Real Estate News & Commentary

5 Reasons the Midwest is Hands Down the Best Place to Invest

Expertise: Real Estate Investing Basics, Personal Development, Landlording & Rental Properties, Real Estate News & Commentary, Business Management, Flipping Houses, Real Estate Deal Analysis & Advice, Personal Finance, Real Estate Marketing
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Let’s face it. It is tough living in a big city. It is no secret that life in a big city is seriously expensive. With ever-climbing costs, the situation just keeps getting harder. To top it all off, there’s the the skyrocketing costs of real estate! It’s just not easy to find an ideal spot worth investing in. Soaring prices, bad neighborhoods, and an overcrowded market are all big reasons so many would-be investors simply don’t ever get to it.

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Everyone knows what happens when demand is high: Prices rise.

So, do you still want to follow the crowd and call a tiny patch of land with a tiny set of rooms your own? If so, then invest in the West Coast and East Coast. Investing there may be one of the stupidest things you can do right now.

Now, you might be thinking, why on earth is investing on the West and East Coast such a bad idea? Well, it’s because huge hedge funds have raised billions of dollars and bought tons of available properties. The first ones they bought were the best deals. There are absolutely no deals left, and the few available are usually not even worth the sweat. Right now, you would be paying top dollar and getting a crappy ROI to boot. But hey, you tell me. How does a $300,000-$500,000 single family home that rents for between $1,200-$1,500 per month sound? Does that seem like a good deal to you? Let me answer that for you: not at all! These are ridiculous and lousy investments in my opinion. I would rather stay in bed sleeping than wreck my balance sheet buying properties like this.

Why All Investors Should Consider the Midwest

Now, if you are someone who refuses to be a follower, I might have some awesome news for you. Think Midwest. Yes, you heard me. The Midwest is where all the real estate action is. Wake up and smell the roses. City dwellers won’t even believe how far their money can go in the Midwestern states. Here, you’ll end up spending almost one-fifth of what you’ll shell out on real estate in any area on the East or West Coasts.

Yes, life in the Midwestern region is different. Yes, it’s less crowded there and a lot quieter, but isn’t it better to have more space, more conveniences, and a stunning piece of real estate at knock-out prices? Well, many people with families would argue that it is indeed better to live there than anywhere else. With top-rated schools, the possibility for a high-end lifestyle, and effortless connectivity all finding their way to these locations, there isn’t much to complain about.

Related: 28 Smart Questions to Ask a Broker When Investigating Out-of-State Markets

The Midwestern region is known for its scenic natural vistas, which are virtually non-existent in big cities, thanks to rapid urbanization. Most Midwestern areas offer an incredible lifestyle at extremely lucrative prices. So what is the catch, you ask? Well, there isn’t any catch. The cost of living here is much more reasonable than in most big cities. This means people get to save way more than they could ever manage in the big city! Comparatively an under-explored market, the Midwest has potential beyond compare!

Why should you care as an investor? Because these Midwestern families are your future rentals. There’s such a clear demand for rental properties in the Midwest.

5 Reasons to Consider Midwest Investments

But there’s more. When was the last time you felt like a kid in a candy store? With deals so sweet you will feel like a kid again, the Midwest is sure to bring back some great feelings. Why? Properties are available between $50,000-$70,000. In addition, many of these $50,000-$70,000 properties will bring in a rent of $700-$1,000 per month. Now, I don’t know how good your math is, but this gives you a ridiculously high ROI. Many of these houses could be found in solid B areas! You can think of the Midwest as a hidden gold mine waiting to be explored. In many parts of the Midwest, a mere $1 million will buy you a stunning mansion with acres of open space surrounding it. You might even get a lake-facing property, or one with a huge pool and a car collector’s garage!

Let’s face it — life is too short to be spending your time in cramped spaces. Many people feel that way, and that’s why the Midwest is such a success for families. Of course, living in a place that doesn’t resemble a chicken coop is a big plus as well.

Take advantage of the low cost of living and low-priced properties. Invest in properties that give you a perfect ROI and do not burn a hole in your pocket. And there ain’t any place like the Midwest to do that! Here are five things that we absolutely love about the Midwest:

  1. It is so well contained and life is so much simpler. Its unspoiled solitude is both captivating and oh-so invigorating. Translation? Happy tenants. There’s no big city pressure in the Midwest; everything is just nice.
  2. Low cost living! An affordable lifestyle with all possible luxuries to go with it is never a distant dream here. That means more cash for rent. It also explains, in part, why rent is relatively high here. It also means that maintenance may be cheaper as well. Don’t forget, especially if you’re living on the East or West Coasts, your hard-earned cash simply has more milage in the Midwest.
  3. While big cities might be known for neon lights and crazy traffic, the Midwest is known for its serene outdoors and calming silence. Compared to busy city life, the Midwest is like an oasis. There sure are some really beautiful locations. It’s also perfect for the average family: Great family trips assured.
  4. The Midwest might not be the center of a bustling universe, but there’s still a lot of activity here — economically speaking, that is. There are few financial headquarters, many factories, and an overall less-corporate environment. There are loads of good blue-collar workers, jobs, and job stability.
  5. There’s a notable lack of pretension. Why is this important? Well, in terms of the maintenance and amenities you need to provide for a mid-class home, it makes a huge difference. People’s expectations are usually a bit lower, and that means easier tenants. It’s not a huge difference from the Coasts, but it’s still noticeable to investors.

Now, those of you who know me know that when I speak about good investment opportunities, I never talk about the appreciation of a property. Right now, the East and West Coasts have some decently appreciating real estate. The thing with appreciation, however, is that it’s basically anyone’s guess as to where it’s going. Many people buy an expensive property and hope that it increases in value in a record amount of time. You might call it investing, but I call it gambling. You know, all I care about is a good cash flow from properties. If you think about it, that’s all that matters. And it’s exactly what the Midwest has to offer. Don’t ask me about where the properties are going in terms of value because I simply don’t care.

Add in extensive homeownership (thanks to some of the lowest average home prices in the country), simple lifestyle, and low-cost living, and you’ve got the perfect mix for investing in properties. After all, homeowners take care of their homes and make living in their neighborhoods as nice as they can.

Related: 4 Things to Do With Extra Cash in a Low Inventory Housing Market

Check it Out for Yourself

Of course, I understand that if you’re currently living somewhere else, it’s hard to imagine what it’s like elsewhere. It’s why I always recommend that people go check it out for themselves. Know where you’re investing. Think about traveling to the Midwest, and check out some properties in areas that appeal to you. It doesn’t matter that you won’t be living there  it’s just always nice to know that you understand what living in a certain place is like.

