Best Cities for 2024? Strategies?

[Forest Wu]

Hi folks, hope that you're doing well. Kicking off a discussion to see if people have ideas of where to invest in 2024. Because of high interest rates (as well as soaring insurance premiums), I think cashflow is near impossible to achieve for long-term rentals. Best strategy is to look into rougher neighborhoods, get creative with financing or find off-markets. 

That being said, I still find these cities interesting:

Detroit, Michigan

Charlotte, North Carolina

Cleveland, Ohio
Indianapolis, Indiana

Birmingham, Alabama

Any other ideas? Let's set some goals and crush it!

[Justin Brickman]

San Antonio and New Braunfels Texas :) 

[Benjamin Aaker]

Just consider also that while you don't want cash flow to be negative. Equity build can still be done. It might be worth it for some investors to maximize equity. High cash flow areas usually mean C markets (as you say in your post). These require a larger investment in time or money. I always recommend to invest near your home. Failing that, my vote is Ohio and Indiana. Midwest is often a good way to go.

[Samuel Diouf]

I am finding plenty of off-market deals in Columbus, OH. I think Columbus is a great option to consider. Multiple, billion dollar companies are investing into our area, such as Intel, Google, and Amazon, due to reasons such as lower costs on land, great tax abatement opportunities, and an attractive cost of living for employees.

The cash-flow won't be as high as Cincinnati or Cleveland but in return you will see those high gains in appreciation. 

[Forest Wu]

Quote from @Benjamin Aaker:

Just consider also that while you don't want cash flow to be negative. Equity build can still be done. It might be worth it for some investors to maximize equity. High cash flow areas usually mean C markets (as you say in your post). These require a larger investment in time or money. I always recommend to invest near your home. Failing that, my vote is Ohio and Indiana. Midwest is often a good way to go.

Definitely agree! I've liked the Ohio area. If I can breakeven after all expenses (e.g., PITI, capex budgeting etc.), I'd consider it a win. I prefer at least B neighborhoods.

[Forest Wu]

Quote from @Samuel Diouf:

I am finding plenty of off-market deals in Columbus, OH. I think Columbus is a great option to consider. Multiple, billion dollar companies are investing into our area, such as Intel, Google, and Amazon, due to reasons such as lower costs on land, great tax abatement opportunities, and an attractive cost of living for employees.

The cash-flow won't be as high as Cincinnati or Cleveland but in return you will see those high gains in appreciation. 

 Nice! Which neighborhoods do you like in Columbus? Would love to try and snag an off-market deal over there.

[Jimmy Lieu]

Quote from @Forest Wu:

Hi folks, hope that you're doing well. Kicking off a discussion to see if people have ideas of where to invest in 2024. Because of high interest rates (as well as soaring insurance premiums), I think cashflow is near impossible to achieve for long-term rentals. Best strategy is to look into rougher neighborhoods, get creative with financing or find off-markets. 

That being said, I still find these cities interesting:

Detroit, Michigan

Charlotte, North Carolina

Cleveland, Ohio
Indianapolis, Indiana

Birmingham, Alabama

Any other ideas? Let's set some goals and crush it!

Hi Forest, I personally love Columbus Ohio and as someone who works with a lot of out of state investors - there's so many catalysts for why you should invest here. Specifically, there's job growth (Intel, Honda, Amazon, Nationwide, etc) and the population is growing (unlike Cleveland or Cincy). I really see Columbus Ohio as an extremely safe bet for the next 10-20 years. Plus, there's still so many positive cash flowing and 1% deals here in Columbus Ohio. As a local investor and agent here in Columbus, let me know if you have any questions or want to connect!

[Remington Lyman]

Quote from @Forest Wu:

Quote from @Samuel Diouf:

I am finding plenty of off-market deals in Columbus, OH. I think Columbus is a great option to consider. Multiple, billion dollar companies are investing into our area, such as Intel, Google, and Amazon, due to reasons such as lower costs on land, great tax abatement opportunities, and an attractive cost of living for employees.

The cash-flow won't be as high as Cincinnati or Cleveland but in return you will see those high gains in appreciation. 

 Nice! Which neighborhoods do you like in Columbus? Would love to try and snag an off-market deal over there.

North Linden, South of Main, Vassor Village, Woodland Park, MT Vernon, Milo-Grogan, Franklinton, Merrion Village, Hungarian Village, Southern Orchards, Driving Park, Olde Towne East, Franklin Park, King Lincoln, Old Oaks, Livingston Park are all but not limited to some areas in Columbus, Ohio I think will gentrify quickly and make for great long term buy and holds.

