WHERE TO INVEST???
Hey Everyone,
I currently live in Colorado and am looking to purchase real estate to eventually turn into a rental. What are your thoughts on good markets to be targeting (towns, cities, states, etc.). If you were looking to put little cash down and still generate CoC return, where would you be looking?
Thanks everyone!
Most Popular Reply
I would recommend Columbus Ohio personally! Still tons of 1% rule deals here in Columbus Ohio. Plus you get a great mix of positive cash flow and appreciation - it doesn't get better than this! Also, I love how there's tons of catalysts for population and job growth. Columbus is the only city in the midwest and rust belt that is growing in population. Plus, tons of employers like Honda, Intel, Nationwide, Wexner are bringing more jobs here. I'm a local investor and agent here and have worked with many out of state investors, so if you have any questions, would love to help out!
- Jimmy Lieu
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@Derek Fike The Midwest will always be a great market for Cashflow. Missouri, Ohio etc. Buy low, rehab, rent and repeat is the best strategy.
As an Ohio agent target area is Cleveland, I highly recommend investing there to generate rental income.
I am not sure how much you are willing to put down, but for what it is worth look into Indiana/OH/Northern Ky. You will find properties at a lot lower price so you aren't putting as much down, as well as cash flowing! If you really want to find the money, I would recommend doing a BRRRR so you can have very little down, if any at all!
- Sam McCormack
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@Derek Fike there are so many options and buying right in the market you choose will always be the priority, in my opinion. There may be better markets but I know my region is strong. I live in Cincinnati, which is less than two hours from many hot markets.
I’m actually a licensed agent, so you would like any market info let me know. I’m happy to get you some info.
I have been looking at commercial real estate lately, and I feel more comfortable in a less hot, popular markets. For example, I have a 40 unit under LOI in Dayton, OH. Popularity and making too many lists leads to a lot more attention from other investors.
I look at deals in hot markets, but also pay close attention to smaller markets. If I may ask, do you have any connections in markets other than CO? If you have a contractor or real estate connection that exists, that’s always a good place to start.
Sorry for the novel.
Two things... You should invest where you know and if you do not know any places other than your backyard see if there is a place local that you can fit in that box. If neither of those work, check some places that are high on population growth, job growth and appreciation...
If those you have looked into, option C would be if you have traveled before to a place and like it start there by getting in touch with a local realtor!
- Peter Mckernan
@Derek Fike Hampton Roads in Virginia includes 7 cities with tourist and government opportunities.
Whether you're looking for short term, midterm, vacation rentals, tenants who could rent for multiple years or even decades.
Time and time again, I hear that the military (Navy, Army, Air Force, and Coast Guard) are constantly moving people into the area which means that compared to other markets, we are stabilized and don't have as much volatility as other markets.
I'm a real estate agent with Berkshire Hathaway HomeServices Towne Realty in Newport News VA serving all of Hampton Roads Virginia.
If you have any questions about the market or getting started as an out of state investor, I'd be happy to help you any way I can.
- Mwazomela Thurmond
@Derek Fike What type of return are you looking for? It seems like your priority is CoC Return at the moment. Just trying to get a feel for what your priorities are and what type of return you are looking for and then I can provide a more specific answer. With that said, there are creative ways to net out with little cash down to none in Colorado. (e.g. I built two ski houses in the mountains and got them for free by building smart and refinancing all of my money + I pulled out a little extra when I transitioned from my construction loan to my permanent loan).
While I live in Colorado, I personally own investments in Colorado, Montana, and Michigan. Areas like Michigan (or anywhere in the rust belt) and South (like Texas) can produce high cash flow from the get go. I can't speak to other cash flow markets specifically other than Michigan since I personally invest there..but the pure cash flow markets do have drawbacks. I invested in Michigan because I wanted to hit my cash flow number and become financially free. Which I did a few years ago. But the other benefits of real estate (depreciation, amortization, appreciation) have performed better for me in Colorado and Montana. And to be honest, I have been significantly better CoC returns on properties that I've bought in Colorado and Montana. Meaning I have found all the key benefits of real estate to be better in markets like Colorado and Montana. You have to get a little creative in how you think about the property(s). They can take a little more work to set up and optimize than those I purchased in Michigan. But have been better long-term investments.
Anyway, let me know your answers to my questions above and I can provide more specific thoughts. IMO you always want to have a clear goal you are shooting for as without this it can feel impossible to hit a moving target. And fuels analysis paralysis. I'm not talking about a goal of "I want to buy another investment property". I'm talking about a goal of, I want this type of property (single family, multi, etc.) I am looking for this type of return. Or this type of CoC, etc. LMK and always feel free to reach out directly.
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Columbus, OH is a great cash flow and appreciation hybrid with a rapidly growing population.
- Marc Rice
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If you look to invest in the Kansas City area, hit me up. I can show you some good details of the various areas.
@Derek Fike
It’s hard to say at the moment due to the fact that there are some unanswered questions pertaining to your current financial situation to narrow down a market based off your buying power/credit scores to help determine what loan products or funding sources to target/ along with how much experience do you currently have and what’s your long term goal(s). I’d be glad to help you narrow things down just send me a message.
Well my first thought would be states with no income tax,
Second possible oppurtunity zones, (legislation is currently stalled as of 22 March to include more census tracts)
third asset types, I like multifamily 4-20 units, sfr portfolios 5-10 or ones you can cherry pick.
then to markets Memphis is a good rental market secondary market like desoto county, bartlett germantown etc. Nashville is a alittle hot and it would take some work to get in a deal. A secondary market of a city like nashville tho. Clarksville, murfreesboro, hermitage, hendersonville. Worked for an investor and acquired nearly 200 doors in 6 months in bham. Only draw back to good markets is heavy hedge fund presence. There is a good amount of competition. WIth good property management things seem solid.
