - what do you think is driving the appreciation in Philly during COVID? Is it exodus from NYC or other factors?
[email protected]
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Bonnie LowPro Member
Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Harrison Smith I think the link you meant to post on press about the Maine market is missing. I'd love to see it!
[email protected]
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Jaeseok An
Member since 2019 · 44 posts · 17 votes
6y
Low population density areas seem to be doing well right now due to people's preference on "secludedness" and the ability to work remotely.
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David Alvarez
Bridgeport, CT · Member since 2020 · 5 posts · 1 vote
6y
@Jaysen Medhurst thank you for your response! Can you explain the benefits of a conventional loan without putting 20% down?
0 Reply
Harrison Smith
Real Estate Agent · Biddeford, ME · Member since 2017 · 213 posts · 150 votes
6y
Here is the link about Portland, Maine. https://www.google.com/amp/s/www.multihousingnews.com/post/amp/top-5-multifamily-markets-for-rent-growth/
1 Reply
Ryan Cleary
Investor · Palm Beach County, FL · Member since 2019 · 370 posts · 330 votes
6y
So in the last year I have bought property in New York (where I live) and Florida and the cash on cash return is pretty similar as long as you put a negative sign on the New York number. Not joking, literally receiving 9% in Florida and -9% in New York. Plus the landlord laws are terrible up here. I will continue to pursue Florida.
0 Reply
Jaysen Medhurst
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
6y
@David Alvarez, the advantages of conventional over FHA are:
1. Less paperwork
2. No upfront PMI (1.75% of loan amount)
3. On-going PMI will drop once you hit 78-80% LTV. With FHA, you have on-going PMI for a minimum of 11 years, but in most cases for the life of the mortgage.
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Detra Harris
Rental Property Investor · Member since 2019 · 31 posts · 36 votes
6y
Wow, what a great conversation. Lot's of good comments. I'm a native of San Francisco and I also live in the Bay Area, therefore, this is a hot topic for me. I purchased my first investment property out of state because of the price point here in California, which is often more than $800K for my asset class. I didn't want to bring in a JV partner on my first deal, purchasing out of state was best for me. It's very expensive to get in this game in California unless you have deep pockets or bring in a JV partner. It took me three years to afford to buy a rental property in California -- right here in my own backyard. It's crazy! Covid-19 is hurting us, several of my colleagues that own market rental properties in the Bay Area have reduced their rents to keep their units occupied. The vacancy rates are increasing daily and it's very scary right now. California is definitely tenant pro, which I'm in favor of, however, when analyzing a rental property, you better be sure it pencils and increase your vacancy rate 5% to 7% on your proforma to be on the safe side these days. Memoratiums have been extended up to another 90 days in many Cities, ouch. I noticed no one made a comment on @Jorge Torres suggestion to take a look at the Dayton, OH market. I've had great success with buying rental properties in Dayton, Fairborn, and Cleveland, OH. I love the OH market, obviously. Regarding hot markets, your experts report hot markets all day long and investors buy into it all day long. For instance, Columbus, OH is on that hot market list and now purchase prices have gone up. Listings last an average 9 days on the market then gone. This is typical -- whenever our experts report a hot market, every investor in town moves into that market and the prices go up. I own rental property in Texas as well, and the prices have gone up there too - I may as well purchase here in California. You gotta make sure it pencils in any market. I'm checking out Philly and Florida right now, thank you to those who mentioned these markets!
4 Reply
Darlene Solomon
Realtor · Tampa Bay FL · Member since 2016 · 15 posts · 4 votes
6y
@David Bell Florida 🙌🏽
0 Reply
Timothy Lewis
Investor · Miami, FL · Member since 2013 · 377 posts · 258 votes
6y
@David Bell check out Alabama and Tennessee
0 Reply
Candace PfabBusiness Member
Realtor · Orange Beach AL · Member since 2018 · 150 posts · 125 votes
6y
Dave Meyer just posted this article that might be helpful!

