Midwest vs Southeast - what markets to invest in 2021?

[Mike Lee]

Speaking with my neighbor last night, he shared he and his wife are looking to start investing in single family rentals with roughly $300K in capital saved, and they are split on regions to invest. In this scenario, they would be out of long distance landlords, and only one has had prior real estate investing experience in the past (his wife owned a multifamily college rental in MD with her ex hubby).

The 2 markets she is targeting are Atlanta, GA and Birmingham, AL. He prefers the midwest, targeting Chicago, IL and Indianapolis, IN.

Reasons: She went to college in Atlanta and has friends in Birmingham. He grew up in the suburbs of Chicago and his employer has a presence near Indy.

All things considered, of the four markets being considered for buy and hold single family rentals, which markets would you suggest?

[Taylor L.]

Of the two sets of choices, I think Atlanta and Birmingham are better. Indy is probably fine. I would pass on Chicago - the laws are just too unfriendly.

Of the remaining 3, it comes down to facts, figures, and numbers. Which is best, between Atlanta, Birmingham, and Indy? Which market is weathering Covid well? Which one can they get to fairly easily for due diligence trips?

Considering they're your neighbor in Tampa, Atlanta and Birmingham are going to be much closer to them than Indy, making Indy just slightly less compelling. They're investing from a distance, which is fine, but going there and getting boots on the ground from time to time is still very helpful. Birmingham and Atlanta are a long drive or a very short flight.

I'm with the wife on this one! It would be between Birmingham and Atlanta if I were in their shoes. In deciding between the two I would look toward the numbers. Employment figures, rents over time, occupancy, etc.