I have been canvassing San Antonio and Dallas, Phoenix, Ft Lauderdale, Asheville and surrounding areas.
would you ever consider putting down 25-40% down to get a better CoC?
I also vote for Detroit.
I own 12-doors there and live in California now.
The returns have been incredible both from cash flow and appreciation. If you do a bit of real research on Detroit I think you'd be amazed at everything that's happening there.
Outside of my own investing I also help others get started, so shoot me a message if you want to talk.
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I want to invest in Palo Alto California only, i don't get CoC but I got the highest IRR in record time by flipping a house. LOL.
Love the question, but it is quite open-ended and dangerous. Here's why:
1) There is no clear answer because your buy box is vague and unrealistic due to the current market, lack of inventory, and interest rates.
2) You're getting a lot of input on cities where you have never purchased or managed a property. You don't know what you're stepping into with no experience.
3) Every city has deals, but you need to know what you are looking for and how you will make money. CoC is just a wish until you actually know how to increase CoC and the type of tenants you have. It's not as easy as I'll increase each unit by $100 per month and will 2x my cash flow from day one. You need to have a strategy for increasing rent.
4) Why is this person selling a property if they refinanced it under 4%? What's under the hood here? Do you know how to do your due diligence? Do you have a trustworthy mentor and team to help you avoid pitfalls? It's like buying stock, what is it that the seller knows about the property that you don't?
There is no deal or best city/state. The best place is where you have the right team to help you get through the problems and come out profitable on the other side.
Hey Derek! Why don't you give the Columbus, OH market a shot? As someone who both resides and invests in Columbus, I can confirm that investing in the suburbs here would be a wise decision. The city is thriving and attracting numerous major companies, resulting in the creation of thousands of job opportunities in the coming months and years. Population is increasing by 0.75% annually and there is a 3.58% yearly increase in employment growth. Additionally, rent prices in Columbus have increased by 6% each year. If you're interested, please let me know how I can assist you further. I would be delighted to discuss this topic with you in greater detail!
Have you ever considered investing out of state?
My pick for where to invest would be Detroit Michigan hands down.
Our company is in four different states currently, with the most success being in Detroit.
The property prices are still very affordable and the returns on investment are very strong.
Yes, there is risks and drawbacks investing in the city - but I believe as long as you understand them and how the city works, you could find great success there.
Hey Derek! Great question and way to be proactive. I would love to show you the investment side of Kansas City. I'm an agent and investor here and would love to chat. I'll send you a PM
- Jimmy Lieu
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Keep me updated if you find some good cashflowing markets!!
- Ryan Thomson
Why does Ohio have the most agents here?
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#5 Classifieds Contributor
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Because Ohio is pretty good for real estate investing which is what BiggerPockets focuses on
- Remington Lyman
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Come to Columbus, there are still 1% deals, but the more attractive part is the population growth and other economic drivers! With big businesses being in there such as Intel, Amazon, Chipotle, the Limited, and more. We have seen people flooding here. I think now is a perfect time to invest here. Dedicated to be the 5th hottest housing market in 2022 according to https://learn.roofstock.com/blog/columbus-oh-real-estate-market. This article has all you need to know on why you should invest there.
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I don't understand the point of this question, and the daily asking of it.
Look, let's use some math to point this out.
There is more than 108,000 cities in the USA. Nearly 5,000 of these with populations greater than 10k.
So let's say it's "gotta" be a population of 10k+. Ok, were now down to about 5k potentials. And now let's just say 1/3, 33% of those are just trash, that leaves 3,300 cities. And now let's say 50% of these one simply can-not find a "deal", just because. Now were too 1,650 cities. And of this, say 50% are not landlord "friendly" enough, 825. And say 50% cut yet again because we want higher tenant quality, that's 412 cities.
At 50%, of 50%, of 50%, of 66%, or 1/3 of A percent of cities, that's still 412 potentials! GREAT-GOUGA-MOUGA that's a hell of a lot of potentials!
How are you EVER going to evaluate 412 potential cities to pick 1?
How can you ever expect to get anything less than 412 compelling arguments for 412 different locations asking such on BP?
So what's the point? Just curious what 412 compelling arguments look like?
I don't get it.......
Congratulations, you achieved the rocking-chair of action questions. A whole bunch of something to go absolutely nowhere.
@Derek Fike, looks like your post is generating a lot of great conversation! My quick answer is.. It depends! Without going through all of those nuances, start in your own back yard so you can self-manage and help you gain valuable experienced every landlord needs that you will not get our of a webinar or blog post. Colorado is an amazing market and purchasing out of state for your first property is not a smart move IMO.
From your post, sounds like you are looking to purchase a primary residence and turn it into a rental down the road? Love the concept and the best way to leverage 5% payment! That is where you will see the highest return. Not necessarily from a cash flow prospective but from pure return on investment.
I put together a few case studies of recent transactions closed in this high interest rate environment in the Denver Metro. Ill DM you the details.
Best of luck!
If you're interested in looking outside of Colorado, you can still find good cash flowing properties in Ohio. Appreciation probably isn't going to be what you're used to seeing in Colorado but, you can get into properties out here with a lot less out of pocket and they provide a solid CoC return.