Above all, considering a purchase price of $60,000 for a single family home with a rental income of $800 each month, you’d be hard-pressed to find a deal with a similar return anywhere else  especially if you take into account that one $600,000 East or West Coast home buys you 10 of these Midwestern homes. I personally own 20 properties and am looking to buy another 30 by the end of the year.

How’s that for a passive income?

[Editor’s Note: We are reposting this article to help out our newer readers.]

Where do you invest — and why?

Let me know your thoughts on the best real estate markets!

Engelo Rumora, a.k.a.”the Real Estate Dingo,” quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate all over the world and has bought, renovated, and sold over 500 properties. He runs runs Ohio Cashflow, a turnkey real estate investment company in the country (Inc 5000 2017 & 2018) and is currently in the process of launching a real estate brokerage called List’n Sell Realty. He is also known for giving houses away to people in need and his crazy videos on YouTube. His mission in life is to be remembered as someone that gave it his all and gave it all away.

    Chirag Harivadan Parikh Investor from San Jose, California
    Replied about 3 years ago
    Thank you for this article!
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    My pleasure Chirag, I hope you found it useful. Much success
    Dale Holmgren
    Replied over 1 year ago
    “In many parts of the Midwest, a mere $1 million will buy you a stunning mansion.” I never thought I’d read “mere” and “$1 million” in the same sentence.
    Alex Craig Real Estate Professional from Memphis, TN
    Replied about 3 years ago
    Good article. Midwest homes are cheaper, taxes are cheaper and with the increase of renters the past few years, there is no doubt the Mid West/Mid South are the place to invest for cash flow.
    Lyuba Barrington REA and accountant (CPA) from Omaha, Nebraska
    Replied about 3 years ago
    Property taxes are 2.17% in Omaha Nebraska. HOI rates are raising fast due to hurricanes. Historical appreciation is 5% annually. Please do your math before investing… Schools are indeed very good (that’s were your property taxes are going).. And jobs are plenty… State Income Tax and sales taxes are rather high. I am a local real estate agent, investor and a CPA in slow winter season. Please do not hesitate to reach out. I have all the investing math ready in my s/sheets!
    Scott Cordero from perris, CA
    Replied over 1 year ago
    interesting in learning more.
    Jayce Tanner
    Replied about 1 year ago
    Hi, would slow winter season be a good time to buy due to fewer competition?
    Engelo Rumora Specialist from Toledo, OH
    Replied about 1 year ago
    Hi Jayce, Yes they would. We tend to find/buy the most during the colder winter months. Much success
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks Alex and 100% agreed. I’m all in and have been for a while. The Midwest isn’t as sexy as the East and West Coasts bur numbers beat their all day long 🙂
    William Morrison Investor from Silver Spring, Maryland
    Replied about 3 years ago
    .
    Mike McKinzie Investor from Westminster, CO
    Replied about 3 years ago
    Engelo, I agree whole heartedly with your article. But remember, there are places on both coasts that are twins of the Midwest. If you stay within 30 miles or so of the coast, from San Diego to Seatlle, you are correct. But go inland 50-100 miles and things change dramatically. Whether it is San Bernardino, Bakersfield, Freano, Modesto and even on up to the outskirts of Sacramento, finding $100,000 houses that rent for $1,500 a month is not that difficult. Last year, in a small town called Visalia, CA, I bought some homes for $40,000 that rent for $950 a month. I put 20% down, so you figure out my ROI. This year, I ventured into the Midwest state of Missouri. Getting 1% rent in a class A area is still easily doable. Class B gets 1.25 to 1.5% rent. But always check your overall expenses. For instance, Indiana has a 2% Property tax and Missouri has a 1% property tax. Texas approaches 3% property taxes. California is about 1.25%. So yes, the Midwest has some great investments, but research all areas, I think just about every state has some good areas to invest (not sure about Hawaii)
    Rachel
    Replied about 3 years ago
    Hi Mike, I live in California. Any tips on where I can find such great prices in Visalia and the outskirts of Sacramento? I look at a website called openlistings.com which lists properties throughout California but I don’t see such low prices. Are you able to find deals that aren’t on the MLS? Thank you!
    Shalabh Jain Rental Property Investor from Bay area CA
    Replied about 2 years ago
    Hello Mike, I myself have looked at Visalia. Would you mind connecting me to your realtor there ? or if you are a realtor yourself, may be we can work together ?
    William Morrison Investor from Silver Spring, Maryland
    Replied about 3 years ago
    Mike nice recap and California. A one born in California and family who came there in the 1800’s is always an interesting discussion with those on the East Coast who think of California as a one small all the same place state. I usually start the discussion by saying it stretches Jacksonville, Florida to NY and would they describe that area as all the same. Grin. What California does have statewide in an irritating and convoluted tax system for out of state investors. And yes I know first hand.
    Amber Turner from Turlock, California
    Replied about 2 years ago
    I live next to Modesto (in Turlock) and not sure you would be able to find many, if any, of those kinds of deals here anymore. You could find something to break even if you put enough down or if one bought in a low rated neighborhood maybe. But we haven’t found anything lately, especially multifamily, that would pencil out. There are properties that can be flipped, but not usually rented out.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Amber, If I was you, I’d look into other markets that are within the closest drive time of where you are based. Success in real estate doesn’t come without sacrifice and that might mean investing further away from home. Much success
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks Mike, Agreed. The numbers can work in any market as it comes down to how cheap you buy and how good you are at negotiating. The Midwest tho offers crazy deals and it feels like they are just falling off trees. I’m sure the same can’t be said for the West Coast and the deals you mentioned are a dime a dozen. In Toledo for example you can pick up as many as you won’t everyday at the $50,000 price point renting for $800+ per month. Thanks again 🙂
    Rachel
    Replied about 3 years ago
    Hi Engelo, Thanks for your post. I live in California and, as you say, almost everywhere (in my experience) is really expensive. Are there any particular cities/states you recommend investing in? Do you recommend SFR over multi-family? I find the thought of investing out of state daunting but I feel like it’s probably my only option if I want to make the most of my money. How long do you need to spend somewhere to “know where you’re investing” – just a few days looking at properties? Any tips on how to make sure I get a solid property with a steady stream of renters, especially if I’m buying a place that isn’t already rented (e.g. a SFR as opposed to a multi-unit). How do I figure out what to rent the place for if it isn’t already rented and doesn’t have a history of being rented? Should I just ask realtors who know rental markets? Do you recommend working with a company in the area that helps investors find properties and how do you know they’re trustworthy? Thank you.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks for your comment Rachel, Yep, the market there sure is expensive and I just got back from San Francisco. Crazy rent prices for 1 bed condo’s hehe In Toledo you could rent an entire shopping mall for those prices hehe I highly suggest you check out Ohio. I’ll be bias and say Toledo and Dayton are my first recommendations. I also like the Michigan market and Indiana. All good things take time and the same goes for learning a market/area. If you’re looking at investing out of state I highly suggest buying turnkey. I don’t know of anyone that can say that they successfully invest in run down properties from out of state. There are just too many things that could go wrong if you try doing it yourself and that is why a good turnkey company can look after all of that for you. Google is your best friend so make sure to spend time researching the people that you’re looking at working with. Team work makes the dream work so focus on the people side of things first before looking at the stats/demographics of an area. Thanks again 🙂
