Rookie from Los Angeles, CA

[Jonathan MacMillan]

Started investing 5 years ago with a single family house in Aurora, CO and about 20K in the stock market.  The house cash flowed positive instantly and has increased in value over time.  The stock market has flat lined. 

My goal, now that I have a decent job and a bit saved, is to find a second rental property for 150-200K preferably by year's end.  My risk tolerance is moderate (probably no Detroit houses for me), but I'm still looking for good rental returns and some appreciation (aren't we all).  I also want to enjoy visiting the city where the property is located.  My front runner right now would probably be Austin, TX, but I've also considered Los Angeles, Cleveland and Ithaca.

I'm a bit overwhelmed with it all and don't really know how to go about narrowing down which city to look in.

Thought?

[Ali Boone]

That's quite the spectrum of city options!

Austin- price-to-rent ratios will be tight there. Possibility of finding positive cash flow, but will take a lot of looking. TX property taxes and insurance are incredibly high, and Austin is already minimal on cash flow, so might make it negative pretty quick. Just depends.

Los Angeles- no cash flow potential, appreciation potential only (negative cash flow in the meantime)

Cleveland- high cash flow potential (except vacancies are very high right now), minimal to no appreciation potential (unless the revamp that's been talked about for the last 20-30 years finally happens). Cleveland led the country in job loss last year, losing more jobs than any other large metro area in the U.S.

Ithaca- not sure. Just make sure the price-to-rent ratios allow for positive cash flow.