Where has the real highest Rental On Investment % or NOI in US ?

[Ken Kwok]

Hi Guys,

If I am not looking for any value appreciation, but I look for the real HIGHEST return on investment (ROI) or actually net operating income (NOI), can you name some cities and return % here and share? I just want to buy that and hold for 20-30 years.

Based on my initial research, seems like Cleveland and some midwest cities has about 8-9% NOI. Anything higher based on your experience?

It still sounds very attractive and amazing for me if I can invest a property with 10% or above NOI, but for sure subject to limited legal risk and potential crazy tenant.

Thanks,

Ken

[James Wise]

Reatlor.com agrees with you that Cleveland is a top rental market.

As for their being risks of legal issues and crazy tenants you will get that in any market. That is not limited to Cleveland. All of the Midwest is very similar. It's a risk reward thing. If you choose the cheapest houses in that particular market you are going to run into more issues. Think about it. If the area is already cheap and you gravitate towards the most blighted part of that cheap market you need to ask yourself WHO is willing to live in a neighborhood where homes can be purchased for next to nothing.

It's true that Cleveland is one of the cheapest markets in the entire USA but don't think that we are all out here living in houses that cost less than a KIA. Here in Cleveland just like the rest of the country we have many neighborhoods with homes priced well about $300,000.

I created The Ultimate Guide to Grading Cleveland Neighborhoods to give out of state investors like yourself an idea of what's what in our market. You can pick neighborhoods with $7,000-$30,000 houses. But note that you'll end up with a different quality of tenant than if you picked a neighborhood with houses priced at $75,000. It's not like the rest of us paying $75,000 for similar rents aren't as smart as you & we weren't able to find those $7,000 houses. They aren't a secret, lol. They are right there on the MLS or Zillow.

Dealing with the lowest quality houses in the lowest quality neighborhoods in the cheapest possible market in the entire USA is a savage business. I know this because I do it everyday. I run over 1,000 rentals out here and lots of them are in low end neighborhoods. It has made me a very wealthy man but i'd be lying if I didn't tell you that It's a war.

Here is some of what you can expect in Cleveland or any other major metropolitan market in the $7,000-$30,000 price range.

House was vacant after tenant's were evicted. Junkies broke in to steal all of the copper wires.

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The same junkies also stole the copper plumbing. No, the junkies are never thoughtful enough to turn the water off before they start cutting.

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Typical look of a savage tenant's kitchen after they move out. Don't think that your lease saying they need to clean it means anything to a savage..........It doesn't.

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I challenge everyone on Bigger Pockets who is reading this post to guess what is even going on in this photo. I'll toss you a vote if you get it right.

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This toilet right here needs no caption. I will give a vote to the Bigger Pockets investor who provides the best caption for this photo of a toilet. (Yes the tenant was still living there the day before & day after this photo was taken)

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How'd you like to take a bath in this sucker!

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Savage tenants's in the ghetto are known for their great yard work!

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Kids...........It's time for bed!

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Close up of the above bed....If you are wondering, this is what a bed bug infestation looks like.

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It's not all bad though. Like I said this savage business has made me a very wealthy man. I just don't want to see investors trick themselves into thinking that this family below is moving into their $15,000 house...........They ain't.

Myself I prefer upper C-Class to B-Class investments at this point in my life. This puts the price point around $75,000. You still get high cash flow but you don't have to go through an all out war every single day. But to each his own, if you think you can stomach the savageness of it all go for it. As I have said you can make some serious money just be informed as to what you are walking into.

• You will need to be on your toes at all times
• You will run into set backs (often)
• You will need to evict people
• You will need to throw families onto the street
• You will make children homeless
• You will have your house damaged
• You will need to hire a team of highly skilled people to be your eyes and ears on the ground
• You will pay a premium for services provided on your real estate portfolio
• You will be harshly judged by those outside of the industry
• You will need to make decision based on the best interest of your business and not your feelings

Works out great for some. Not so great for others. It's all about you and how you see yourself as a business owner, investor and what are you willing to deal with in your career.