[Travis Biziorek]

I do a LOT in Detroit (including my own stuff).

In 2019 people were telling me I've lost my mind for investing there.

12-18 months ago people were warming up to it as a "cash flow" plan.

Within the last six months people are starting to realize the true opportunity. You can get cash flow today, but it's really only important to help pay the bills as things appreciate. 

There's a lot happening in the city and folks are finally figuring it out. You're seeing headlines touting Detroit's appreciation. 

It's still early, and I'm here for it :-)

[Jay Hinrichs]

Pick better neighborhoods and put a little more down to get to break even you will come out far ahead in the long run dont get so focused on cash flow per se.

[Owen Mitchell]

Katy, TX look interesting 

[Patrick Drury]

@Forest Wu
The Cleveland market is great for investing in from out of state since it's landlord-friendly, has a low barrier of entry on price points, and you can cash flow. 

[Siva Chilukuri]

Any suggestions in texas? especially around 250 miles radius from dallas texas. I recently moved to this area and planning to buy first multi-family home.

[Marcus Auerbach]

Cash flow is a poor metric by itself. Pick better neighborhoods, consider a small negative cash flow a forced savings account or just leverage less so you are break even or positive - long term you'll be way better off finacially. Run it througha BP calculater, you'll see.

I know that is not what anyone wants to hear, but REI has returned back to normal - the unicorn years after 2008 have finally dried up. It is still a great investment, but the cashflow for zero down magic is gone

[Bruce Lynn]

What are the places with both job growth, population growth and income growth?   That's what I would look at.  Some people tout the billions of investment in chip factories, but those employ very few people, they're highly automated.  So just take that into consideration.

I would also think about what type of tenants do you get for what you want to invest. I would also look at what kind of construction you get and how old it is.   What I often see pitched in OH and MI are 100year old houses.   In other markets like Texas and North Carolina you will like get newer homes....maybe built in the last 10-20 years.

[Jay Hinrichs]

Quote from @Marcus Auerbach:

Cash flow is a poor metric by itself. Pick better neighborhoods, consider a small negative cash flow a forced savings account or just leverage less so you are break even or positive - long term you'll be way better off finacially. Run it througha BP calculater, you'll see.

I know that is not what anyone wants to hear, but REI has returned back to normal - the unicorn years after 2008 have finally dried up. It is still a great investment, but the cashflow for zero down magic is gone

2 thumbs up on this thought process.. chasing cash flow for a beginner or out of area investor has inherent risks of ending up in areas of the cities that are tough to manage long term. I have a pretty simple metric I like to recommend.. Once you pick your MSA figure out the Median price of the SFR your looking to buy as a rental.  Buy at or slightly above or slightly below that price point. The reason I think this works is many of the sales will be to owner occupants and that's what create neighborhood stability. Generally indicates better schools .  When one looks at it logically if your median is say 150k ( pretty common in some mid western cities) and your trying to buy 100k all in rentals what is that telling you ???  Price has a direct correlation to the success of the investment and the ability to run the investment without a ton of ups and downs.

[Robert Ellis]

Quote from @Forest Wu:

Quote from @Samuel Diouf:

I am finding plenty of off-market deals in Columbus, OH. I think Columbus is a great option to consider. Multiple, billion dollar companies are investing into our area, such as Intel, Google, and Amazon, due to reasons such as lower costs on land, great tax abatement opportunities, and an attractive cost of living for employees.

The cash-flow won't be as high as Cincinnati or Cleveland but in return you will see those high gains in appreciation. 

 Nice! Which neighborhoods do you like in Columbus? Would love to try and snag an off-market deal over there.

You also don't always need off market for it to be great deals. I sold off market for the first 6 years of my career and sometimes the motivation levels aren't there to get them to sell 

[Kevin Johnson]

Quote from @Forest Wu:

Hi folks, hope that you're doing well. Kicking off a discussion to see if people have ideas of where to invest in 2024. Because of high interest rates (as well as soaring insurance premiums), I think cashflow is near impossible to achieve for long-term rentals. Best strategy is to look into rougher neighborhoods, get creative with financing or find off-markets. 

That being said, I still find these cities interesting:

Detroit, Michigan

Charlotte, North Carolina

Cleveland, Ohio
Indianapolis, Indiana

Birmingham, Alabama

Any other ideas? Let's set some goals and crush it!