    Tom Econ
    Replied about 2 years ago
    I live in Bay Are and thought of investing in Midwest but read about a huge opioid epidemic in Ohio that was crippling towns. Can anyone local there comment on how that is affecting RE?
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    lol Tom, I heard there are earthquakes in CA but still property prices are hitting record highs lol Don’t believe everything you see in the media. Conduct due diligence on a local level and not what the media says. Much success
    Larry Frank Rental Property Investor from Racine IL
    Replied over 1 year ago
    I was looking at Ohio and have a sister that lives in Dayton area. The opioid epideemic is real. A lot of these high return properties are in need of repair or will have higher repairs per sq foot than other properties. Factor in property management at 8-10% (because rents are so low they have to charge that) and cap ex such as a roof/new driveway, paint, the deals are not as good as described. However it still pays off much better than Cap rates of 3-5% in CA. If interest rates go up 1 point and rents don’t you will be in serious trouble.
    Palmira Angelova Business Analyst from Oakland, California
    Replied over 2 years ago
    Hi Engelo, Thanks for a great post! I’m looking for my next investment to be in a cheaper, cash-flowing area like the ones you’ve described. I’m curious about your above comment though – why would you recommend turnkey investments? Would your opinion apply to non-run-down properties as well? I have a few out of state investments, which I travelled / vacationed to to pick out myself, then handed over to a property manager that I trust. I’ve considered 2 Turnkey companies, but generally find that they keep the best profits from most deals for themselves (they sell to you at roughly market price) *and* they charge outrageous property management fees. Curious to hear more about what you think!
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Hi Palmira, If you can find the right turnkey company, you could do very well from a cashflow and “hands off” standpoint. If you want the best deals and not to pay a premium, then you will have to look for the deals yourself and do all of the work yourself lol The best turnkey companies have in-house property management that doesn’t nickel and dime to death. I wish you much success
    Andrew Syrios Residential Real Estate Investor from Kansas City, Missouri
    Replied about 3 years ago
    Gotta say, I agree : )
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks mate, I’ll be in KC this coming weekend. Let me know if you have time for coffee 🙂
    Marcus Auerbach Rental Property Investor from Milwaukee - Mequon, WI
    Replied about 3 years ago
    Hi Engelo, great post and you bring up a lot of good points about the midwest. I have been buying and renting in Milwaukee the last 7 years. I was able to put a nice portfolio of completley remodelled properties together and ultimately quit my very well compensated corporate job thanks to what you describe. I work now as an agent for other investors and despite the best market we had in ten years we can still find great deals with solid cash flow for investors who have saved up some down payment. So the economics still work very well for landlords arround here, but our intern brought up a really good point: we are right at the Great Lakes, the largest fresh water resorvoir, and water as a ressource for farming as well as manufactoring will be a major consideration for the years to come.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks for your comment Marcus and well done on your success. The upper rust belt could see major changes if more jobs come back from China. Either way, the numbers make sense just as you mentioned and we are all in with Ohio properties. Have you seen much appreciation in Milwaukee? Thanks
    Marcus Auerbach Rental Property Investor from Milwaukee - Mequon, WI
    Replied about 3 years ago
    Actually, yes we have seen heathly appreciation in the last years. The greater Milwaukee area breaks down into different markets that develop quite differently. While the lower income areas just barly keep up with inflation we have seen between 4-6% in the majority of areas, and a few selected suburbs as high as 8%. That’s 2015 data. 2016 will be another good year, MLS data looks very promising so far. Milwaukee is generally a much more stable market, both up and downs are more moderate arround here.
    Jeff Piscioniere Investor from Shelton, Connecticut
    Replied about 3 years ago
    Engelo, Can you list what you specifically consider the Midwest and/or what areas you might consider having similar markets nearby? Thank you, Jeff
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks Jeff, 1) Ohio 2) Michigan 3) Indiana These are my top 3 picks and if you’re looking for B class with solid cashflow, you can’t go wrong. Make sure you have the right people on the ground as they will make or break your investments. Thanks
    Christy Greene from San Diego, California
    Replied about 3 years ago
    Thank you for the article ,Engelo. You sound like you know the mid west pretty well. I have been looking in areas in Indiana and Ohio. It seems most of the schools are good and price of houses are reasonable. What I did not like was that in some places, the property taxes were higher and some areas had high crime rates. Could you share what areas in the Midwest you are talking about? Thank you.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks Christy, I’m glad you found the blog useful. I suggest looking into Ohio. I’m bias as I’m based here and we do around 10 deals per month. I think the market is very undervalued in key pockets and there is not much competition. Rents are strong and tenants are decent blue collar working class folk. The taxes don’t have anything to do with the ROI if the rents are high enough. Crime can be found everywhere and as long as it isn’t ridiculously high, I wouldn’t worry about it much. You will never find a perfect investment but do your best with minimising your risk as much as possible. Risk is minimised over time by doing enough market research. Thanks
    Kurt
    Replied over 2 years ago
    Wrong. Taxes are subtracted from income and always affect ROI. No matter what your rents are. It’s statements like this that cause you to lose credibility
    Engelo Rumora Specialist from Toledo, OH
    Replied over 2 years ago
    You’re wrong Since you’re still sticking around my blog I’ll happily keep going back and forth with you to continue bumping my blog up the ladder for all to see it. So thanks for “stinking” around 🙂 The investor I replied to is worried about taxes affecting her ROI. Well the taxes don’t really matter in an area where a property has super high rent. For example in Toledo, the taxes are “high” as they are $1,500 per year but a $50,000 house rents for $750+ per month showing a better than average cap rate. Buying the same priced property in another market with lower taxes ($500 per year) but also only renting for $500 per month affects the ROI so the taxes “don’t matter”. The point of my comment to Christy is that the ROI comes down to the overall numbers in each individual deal. As for credibility, how about you update your profile and a photo first before talking. Or do you prefer hiding who you are and just BULL$#@%ing with comments?
