You can spend the rest of your life comparing cites and states across the U.S. and still, in the end, make a poor investment decision. Every metro area has great, good, fair and poor investment opportunities. Whether you invest in your own backyard or 3,000 miles away, being able to spot good opportunities is the key. What constitute good opportunities will depend on your investment goal and time horizon (wealth building? cash flow?), the amount of capital available to you, your risk tolerance and your capacity to conduct diligence. We invest in our own backyard (SF/Marin County) as well as, both currently and in the past 20 years, in Davis CA, Las Vegas, Rochester NY, Chicago and St. Pete area. Here is a sketch of our process for finding new markets:
If you are going out of area, start with a metro with which you have some familiarity. You have family there? Friends? You like to visit? Many online resources exist that will allow you to break the metro into neighborhoods. Having some personal experience with the area will help immensely in this regard. Once you develop this map, focus on those neighborhoods/areas consistent with your level of risk tolerance and available capital. Are you looking for high end properties, working class areas, etc? From there, check rent to sale price ratios in the selected neighborhoods. Look into the area's property tax assessment practices and rates (unlike mortgages property taxes are forever). Subscribe to the online version of the local paper for a sanity check on your neighborhood assessments. Lastly, pay a meaningful visit to the neighborhoods you have selected. If one or more neighborhoods continue to appear promising, meet up with one or more local realtors and select the best one to work with in helping you find properties.
Once you have this process down pat, you can drill down in pretty much any metro in a week or two.
