What cities should I focus on?

Question

Hi all,

My wife and I are planning a road trip through the Southeast US where we drive through towns and neighborhoods looking for the best places to buy property. Would love help narrowing our list of towns. We'd like to avoid anything on the coast like Wilmington or Savannah due to flooding/weather concerns. Other than that, we're very open to any nice town, ideally with good schools, good employment and high quality of life.
We're targeting cash flow, and ideally somewhere near the 1% rule (.85% or .9% also fine). SFH or multi-family. Budget is anywhere from $100k-$400k depending on return.

Currently considering: Raleigh NC, Charlotte NC, Atlanta, August, Greenville SC, etc.

We currently live in NYC but are ready to start an investment portfolio out of state. Would really appreciate A) Any help narrowing the list and B) being put in touch with any good investor-friendly realtors in one of these areas!

Thanks so much

Anthony Davis · Answer

@Matan Har North Carolina is a good state to invest in rental properties.

I’m curious if you’re just planning a road trip for pleasure....and want to look in-person at potential target areas.

A top brokers office can be found by a very high number of sales in comparison to sales by other ‘local’ agents.
Those high-sales volume offices may have working relationships with high-quality property management companies in the the target areas.

Sometimes, an introductory call can give a lot of information without signing with a brokerage or agent.
Did you know that top real estate platforms can notify you when properties are listed within your target areas? I just wanted to give some insights/ideas before you start your trip.

NC: You can find decent property in the (Charlotte metro area) within your listed range.

The Raleigh, NC area has decent townhomes and other multi-family units within your listed range. SFR’s as rentals will be less expensive the farther you go from the colleges.

Fayetteville, NC has the military base. Has flooding concerns. Hurricane concerns. Also, can be a great place to buy a cash flowing portfolio, hold for a while, then sell to acquire slightly better properties in other more desirable markets.

Raleigh, Durham, Chapel-Hill metros

Greensboro, High Point, Winston-Salem areas

The Charlotte metro area

are all college areas with heavy rental populations.

Between Raleigh & Durham is the Morrisville/Cary area near employers, such as Boeing, IBM, Glaxo-Smith Kline....name may have evolved by now but a lot of pharmaceutical companies and small manufacturing companies are in this area.  There is one Walmart Supercenter in Morrisville....formally better known as the RTP, Research Triangle Park.

I hope this helps in some way.

Anthony Davis

Charlotte NC

Brenden Mitchum · Answer

Hey @Matan Har

Sounds like a very informative and enjoyable trip you all are planning. I would definitely recommend stopping over in Atlanta for at least a few days. The market is very hot right now but things will cool down eventually and it's a very stable market to be in with such high job diversity and growth.

However, you really will want to spend some time here since there are so many different submarkets. For you, I would recommend sticking to Cobb and Gwinnett County. Cherokee and Forsyth Counties too but supply is incredibly low there. West Cobb is a little more affordable but not quite as nice as North Cobb (Kennesaw). Gwinnett is a very diverse County - incredibly upscale neighborhoods and arguably the best schools in the MSA mixed in with a ton of blue-collar more affordable neighborhoods. I'd recommend stopping in Lawrenceville (the county seat) for a night or two.

There are also parts of Dekalb County to the east and north that might be of interest to you. Tucker is a great place to be with good schools, proximity to everything, but prices that are beginning to reflect this.

If you're looking for a more affordable and up-and-coming area, I'd recommend making a stop in Henry County. McDonough, the county seat, has really blown up in the past couple decades with population growth over 180%.

Honestly, you could spend months here and still not see it all. It can be quite overwhelming but don't let that stop you from coming out and getting a little taste of what Hotlanta has to offer!

And please, feel free to message me anytime if you have questions or just want to chat about the ATL market!

Matt Har · Answer

Thanks so much everyone! All very helpful.

@Evan Polaski, I'll check out the local forums like you suggested.

Darius Ogloza · Answer

Most flooding occurs along rivers well inland of the Atlantic Ocean.

Evan Polaski · Answer

@Matan Har, welcome to BiggerPockets.  I would recommend you head over to any of the local forums you are considering to help get a better gauge on what investors in those markets are actually seeing.

Beyond that, there are some factors to consider.  Florida has no state income tax, so that will likely help your overall cash flow. I would also make sure it is an area you a) can get to fairly easily and b) enjoy going to.  I am not an out of state investor, but even with a great manager and team on the ground, I would want to visit the properties a couple times per year to keep everyone honest.  And I would want to mix that business with pleasure.

Beyond that, the Southeast is a very big geographic area.  The advice you are being given is solid, but I would steer away from small, single employer towns.  You can get better cash flow, but typically less appreciation and more risk.  But the suburbs and pockets of any mid to large size town will always have potential tenants.  Then it becomes the balance of finding cash flow that isn't in a rough area.

Sean H. · Answer

You won't find your 1% rule in any of the hot triangle towns- raleigh, durham, chapel hill, etc.

Why not skip all the big cities, and look for lesser known cities like burlington, greensboro, fayetteville? Good cash flowing properties are not in areas with a hot development market.

What cities should I focus on?

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