    Kurt
    Replied over 2 years ago
    So losing 16% of your gross income to property tax “doesn’t matter”. Great. It makes me wonder what other expenses don’t matter to you.
    Jerry W. Investor from Thermopolis, Wyoming
    Replied about 3 years ago
    Interesting article. I have bought several mid west homes to try mid west investing. I could buy all in for $60K and rent for $900 per month, but taxes were $200 per month, property management came to about $100 per month, throw in the cost of refurbishing when you have turnover, and $200 per month on a water bill when the place is empty and my returns dropped to about 6% which I can beat in my local area. I realize that taxes vary a lot, but I found the desirable areas were good school districts and the taxes went up accordingly. Perhaps if you do economy of scale you could do better, but me experience was very lukewarm.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks Jerry, Those taxes do seem a bit high. We are seeing them at around $1,200 – $1,500 per year in Toledo. We dispute them also and usually get them lowered 30-50%. Our turnkey sale prices are between $50,000 – $70,000 so you can imagine what my personal ROI is on these B class properties when I decide to keep them for my portfolio. Thanks
    Anne M. from Kiryat Ono, Israel
    Replied about 3 years ago
    Funny. As an outsider (non-American) who has traveled quite extensively in the US (44 states and counting), I was just telling my husband I think the Midwest is the right place for us to invest in. I still need to do a lot of research, obviously, nothing more than intuition at this point. Just odd that I found this article this morning.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Awesome Anne, Definitely check out the Midwest. I’m sure you will like what is on offer here. Thanks and much success
    Scott Trench President of BiggerPockets from Denver, CO
    Replied about 3 years ago
    The problem is – where are you going to be in 5 years? If you buy your $300,000 home that rents for $1,500 per month, in five years you *MIGHT* have a $400,000 home that rents for $2,000 per month. If you buy five $60,000 homes ($300,000 total) that rent for $800 per month, yes you have $4,000 in gross rents, but you might have $315,000 in 5 years and $4,400 in rent. Oh and you had twenty different tenants in that time frame, vs one or two in CA or the East/West (I’m in Denver, which you can throw in there). The problem is that in some places, you can be pretty sure that your outcome is going to be fairly mediocre cash flow. In other places, you HOPE for appreciation. It’s not about what you get today, it’s where you are when you exit in 5 years or a decade or two down the line. For me, I’ll hope for appreciation all day long. And, just because I’m investing in Denver, hoping for some appreciation, that does NOT mean that it is “risky” – I still maintain a strong cash reserve account and my properties still cash flow strongly – just not to the same degree that properties cash flow from day one in the midwest. The people you are dissing for investing in CA are the same people that have been investing in SF for decades. They are millionaires tens or hundreds of times over, from appreciation. Don’t know too many millionaires that got there as rapidly out in the midwest. It’s foolish to depend on appreciation, but it’s equally foolish to ignore it entirely.
    Dave Poeppelmeier Rental Property Investor from Maumee, OH
    Replied about 1 year ago
    Scott, I invest in (and live in) Ohio, and unless you’re rolling the dice in an up-and-coming pricier suburb of a big city (with the same cash flow problems of buying on the coasts), the Midwest is about cash flow, not appreciation. If I get 1% appreciation a year that’s doing well, but as long as that cash flow is nice I’ll take that 6 days a week and twice on Sunday. So when it’s time to cash out, you can easily sell that SFH or duplex, tip your hat and move on.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks Scott, “Hoping” in my opinion never has and never will be a strategy. Hoping is for terminally ill people that have no over choice. Real estate is a numbers game that requires calculated risks. My portfolio is built on ZERO capital appreciation projections. I don’t need any nor do I want any to be honest as I can’t live of it. There are far to many folks in CA that lost their ass during the GFC more than becoming millionaires. This is just my opinion. Thanks and much success
    O'brian
    Replied about 3 years ago
    Great comment Scott. Even though I have a couple rentals in the Midwest, I’m not opposed to investing in CA. While some investors only look to maximize cash flow, others prioritize investing in especially strong markets with greater appreciation potential even if that means lower cash flow in the short term. Though I will say that the Midwest does offer a lower barrier of entry with its low price points…it’s how I got started 🙂 I’d be interested in seeing how the long term returns compare between places like the Midwest vs coastal cities.
    Becky J
    Replied about 2 years ago
    Investing in CA would be a different strategy. Right now there is a HUGE demand and lack of inventory has been driving up prices like before 2008. If we sold our house today, we would make $200K. We bought it 2 years ago! That is tax-free money 🙂 To compare, rent on average for a house like ours would run about $3000, still less than our mortgage payment. The problem is as an investor, it is hard to find deals in this market. People are just not selling… so if if you do, you just hit gold.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Hi Becky, Congratulations on your success but investing based on appreciation is a gamble in my opinion. Personally, I think the CA market is ridiculously expensive Much success
    Faisal Farnas Investor from Saint Petersburg, Florida
    Replied about 2 years ago
    I have friends who bought in the midwest in the bottom of the market during 2011 and sold a few years later when the market recovered. Their houses appreciated by 2-4% during that time frame. I know people who did the same thing in Florida, and they saw close to 100% return (house doubled in price). I will take the chance of 100% return any day.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Faisal, I wouldn’t take that chance. Real estate is about the long term and not short term play. You might as well go and play Black Jack or roulette and put it on black. You might double your money in 30 seconds lol Much success
    Faisal Farnas Investor from Saint Petersburg, Florida
    Replied about 2 years ago
    I have friends who bought in the midwest in the bottom of the market during 2011 and sold a few years later when the market recovered. Their houses appreciated by 2-4% during that time frame. I know people who did the same thing in Florida, and they saw close to 100% return (house doubled in price). I will take the change of 100% return any day.
    Andrew Abbott Flipper/Rehabber from Milford, MI
    Replied about 3 years ago
    Great article, Engelo. Thank you! Would you group Chicago into this category or do you not recommend a “big city” market? Reason I ask is I currently rent in metro Detroit which I consider to be a very low-cost of living, affordable market, but I plan on moving to Chicago within the next year and purchasing my first investment property. Just gathering some opinions on Chicago market. Any advice from anyone would be appreciated.
    Patrick Huey Real Estate Professional from Rockford, Illinois
    Replied over 1 year ago
    I would exclude Chicago from being an “affordable” housing market though you can still find some relatively decent deals at times. Ohio, Michigan, and Indiana are really affordable markets, but I also would consider Iowa, Minnesota, WIsconsin, Nebraska, and most of Kentucky. Iowa in particular has really low unemployment, and while most of the state is rural, you do have larger cities like Des Moines, Cedar Rapids, Waterloo, and the Quad Cities (Davenport, Bettendorf, Moline, IL, Rock Island, IL).