Charlotte is DEFINITELY booming...  I live in Columbia, SC and we are also seeing a lot of influx since prices are still relatively low here, plus there are a couple of big projects bringing thousands of jobs to the area in the next few years as well.  The investors I work with here are mostly looking at student rentals near the university or focusing on areas near Fort Jackson, so there is always a good rental base here!

[Jack Seiden]

Quote from @Forest Wu:

Hi folks, hope that you're doing well. Kicking off a discussion to see if people have ideas of where to invest in 2024. Because of high interest rates (as well as soaring insurance premiums), I think cashflow is near impossible to achieve for long-term rentals. Best strategy is to look into rougher neighborhoods, get creative with financing or find off-markets. 

That being said, I still find these cities interesting:

Detroit, Michigan

Charlotte, North Carolina

Cleveland, Ohio
Indianapolis, Indiana

Birmingham, Alabama

Any other ideas? Let's set some goals and crush it!

 Whatever market the real estate agent responding works in 😂. In all seriousness I think markets big and small that offer affordability while still having a “draw” whether that be natural beauty, cultural amenities or a nice tertiary market close to a major metro. I like a lot of those cities, I’m a big believer in the mid-west going forward, Birmingham is interesting I was there a few years ago and I’ve been to probably over 100 U.S. cities at this point & frankly it was one of the worst ( though it did have fantastic architecture) & is one of the last affordable sunbelt cities, really that & Memphis are it, so I’ll be interested to see if it takes off.

[Marcus Auerbach]

Quote from @Jay Hinrichs:

Quote from @Marcus Auerbach:

Cash flow is a poor metric by itself. Pick better neighborhoods, consider a small negative cash flow a forced savings account or just leverage less so you are break even or positive - long term you'll be way better off finacially. Run it througha BP calculater, you'll see.

I know that is not what anyone wants to hear, but REI has returned back to normal - the unicorn years after 2008 have finally dried up. It is still a great investment, but the cashflow for zero down magic is gone

2 thumbs up on this thought process.. chasing cash flow for a beginner or out of area investor has inherent risks of ending up in areas of the cities that are tough to manage long term. I have a pretty simple metric I like to recommend.. Once you pick your MSA figure out the Median price of the SFR your looking to buy as a rental.  Buy at or slightly above or slightly below that price point. The reason I think this works is many of the sales will be to owner occupants and that's what create neighborhood stability. Generally indicates better schools .  When one looks at it logically if your median is say 150k ( pretty common in some mid western cities) and your trying to buy 100k all in rentals what is that telling you ???  Price has a direct correlation to the success of the investment and the ability to run the investment without a ton of ups and downs.

Jay you know Milwaukee well! I frequently get approached by OOS investors (usually noobs) who see on Zillow that you can buy a house in MKE for 100k. They don't realize what they are getting into: at best maybe they anticipate issues with the tenant. But there is also the fact that you are buying a 100 year old building that could easily take 70k in rehab to get it all done and the house is just not worth that much. That's why past owners relied mostly on duct tape..

Yesterday someone emailed me about buying at 120k all cash - their reason for buying in the hood: they are risk averse and don't want to take out a loan, as they perceive that as risky. Instead they choose a whole bundle of risks that comes with class D assets. Where do I even start explaining??

 Our median is 195k for the city of Milwaukee, but it is over 300k for the metro area. The surrounding suburbs are bigger in population than the Milwaukee propper BTW. Every first time home buyer we work with shoots for min 250k and up - they don't want to own anything in lower priced areas.

[Forest Wu]

Quote from @Marcus Auerbach:

Cash flow is a poor metric by itself. Pick better neighborhoods, consider a small negative cash flow a forced savings account or just leverage less so you are break even or positive - long term you'll be way better off finacially. Run it througha BP calculater, you'll see.

I know that is not what anyone wants to hear, but REI has returned back to normal - the unicorn years after 2008 have finally dried up. It is still a great investment, but the cashflow for zero down magic is gone

 Definitely this! Finding better neighborhoods and maybe putting a slightly larger downpayment just to breakeven is a good strategy to consider. Cashflow is just a bonus - not necessarily a requirement anymore

[Forest Wu]

Quote from @Robert Ellis:

Quote from @Forest Wu:

Quote from @Samuel Diouf:

I am finding plenty of off-market deals in Columbus, OH. I think Columbus is a great option to consider. Multiple, billion dollar companies are investing into our area, such as Intel, Google, and Amazon, due to reasons such as lower costs on land, great tax abatement opportunities, and an attractive cost of living for employees.

