Where to set up shop!

Question

Hello, I am 22 years old deciding on where to set up home. I currently live in the area of the job I took after college. I no longer have that job and would like to get closer back to home(9 hours away). I know I will build a real estate empire, I just don't know the better part of the country to start. Yes, wanting to live there comes into play. This brings me to two locations, Golden Triangle area of MS or Northwest Arkansas (Fayetteville, Bentonville, Rogers). Golden Triangle(Columbus specifically) is a stagnant market. Population stays the same, real rough areas, less competition, and much cheaper prices. This is comparison to Northwest Arkansas: high population growth, high competition, much higher prices, and highly appreciating.

What's better for someone starting off? My goal for this stage in life is to build my Cash Flow. I also don't have tons of money to invest yet(young and building a business). My gut would say Golden Triangle is the better bet. The Price-Rent ratio is much more favorable. There is a huge spread in neighborhoods which plays in favor of finding deals. You can still find deals under 75k, something of the past in a market like NWA, I would guess. Golden Triangle is a unique market including Starkville (huge college town), Columbus (smaller college town and Air Force Base), and West Point (pretty rough...). There is really 3 different markets there that each have unique characteristics.

What do you think? Am I missing variables that I should be looking at when making this decision?

Jamie Atkinson · Answer

Dylan, I'm not from NWA but have been investing there for 14 years.  What initially drew my interest was the college town, Fayetteville.  It reminded me a lot of my college town (Athens, GA) but with more economic anchors (ie job growth).  I had never even been there when I made my first purchase.

Personally, I wouldn't overlook Starkville.  One thing I always say to folks, have you ever seen a state university contract or get smaller? The answer is a resounding 'no'.  Companies come and go, but big state universities and governments aren't going anywhere.

My .02 is that the ship has already sailed on NWA.  Inventory is picked over and prices are quite high.  I look for some real high value mid-markets in the South and Midwest....places just like NWA.  The pandemic has created a sea change that has not fully manifested itself.  When I was a student, I never wanted to leave Athens....but I was forced to because the jobs were in Atlanta. I sense that will no longer be the case moving forward.  College towns are rich in culture, arts, quality of life, etc... the drawback has always been a lack of professional jobs.  You could become a 'townie' and stay, or you could get a 'real job.'

Lee Ripma · Answer

@Dylan Osmon

You’re ahead of the game doing this young. You can be successful in any RE market. I think most people want cash flow so they focus on cash flow. If you want cash flow focus on EQUITY. Equity can be converted to cash flow. My advice is figure out how to get 1M in equity in the next 3 years. So forced appreciation on properties to get that equity since you probably don’t have a ton of money just starting out.

Adriano Caraco · Answer

I would recommend listening to @Lee Ripma podcast, I learned a lot from that podcast.

Adriano Caraco · Answer

I live in NWA and don’t recommend here, I personally invest out of state. There are big and stablished developers and a lot of competition, the price to rent ratio is not good, 300k house rents for 1.4k. It is possible to make it work but Ohio would be much easier to find deals.

Dylan Osmon · Answer

@Lee Ripma thank you so much, I will try to change my mindset more to building equity. There is plenty of big investors out there that do it in small flat markets so maybe an over thought for population growth.

Dylan Osmon · Answer

@Zeke Liston

Will you simplify that?...

Just kidding, I think you’re right, I just second guess myself too much sometimes.

Zeke Liston · Answer

This can be broken into 3 easy steps: 1. Move to Columbus 2. House-Hack 3. Make money.

Dylan Osmon · Answer

@Remington Lyman

Haha, that’s a wee bit further from home. Starkville would be my college town too, great environment to live in!

Ryan Blackstone · Answer

All I know is NWA. It is a great market if you are thinking wealth creation. We are one of the fastest growing areas. That being said, what things are selling for on the open market is way higher than I would be willing to pay due to the low return. However, there are still plenty of deals off market that you can prospect for. The other way I have seen people win in this market is house-hacking. The numbers work better at a higher price if it is a house-hack. We have seen 11% increase year over year. If you are young and wanting to BRRR. I think its a great market. However, for a great deal you must prospect off market.

Dylan Osmon · Answer

@Adriano Caraco

So glad you said that, that’s what I see just scrolling MLS. Y’all have very low rents (considering) for how popular the area is and how many people move there. The Price Rent ratio seems tough for new guy competing with cash offers left and right.

Where to set up shop!

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