https://www.biggerpockets.com/blog/best-zip-codes-real-estate?utm_source=Iterable&utm_medium=email&utm_campaign=Newsletter%20%7C%208/18/20&utm_channel=28425

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James De Stefano
Real Estate Agent · Houston, TX · Member since 2017 · 290 posts · 233 votes
6y
Originally posted by @Jeff Piscioniere:
@Bonnie Low East TN in the mountains. Rains a lot but unless you buy in a river basin no issues. TN is a huge state. I find it hard to believe FEMA maps would make you write off an entire state.....?

Great point. Real Estate is hyper-local, and it sounds like parts of Tenn. have the same stigma as Houston.
Houston gets a crap-ton of rain. It's in the Coastal Plains and has the threat of Hurricane's during the busy season. But the Fall/ Winter months are incredible, and as long as you pay the $400-600 a year for Flood Insurance, much of the stress is alleviated.

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Ryan Breakfield
Hattiesburg, MS · Member since 2019 · 2 posts · 1 vote
6y
@Charlie Rushton yes. Sent you a message
0 Reply
Johnny Wolff
Investor · Kansas City, MO · Member since 2019 · 130 posts · 118 votes
6y
@David Bell - Texas all day my friend. Very landlord friendly laws as a bonus.
1 Reply
John BrittPro Member
Real Estate Consultant · Chattanoooga, TN · Member since 2008 · 194 posts · 52 votes
6y
For people looking at Tennessee here are the cities. Memphis, Knoxville, and Chattanooga to invest in rentals. Nashville from my perspective is very hot, it seems like it would be a great place to fix and flip prices seem to be increasing every 3 months. But there is another city to look at that is Huntsville, AL. It is loaded with companies bringing in their engineers to support government projects.
1 Reply
Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
6y
If you're looking to help narrow out of state investing, I'd start where you have a connection or relationship you don't mind visiting every once in awhile. Listing states or even multiple MSAs is way too broad.
You can find good deals anywhere, but the individual property is much more important than macroeconomic shifts.
2 Reply
Nathaniel Booth
Real Estate Agent · Fayetteville, NC · Member since 2020 · 7 posts · 6 votes
6y
I support what Jon said about the market in Northwest Arkansas. Fayetteville, Rogers, Springdale and Bentonville all have great areas for Investment properties. The support of large companies (Wal-mart, Tyson, JB Hunt, etc) in the area has allowed for steady economic growth including a 20% increase in GDP over the last 5 years.
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Wale LawalBusiness Member
Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
6y
Start from your local market, then expand to any market you are comfortable with.
Goodluck!
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Calvin OzanickBusiness Member
Property Manager · Janesville, WI · Member since 2017 · 707 posts · 297 votes
6y
Investing in Wisconsin is a huge plus to investors. I work as an agent and PM in Rock County, WI which is primarily Janesville and Beloit. This market is so successful for 2 major reasons.
1. The point of entry to buy into this market is extremely low and allows for investors to purchase properties at a significantly lower rate.
2. Amazon, Dollar General and ABC Supply Co, among other companies, have boosted the economy to a great spot. The employment rate is on the rise, vacancies are low and many tenants are looking to rent and that is pushing rent rates up. If you are interested or would like to speak more about the potential, I am always available for a email or call.
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Shannon Robnett
Developer · Boise, ID · Member since 2020 · 173 posts · 198 votes
6y
@david

@Michael Bell Feel free to reach out if you have direct questions about the Idaho market. As a 40 year resident and 25 year builder and developer I tend to think I have a bit of insight on what is happening here in the Boise area.
2 Reply
Tonya Copeland
Investor · Member since 2020 · 7 posts · 1 vote
6y
One thing i've noticed is that many folks in the city like NYC and San Francisco are moving out of the cities to live somewhere house prices are less crazy.
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