Good Markets for Multifamily

[Alexander Ballesteros]

Hi BP!

I am new to out of state investing and looking for suggestions for markets to purchase a duplex/triplex to begin my journey.

From my research, Wisconsin and Indiana are great states to start looking into.

Would love to get some guidance from other fellow out of state investors!

Thanks!

[Peter Falk]

That's a lot to think about.  I'm in Madison, WI.  We have a growing tech industry (increasing millenial population), popular retirement destination (per Money Magazine #1 in 2020) and a large college town (UW Madison) and government (Capital of WI).  However, it's overall a more expensive market than many other WI markets.  That said, with demand, have seen decent appreciation (a campus area 3-unit recently sold from long term owners who averaged 7% appreciation per year on top of cash flow).  That said, cash flow may be pretty lean initially, but should be able to see rent increases each year (although taxes and other expenses will go up as well).  Within the city, like most larger markets, rougher areas show greater cash flow on paper, but may result in more economic loss if you run into more evictions for non rent payment/turn overs.  If you are investing out of state, I'd consider going with a stable area where you will hopefully get long term tenants.  Real estate taxes are I think higher overall in WI (I'd estimate them in Madison at around 2% of assessed value, which would likely be adjusted to your purchase price) so if you find a similar market with lower real estate taxes would obviously see better cash flow.  Madison does have a lot of parks, well funded schools, etc., so maybe get what you pay for, but overall think it's a pretty high tax rate city, so something to think about if you are open to investing anywhere.