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Thanks Andrew, I’d keep investing in Detroit if I was you. It’s my #1 hot spot for the future and I believe it will get a ton of air time very soon. Media is heating up about it but then it will be to late once the word spreads. Lot’s happening there but still years away from any significance in my opinion. Thanks again and much success.
    Darren Sager Realtor from Summit, NJ
    Replied about 3 years ago
    I love you Engelo but I respectfully disagree. I think long term the midwest is going to get hammered.
    Frank Montero
    Replied about 2 years ago
    Interesting ….Why do you say this?
    Engelo Rumora Specialist from Toledo, OH
    Replied about 1 year ago
    Because there is much less competition and much better deals from a cashflow investment standpoint. Much success
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Don’t be a Debbie Downer mate, I think you should move to Ohio. NYC is to crowded 🙂
    Deb Dossinger from Charlotte, North Carolina
    Replied about 3 years ago
    I wish this was true…I am originally from Milwaukee, Wisconsin, now in Charlotte, NC….I never bought any property up there as taxes were too high and what no one has mentioned here is the weather factor….you have very rough winters and cold weather which can figure into upkeep on your property and maintenance as far as shoveling and snow blowing.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    It sure is true in my opinion. Hedge funds have bought the entire NC market and the deals have been long gone. I’ve been investing in the Midwest for 5+ years now and wouldn’t be willing to get out of bed unless I see a 15%+ net return on investment. Much success
    Scott Cordero from perris, CA
    Replied over 1 year ago
    are you finding 15% in Ohio? Ive been looking into Cleveland or is another city in Ohio better to invest to see that 15%+?
    Stuart Donovan from Round Rock, Texas
    Replied about 3 years ago
    I haven’t started investing in real estate yet, but I agree with this assessment, and will more than likely start in the Midwest myself.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 3 years ago
    Awesome Stuart, I wish you much success
    Garry C. Rental Property Investor from Littleton, CO
    Replied about 3 years ago
    So many options, so little time… I’m in Denver, which I contend is neither coastal nor midwest. But, we all know it’s becoming more and more like the coastal areas daily. However, no matter where you reside or invest, there are deals to be had. You just have to focus on that area and put some time into it. I’m finding deals in Denver, they just aren’t sitting on the shelf waiting for me to buy them like they seem to be in the midwest. I’m OK with that. I try to find deals at the right time when I’m ready to buy. Just in case I can’t locate something when it’s time to pick up the next property, I’ve been considering the midwest. I just haven’t decided between Ohio, Detroit, or Milwaukee. I’m open to opinions on those…
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Hi Garry, You can’t go wrong with Ohio, Indiana or Michigan Just find amazing people and you will earn great cashflow. Much success
    Heidi Farrey Investor from Kailua, Hawaii
    Replied about 3 years ago
    We are semi new to buying sfr’s to rent out of state. We are in California and just bought out first house in Firestone Park, ohio. We fix most things diy and are now looking for a multi family duplex so we can have. Home base while rehabbing. Any suggestions from anyone which city to invest in …a “b” house in an “a” area, that we could live in when in town. Someplace safe and fun for the family that is also a great investment area.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Hi Heidi, Here is one of my latest blogs on how to differentiate the different asset classes. https://www.biggerpockets.com/renewsblog/evaluate-asset-classes/ Hope it helps. Thanks
    Kurt
    Replied over 2 years ago
    You seem to be arguing not so much in favor of the Midwest as against cities. But cities are where there is a critical mass of tenants and without tenants you have vacancies.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 2 years ago
    Wrong, Without a great property manager, you have vacancies Thanks
    Kurt
    Replied over 2 years ago
    What can a manager do if you have people leaving the area due to no job prospects? If you owned property in Detroit the last 30 years, your great managers skills would have gone to waste.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 2 years ago
    Those markets are very rare and IMO can only be found in areas that are stimulated by only one industry like mining. A good manager can find tenants and get your property tenanted in most places. There are investors making millions in the ghetto of Detroit not because of the market booming but due to having the right team in place. People still need shelter over their head so unless your opinion is of a zombie apocalypse happening soon and human beings becoming extinct. There will always be a demand for rentals in pretty much every market nationwide.
    Kurt
    Replied over 2 years ago
    Detroit is a zombie apocalypse. I sure wouldn’t want to have invested there. From what I have seen making money in real estate is 90% about two things, location and timing. If you get those right, you don’t have to work very hard for the rest of the pieces to fall into place. As far as the “Midwest” goes, it has it’s share of disaster cities that have become ghost towns, which might be why you focus on the markets far from the hustle and bustle. Well good luck with that, because many of those small towns are dying also. It seems that a job at Walmart is not really enough to live on. This is not to say that there are not some areas that will do OK in the Midwest, but it looks to me like more of a crap shoot than areas that are adding population more consistently. The West seems to be always growing as does Texas.
    Brian Ploszay Investor from Chicago, ILLINOIS
    Replied about 2 years ago
    I mapped out the areas in Detroit to buy up. It is a small area near downtown. Love it there. The rest of Detroit is super marginal. I would suggest looking in suburbs for investments if you want to be in that region. Detroit is not a bargain, but it has systemic decline. There are a shortage of good renters to fill the houses. There are some that are doing it, but not the best place unless you have strong boots on the ground.
    Gordon Eisenberg
    Replied about 2 years ago
    I have been considering the real estate market in Detroit Brian which includes Midtown, New Center, North End & Indian Village. Do you agree with my thoughts? What do you consider to be those up and coming markets of Detroit.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    100% agreed on the suburbs of Detroit. There are some amazing numbers. Having an amazing team in place is the key factor when investing in any market. Even the worst of the worst parts of town lol
    Engelo Rumora Specialist from Toledo, OH
    Replied over 2 years ago
    You could have done very well in Detroit and 90% of downtown has been bought without any more bargain deals. So you missed your “timing” on that one lol All I can say here is good luck to you with your “location and timing” strategy as you will definitely need it more than me 🙂 After doing 400+ deals over the last 5 years I have come to the conclusion that success in real estate is dependent on the numbers in the deal and working with the right people. I’ve invested across numerous markets in the US and the world and I make money if the people on the ground are good. I loose if they aren’t. A good team will either make or break your investment no matter the location while money can be made anytime and anywhere as long as you know what you’re doing. Good deals are always out there. Much success
    Kurt
    Replied over 2 years ago
