All Forum Posts by: Account Closed

I've been doing research in to various cities, and it seems like these two keep popping up as growing areas with a strong rental market. I read some news articles and I understand that it may be due to the oil boom. My question is whether you think this is sustainable for a long-term investment. I'm looking for a buy-and-hold SFR property. I think based on many indicators, these towns could be great investment areas. Job growth, income growth, low vacancy, etc. Pretty much everything looks good except property taxes. Local investors, what can you tell me?

Also, it looks to me that Bakersfield CA might be a bit better in terms of cashflow than LA.  You might also look at Antellope Valley.

Have you considered what your entry price would be? You might be able to calculate such a thing if you came up with criteria for cap rate and such.  FWIW, you should only offer $120k if you're looking for a cap rate closer to 8%.  Going with the rent-o-meter rate, it seems like this would have negative cash flow. Your debt coverage ratio would plunge to .7, your cap rate would be 2.9%.

Why do you think you'd get $1700 if rent-o-meter suggests closer to $1500? Did you look at comparable properties renting within a small radius? If you're right that it's more like $1700, then you'll only just be breaking even. Without cash-flow, you'll be depending on appreciation and loan-paydown for your investment. Assuming that the property would rise with typical inflation at 3%, your ROI with principal accrued, $0 cash flow, and 3% appreciation would be ~$8k a year (~12%).

Hey BP,

I am considering forming an LLC with two other partners and I wanted to understand the tax implications of that.

• Can we choose to not have any distributions and "save" the money in the LLC for future investing tax free? I.E. if we don't distribute it, is it still "passed through" taxed?
• How complicated to taxes on partnerships get?  Is it more or less complicated to me on my to have a partner

Hi Venkatesh,

I'm trying to put together a similar list, and here's what I've decided is important to me as a buy-and-hold investor.

• Zip code

• Max purchase amount

• Property size in sq ft

• # units

• Cap rate

• Appreciation potential

• Rent / acquisition price

• Max initial repair cost

• Cash flow

I don't have any minimum equity requirements, that seems like more of a wholesale question.  Also, why would you avoid a home sold within the last 3 years?

Christopher

Hey Bigger Pockets,

I am looking to start investing and due to high prices in the SF/SJ area, I'm looking to invest elsewhere.  I'm trying to be methodical about this, so I've developed a score for cities based on different metrics.  I'm trying to find a good area for buy-and-hold rentals with a bonus potential for appreciation.  Toward that end, I'm hoping to identify strong economic growth and strong rental markets.  Here's what I'm looking at:

• High Population Growth
• Low Unemployment
• High Median Income Growth
• Low Vacancy
• High Percentage Renters
• High Rent/Price ratio
• High % of renters paying < 1/3 income on housing (affordability)
• High 1 year job growth
• Low state property tax
• Low median house price

What I'm looking for is any thoughts you all might have on other important metrics I may have missed or if you think I'm looking at the wrong information.  FWIW, I'm getting high scores for areas in Texas and Oklahoma.  Thanks!

Christopher

Also, this article:

http://www.groco.com/readingroom/estate_planning/c...

suggests the following criteria:

• % renters higher
• A market with low (good) median price/ median rent. Min 1%
• Vacancy rate
• Avg cost of housing < 3x avg income
• Days on market. Want low and decreasing
• asking/sale price. If they’re getting the price they’re asking for, that’s good.
• Low unemployment
• Per capita and median household income rising
• Gdp growth

Any thoughts on which of these is more important and if any are ignorable?

Hi All,

I'm trying to work through a bit of an academic exercise, and I'd like to re-produce some of the results in the Forbes article, Best Buy Cities: Where To Invest In Housing In 2016.  My question is what are the important criteria an investor should look at to determine what area they should invest in (for a long-term buy-and-hold rental)?  How would you weight these criteria?

Some thoughts based on the article:

• Job growth ( 3.5% is great, 2% is national average)
• Population growth (8% is good, 2% is national average)
• Good median rent/median price ratio 

Which of these is more important than the others.  What would you look at as a signal of a strong market?