The cash-flow won't be as high as Cincinnati or Cleveland but in return you will see those high gains in appreciation. 

 Nice! Which neighborhoods do you like in Columbus? Would love to try and snag an off-market deal over there.

You also don't always need off market for it to be great deals. I sold off market for the first 6 years of my career and sometimes the motivation levels aren't there to get them to sell 

 Good point. But my worry is that offmarket might be the only way to find a property that is reasonably priced or to create instant equity. Maybe look for sellers who are willing to seller finance?

[Erin Wamsley]

Quote from @Forest Wu:

Hi folks, hope that you're doing well. Kicking off a discussion to see if people have ideas of where to invest in 2024. Because of high interest rates (as well as soaring insurance premiums), I think cashflow is near impossible to achieve for long-term rentals. Best strategy is to look into rougher neighborhoods, get creative with financing or find off-markets. 

That being said, I still find these cities interesting:

Detroit, Michigan

Charlotte, North Carolina

Cleveland, Ohio
Indianapolis, Indiana

Birmingham, Alabama

Any other ideas? Let's set some goals and crush it!

Greenville, SC.

The major boom here is over, but the population of our small city is still growing, and I think home prices in certain areas on the edge of the most gentrified downtown neighborhoods will still rise moderately over the next 5 years. Meanwhile, I think positive cash flow on rentals is definitely possible here (I am just a small time landlord, but have done well on 3 SFH) -- Soaring property taxes are a problem that has hurt our cash flow recently, but costs here are overall still low compared to many cities, while the rental market is extremely tight due to high demand/rents very high.

[John Underwood]

Quote from @Forest Wu:

Hi folks, hope that you're doing well. Kicking off a discussion to see if people have ideas of where to invest in 2024. Because of high interest rates (as well as soaring insurance premiums), I think cashflow is near impossible to achieve for long-term rentals. Best strategy is to look into rougher neighborhoods, get creative with financing or find off-markets. 

That being said, I still find these cities interesting:

Detroit, Michigan

Charlotte, North Carolina

Cleveland, Ohio
Indianapolis, Indiana

Birmingham, Alabama

Any other ideas? Let's set some goals and crush it!

 Huntsville, AL

[John Underwood]

Quote from @Erin Wamsley:

Quote from @Forest Wu:

Hi folks, hope that you're doing well. Kicking off a discussion to see if people have ideas of where to invest in 2024. Because of high interest rates (as well as soaring insurance premiums), I think cashflow is near impossible to achieve for long-term rentals. Best strategy is to look into rougher neighborhoods, get creative with financing or find off-markets. 

That being said, I still find these cities interesting:

Detroit, Michigan

Charlotte, North Carolina

Cleveland, Ohio
Indianapolis, Indiana

Birmingham, Alabama

Any other ideas? Let's set some goals and crush it!

Greenville, SC.

The major boom here is over, but the population of our small city is still growing, and I think home prices in certain areas on the edge of the most gentrified downtown neighborhoods will still rise moderately over the next 5 years. Meanwhile, I think positive cash flow on rentals is definitely possible here (I am just a small time landlord, but have done well on 3 SFH) -- Soaring property taxes are a problem that has hurt our cash flow recently, but costs here are overall still low compared to many cities, while the rental market is extremely tight due to high demand/rents very high.

 33 people per day moving to Greenville. 

[Alan Asriants]

As many have said here. 

Location (most important): Pick strong neighborhoods with plenty of growth, high quality tenants, historically strong areas. 

Avoid - D class areas

Property type: try to get into small MF. This will be likely the best way to get the most dollar for dollar. It's also a more desirable asset class, giving it more room for appreciation. Also your ceiling for increasing rents goes up because you have more units that you can bump rents on. Try to find something built after 1980+ preferably. after 1960 is good too. Buying this kind of real estate avoids going into CAP EX improvements too much, as most plumbing and electrical is still good and close to todays codes, and you are not dealing with plaster walls. Mostly cosmetic renovation.

Avoid: poorly converted MF, Very old buildings with lots of CAP ex like siding, windows, repointing, etc.

Cash flow is a good metric but it is by far not always the most important. 

The three rules to real estate are:

Location, location, location!