    There are still many houses in Detroit for under $15K, so I am not sure I missed a huge run up. My point was that had you bought there 20 years ago, it’s hard to imagine you would have come out ahead the way you would have buying in some California markets where the average house is up over a million dollars. Everyone likes a turnaround story, but when it comes to investing I like a sure thing. And I don’t see Detroit’s come back as a sure thing. I do however see LA and the SF Bay Area in California as a sure thing. And being a sure thing, you have to pay a premium for that.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 2 years ago
    A sure thing is that you like hiding behind a keyboard 🙂
    R.C. Allen from Dayton, Ohio
    Replied over 2 years ago
    Good post, thanks. I’m currently just getting started in my REI adventure. I am actively perusing wholesaling as the catalyst to my future rental portfolio. I live and work in the Dayton, OH area. The outside investment in downtown Dayton has been immense over the past year or two. People are flocking back to the downtown areas as better amenities continue to pop up and older buildings get converted. I feel that the entry level is very low and the experience gained along with the cash flow are worth the investment for newer investors. I would agree with Scott above, the appreciation will never be what the coastal cities and Denver could offer. That being said investing in an areas like Ohio and Indiana could provide the foundation and knowledge for a successful REI career.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 2 years ago
    Thanks R.C I’m a big fan of Dayton. South Park, St Anne Hills Historic District and a little pocket just East of Five Oaks (45405) are my top picks. Much success
    Palmira Angelova Business Analyst from Oakland, California
    Replied over 2 years ago
    Something I’d love to understand better is how you are finding these deals. Do you look on the MLS? Do you look at Zillow? When I check the postings, even in some of the areas you are mentioning, there is nothing that would come close to even 1% rent over value. Do you have connections, drive around the neighborhood? I’d like my next investments to be in cheaper, B areas that cash flow better and appreciate less quickly, like the ones you are describing and would love to learn more about your process!
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Hi Palmira, Leave no stone unturned. Send yellow letters, stalk Craigslist, network, check the MLS daily and submit offers. The deals are out there, you just need to stay very active. Much success
    Cameron Jordan from Havertown, Pennsylvania
    Replied about 2 years ago
    Thank you for your article. You have me thinking now,
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Keep thinking haha
    Anup Shah Investor from Seattle, Washington
    Replied about 2 years ago
    Thanks for republishing this article. Do you think these markets you recommended last year still good ones and any recommendations to specific areas within these states?
    Rebecca Cirisan Flipper/Rehabber from Dayton OH (dayton, oh)
    Replied about 2 years ago
    Anup, Engelo is still dominating in the same markets he recommended last year, the same market he touted 3 years ago and the same market he was told he was absolutely nuts for taking over 5 years ago. Personally, Toledo, Dayton and Cincinnati in Ohio are my favorites so far.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Anup, The core principles always stay the same. You can do well and make money in any market as long as you have the right team in place. I believe the Midwest will always show amazing cashflow and the day it doesn’t. I work with all of my investors to sell at a high price and we can all move to the Bahamas then lol Much success
    John Barnette Investor from San Francisco, California
    Replied about 2 years ago
    Grew up in the midwest (chicago burbs, Indy, Columbus, oh) and family still in Indy area. Live in SF 20 years now and a real estate agent and investor. Investing in a market like SF is very challenging but possible. Long term. Not only has there been significant appreciation in propery value (to owner retail customers) but huge rent appreciation. And prices did crash 2008-2010 but rents outside of the very top luxury market did not change much. Need to be consistent and look for the occasional deal that others look over. Get cash flow and appreciation. My parents very high end luxury home in Carmel (Indy) suburb isn’t worth much more than their cost to build it 25 years ago. Factor inflation and way under. Mind you not a rental type house. But brother’s townhouse also in Carmel has not appreciated more than 10% probably in 7 years. They are lovely places. The thing is that midwestern populations are generally flat to declining. Lots of land to build and build. Thus no value growth. SF, Seattle, Portland, even Denver are very or somewhat limited in land space to build, cumbersome construction regulations, and coupled with high paying jobs and ensuing population growth. All make for outsized appreciation in these markets. Will there be a correction. For sure! Will these industries go away? Not anytime soon. Tech is business. All business. Biotech is key in our graying demographic. Internatiomal destination spots for cash. Absolutely. Long and short. Yes the midwest is great place to get started in RE investing, passive, some cash flow, relatively low risk, easy entry prices. But real wealth is made with supply and demand imbalance, being able to spot a needle in the haystack kind of deal, betting big when the market has drops. Takes patience though. Lots
    Sharon Thompson Residential and Commercial Real Estate Agent from Indianapolis, Indiana
    Replied about 2 years ago
    Thanks for a great article. The midwest definitely has lots of opportunities for serious investors these days. For everyone else, we have jobs and reasonably priced homes. Money Magazine just ranked Fishers, IN as the the number one place to live in the United States. Three other Indiana towns made the top 100 list. Happy to set up tours from my Indianapolis office.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    I like Indiana, My top 3 picks are Ohio, Michigan and Indiana I like the Bahamas also hehe Thanks
    Andrew Syrios Residential Real Estate Investor from Kansas City, Missouri
    Replied about 2 years ago
    Except for Kansas City. Don’t ever buy in Kansas City, like ever, because you totally shouldn’t buy there. There’s nothing good here, I mean there. Just stay away, it’s for your own good!
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Agreed Don’t forget Ohio also. Never buy there, i mean here. I mean why would you ever buy in Ohio and get amazing cashflow. It’s all about unpredictable appreciation, right? lol Just don’t buy here, I mean there lol Thanks mate
    Vince Mayer Wholesaler from Arnold, Missouri
    Replied about 2 years ago
    …and St. Louis! Don’t ever, ever come to St. Louis to invest because you’ll be ruined, ruined I say!
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    lol
    Ali Safavi Investor from Los Angeles, California
    Replied about 2 years ago
    When it comes to investing, the Midwest is great. When it comes to living, I tend towards Southern California:)
    Rebecca Cirisan Flipper/Rehabber from Dayton OH (dayton, oh)
    Replied about 2 years ago
    Not a fan of flat lands and corn fields? The best part about being in Toledo is that it is so bland and boring, there is nothing to do except work all day long.
    Kurt
    Replied about 2 years ago
    Investing in Southern California has been very rewarding over the last 5 years.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Kurt, I’m not a fan of the CA market. It’s the same as Australia. Great to live and not to invest unless you really manufacture the equity with some Hard Yakka I’m buying buildings like a walk in the park all across Ohio for 20-30 cents on the dollar of what it would cost to build. You just can’t do that in CA. Much success
    Kurt
