Where should I invest? Advice please!

Question

Hello everyone. I am getting into real estate investing and have been reading some of Brandon Turner's books.

I currently live in the Phoenix Arizona area. However, I am from the Madison Wisconsin area and most of my connections are there. I also have more knowledge of the market and areas there. One of my business partners also lives there.

I hear a lot of good things about investing in the midwest. What I'd like to know is if anyone has any experience with the Phoenix area? Is it a good market? Which area should I focus on and why (Phoenix or Madison)?

Thanks in advance for any insights!

Account Closed · Answer

Hmm, I'm cash flowing fine (above expenses) $500 to $900 per property in Phoenix. What do you consider to be enough?Your Comment: "Phoenix isn't cash flowing very well right now". ? You shouldn't be speaking for Phoenix, maybe you should say "you" can't find cash flowing properties. But, I sure can and my Turnkey Investors do too. ;-)

Account Closed · Answer

@Christopher C. Blye It's buying the properties "off market" using Subject To and selling to tenant buyers, getting $20,000 option fee and then lease option to buy. Investors from So Cal are finding that the Phoenix market is a welcoming and profitable area to add to their portfolio.

Pamela Sandberg · Answer

Phoenix isn't cash flowing very well right now, but we have VERY healthy appreciation. It might make sense to diversify your real estate portfolio with some cash flow in the midwest AND some appreciation here in Phoenix. Happy to answer any questions I can about the Phoenix area!

James Wise · Answer

Lots of folks look at the Midwest for the turnkey markets. Tons of turnkey markets out there. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors Cleveland, OhioDayton, OhioToledo, OhioYoungstown, OhioCincinnati, OhioMemphis, TennesseeBirmingham, AlabamaKansas City, MissouriSaint Louis, MissouriIndianapolis, IndianaDetroit, MichiganErie, PennsylvaniaLouisville, KentuckyMilwaukee, WisconsinJackson, Mississippi Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly. One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible. Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.Make sure your property manager is a licensed real estate brokerage.Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

Account Closed · Answer

There isn't much managing to do. The tenant buyer takes care of all maintenance & repairs.

Account Closed · Answer

I have some experience in the Phoenix area ;-) Here is a spreadsheet I did that will help in your decision makingAverage Turnkey Cash Flow Per Door In Phoenix Metro Area No Bank Financing Needed https://www.biggerpockets.com/forums/600/topics/584916-average-cash-flow-per-door-in-phoenix-metro-area

Christopher C. Blye · Answer

@James Wise Thank you for the info

Christopher C. Blye · Answer

@Mike M. How do you manage your turnkey investments?

Christopher C. Blye · Answer

@Mike M.

Christopher C. Blye · Answer

@Pamela Sandberg Some very good information and I'll definitely look into that strategy. Thank you