    Replied about 2 years ago
    All you need to do in California is wait and prices go up. A house that sold for $250K in the 90s sold for $500K in the 00s now sells for well over a million today. You just can’t do that in anywhere in the Midwest I’m familiar with. You can’t buy almost any house and expect to make a million dollars in your lifetime. Not happening.
    Kurt
    Replied about 2 years ago
    All you need to do in California is wait and prices go up. A house that sold for $250K in the 90s sold for $500K in the 00s now sells for well over a million today. You just can’t do that in anywhere in the Midwest I’m familiar with. You can’t buy almost any house and expect to make a million dollars in your lifetime. Not happening.
    Kurt
    Replied about 2 years ago
    Investing in Southern California has been very rewarding over the last 5 years. Reply Report comment
    Kurt
    Replied about 2 years ago
    Investing in Southern California has been very rewarding over the last 5 years. Reply Report comment
    Brian Ploszay Investor from Chicago, ILLINOIS
    Replied about 2 years ago
    The writer sells turn key investments in the midwest, so I view this as a marketing piece. I am not attacking him. I live in the Midwest: Out of region buyer’s beware: There are many small and medium towns which are economically on the decline. Youngstown Ohio, Toledo Ohio, Rockford Illinois. Be very careful in buying homes in this region. They might be worth less when you sell them. Purchase in strong areas: Part of Chicago. Milwaukee, Iowa. Twin Cities.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks for your comment Brian, My apologies that you don’t know me better. If you did tho, you would know that I turn down more business than I take on and that I don’t pitch through my blogs or Bigger Pockets posts. I also disagree with your comment. Success comes from working with the right people and not so much the stats/demographics of an area. If you don’t mind me asking, what do you sell in Chicago? 🙂 Thanks again
    Stuart Donovan from Round Rock, Texas
    Replied about 2 years ago
    Engelo, Do you still buy in the Toledo area now that they have passed the lead ordinance? Or do you not buy homes older than 1978? If so do you go through the yearly lead certification or do you go through the lead abatement? Is it worth the added headache to invest in these homes? Curious on your thoughts. Regards,
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Hi Stuart, We are buying now more than we ever have been. The lead BS was just a money pinching gimmick by the city. They still don’t know what to do with it and how to go about it. There might be a new mayor soon so that will be another cluster. We are the biggest buyer in town so we do whatever we need to do to satisfy whatever needs they currently have lol I’ve left the nitty gritty of it to my CEO and 2 project managers to sort out. They keep changing the game so we are just adapting. Not a big deal tho as now we have system in place that we implement on every deal just to protect us and our investors from any future shenanigans the city wants to pull again. Much success
    Rebecca Cirisan Flipper/Rehabber from Dayton OH (dayton, oh)
    Replied about 2 years ago
    Learning the lead ordinance rules that changed daily was tiresome, implementing the testing and being fully compliant was the easy part. We are currently working very proactively to get over 150 properties tested and certified. Our 6 year certs starting rolling in about a month ago, I am thinking we can hang them all on the fridge like we did in grade school. We have built this procedure into our renovation processes so that our investors do not have to deal with this headache. Comply, conform and keep on rolling!!
    Michael F Ferraro Appraiser
    Replied about 2 years ago
    ENGELO: “How does a $300,000-$500,000 single family home that rents for between $1,200-$1,500 per month sound? Does that seem like a good deal to you? ” That’s a good deal. I don’t where you are getting your statistics from but I seriously doubt if you can find a $500,000 house that rents for $1500 located from San Diego north to the end of Los Angeles County. I live in Castaic which in an unincorporated area of Los Angeles and you be hard pressed to find a one bedroom apartment 500 to 600 sq. ft. for $1200, let alone a house. There isn’t a single family rental available for much less than $2500 anywhere in the Santa Clarita Valley. Check Zillow listings and verify. Respectfully
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Michael You asked: “How does a $300,000-$500,000 single family home that rents for between $1,200-$1,500 per month sound? Does that seem like a good deal to you? ” I’d run from a deal like that. I can get $80,000 – $100,000 duplexes within 3 min of where I live in Toledo (Solid B class area) that will rent for $1,500 per month. That’s just another day in the office for me lol Those types of deals are falling of trees here mate. Much success ps. I’m not a fan of the CA market. It’s the same as Australia. Great to live and not to invest
    Kurt
    Replied about 2 years ago
    Michael’s point, which you apparently missed, is that rents are much higher in Southern California than what you claimed. About twice as high in that price range.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    I’d run from Californian real estate unless you want to wait another 20 years. Kurt, It would be great if you could upload a picture to your profile. It might make your comments more credible and less “trolly” Just saying. 🙂
    Joseph M. from Saint Paul, Minnesota
    Replied about 2 years ago
    “Midwest” is too broad a brush, I think. I live in “the Midwest” but not in the rust belt. Twin Cities, MN. It’s not this rustic, huge spaces kind of place you’re describing. It’s a metropolitan area of 5+ million people with tons of fortune 500 corporate work. It seems your post is more about “Big City” vs “Mid to Small City/Town” vs “Rural” investing. MLS deals are scarce here in the Twin Cities, none to be had on the MLS unless you can close with cash within hours of a listing. Fundamentals are super strong, high median wage, good rental prices and they continue to grow, tight inventory of housing for rent or sale, highly educated workforce, etc. But if you go up to Northern MN you see lots and lots of dying little towns that are poor areas to invest in. Declining populations as the boomers retire or pass away. Then there are places like Detroit, generally just bad due to the political situation; or Chicago where people are leaving en masse because of its impending bankruptcy (also political). You are right though that if you go off the beaten path there are some mid-sized towns with good to great fundamentals yet still low prices and good rent. Its critical to look at whether the local economy is in a good place or not though and whether the population is declining or growing.
    George
    Replied about 2 years ago
    Buy property in the Midwest for $50-$70k and get $700-$1000 I’m rent. You must be delusional or this article was written 30 years ago. At those prices they’re a dump and no way your getting those kind of rents . Especially not in illinois , not to mention you’d get murdered on the property taxes here. Stay away from Illinois. The ROI IS NOT WORTH IT
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    George, Is Illinois the only state on the Midwest? I’m buying properties with even better numbers than that all day long. You should check out Ohio, Michigan and Indiana as there are some great numbers in those markets. Its easy easy as taking your poodle for a stroll through the park hehe It’s great to be me. Much success
    Dan Heuschele Investor from Poway, CA
    Replied about 2 years ago
    Your 5th sentence is why to invest in coastal CA. As for it being gambling, there is over 70 years of long-term appreciation that exceeds inflation and most other locales. If you are in the game long term it would be similar to betting on a horse that has one every race for over 70 years. Is that gambling? Is it gambling to bet on the sun rising tomorrow? I realize the sun has been rising more than 70 years but the point is that in my market (San Diego) it does not matter when you purchased in the last 70 years (including 2008) your investment would have produced a good ROI. The only people to have lost money on San Diego buy n hold are people that were over leveraged and had to sell when the market was depressed. With cap expenses and other costs the only way $700/month rent is worth me owning is if it has appreciation to go with the cash flow. I believe you can make money in many ways in RE so I am not trying to discourage Midwest RE investing as much as point out that coastal CA has been a great place for REI for decades (i.e. has produced great ROI). I would not be surprised if the East coast is similar to the West coast at having produced great ROI for decades. This really implies that you can do well investing in RE anywhere if you do it smart.
    Kurt
    Replied about 2 years ago
    Virtually every long term owner in decent neighborhoods of LA and SF/SJ has made a million dollars over the last 20 years at a minimum. I like those odds
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    I like my odds better where I can make a passive income of 20% net cashflow on a bad day. You live of cashflow and not the $1m in equity you just gained 20 years. Plus, 20 years to make just $1m??? That sounds bad IMO. I could save that much working in Walmart for 20 years lol Much success and sorry but I’m being a bit of a smart A$$ above 🙂
    Kurt
    Replied about 2 years ago
    What percentage of your homes have gone up by a million dollars? We have 100% in much of California.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    It doesn’t matter if they don’t go up in value They cashflow so much that $500,000 is enough to retire on Appreciation is a prediction thus = gambling Thanks
    Kurt
    Replied about 2 years ago
    It doesn’t matter if I make a million dollars and you make $50-100K. OK, that makes one of us that doesn’t care about making big money.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    lol I don’t like comparing who’s is bigger but I can tell you that I’ve made much much more in 5 years than the $1m you claim that took you 20 years. Much success
    Kurt
    Replied about 2 years ago
    Not bad just for living in a house though. I am making more now also.
    Kurt
    Replied about 2 years ago
    How many houses have increased by a million that you own?
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Actually, Betting on horses is gambling. Is betting on horses in CA not considered gambling? 🙂 Investing in CA is speculative and expensive. I’d run from that market like a cheetah lol It would take too much hard work to manufacture equity. In the Midwest you can make a $30,000 – $50,000 profit on a flip that you might have a total outlay of $100,000. I’m sure that in CA the $30,000 – $50,000 profit would take at least a $500,000 total outlay. Plus, you would be competing with everyone in CA while in the Midwest it’s much more quiet. I do agree that you can do well and make money in every market tho. There are great deals to be had everywhere. Some places they just fall of trees (Like the Midwest) Much success
    Kurt
    Replied about 2 years ago
    Virtually every long term owner in decent neighborhoods of LA and SF/SJ has made a million dollars over the last 20 years at a minimum. I like those odds
    Rebecca Cirisan Flipper/Rehabber from Dayton OH (dayton, oh)
    Replied about 2 years ago
    Invest $500,000 and make $100,000 passively every year after? so if I held these properties for 20 years (since Kurt says CA makes 1 million in 20 years) I would make 2 mil passively. Less money up front and a better ROI…. To each their own as every way to invest has both pro’s and cons but I personally choose passive income all day long.
    Kurt
    Replied about 2 years ago
    A house that was $500K would have increased by 2 million over the last 20 years. Plus you are ignoring the fact that it would also make $100K NOI conservatively at this point.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    So your saying anyone buying now for $2m will get a $100,000 NOI. That return doesn’t even keep up with inflation. I wish I was old enough to know what real estate was 20 years lol Maybe I would have bought in CA back then
    Kurt
    Replied about 2 years ago
    5% is considerably higher than inflation. Prices and rents have gone up 50% in the last 5 years looks like you missed again.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    The only thing I miss is seeing your profile picture I mean, I’m sure everyone reading would love to see the man behind the success you claim to have that only took you 20+ years 🙂
    Ernest Ho from San Jose, California
    Replied about 2 years ago
    Love the piece and insights. I live in Silicon Valley and aspiring to get into multifamily out of state. Will definitely consider Midwest. Cash flow is King and Midwest looks great.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Ernest and I’m glad my blog offered you some insight into the other markets. I wish you much success
    Joanne Basecki Real Estate Investor from Chicago, IL
    Replied about 2 years ago
    I use to live in Silicon Valley. In fact that’s when I purchased in Midwest, Chicago, Cook to be exact. I can’t claim a talent in area of investing. The building soon turned into a vacant lot. Demolished !!! LOL (; (: Determined to turn my luck (and talent) around I read lots on land investing by Jack Bosch. Some interesting strategies. My lot however is still not sold. (Almost 90 days on market). Many ideas but hands strapped for lack of cash. Anyone here has an opinion on how is it best (or even possible) to sell a vacant land in WHP?
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    It’s a tough one Joanne, Have you tried connecting with any reputable realtors in the area? Or other investors doing great things? Thanks
    Karl B. Rental Property Investor from Los Angeles, CA
    Replied about 2 years ago
    Hands down? Ugh. Bad article title. My latest property isn’t located in the Midwest: it’s a duplex in PA and I’m getting $1350 per month and paid $45K for it (plus $1900 in electrical rehab plus around $1000 for all other expenses).
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Karl, A “one in a hundred” deal doesn’t prove that a market is a good one Pants down the Midwest is the best place for real estate investing Is that better? lol Much success
    Karl B. Rental Property Investor from Los Angeles, CA
    Replied about 2 years ago
    I don’t listen to the noise – I make offers that work for me. One can call my market bad, not as good as the Midwest, etc. but that’s cool – I’ll keep buying.
    Darrell D. Rental Property Investor from Springfield, OH
    Replied about 2 years ago
    Great Article. I’m in Springfield, OH and agree. I like the simple lifestyle and watching the corn grow. I live on a quiet neighborhood with successful neighbors so it’s nice. I have to say, you are an writing machine! You’re kicking out an article a week. That’s awesome. I wrote one… that’s it. Ha ha. Keep up the good work!
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    haha Thanks Darrell, I have almost 20 full time staff that help me out. Let’s just say that I’m good at dictating lol Much success ps. I visit Dayton and Cinci often so we can catch up for coffee sometime
    Brent Rogers Investor from Georgia
    Replied over 1 year ago
    Everything you say about the midwest makes sense. The only thing I would say that dilutes this a bit is a $60,000 house getting $800 / month in rent could have the same expenses as a $260,000 house getting $2400 / month. Plus you have to place 3 – 4 tenants in the 60k houses for every one in the 260k. Again I am not arguing about the midwest. It is tempting to try and enter that market from afar. However I don’t like dealing with a lot of houses that might have 15-20% returns but only generates $2k per year in cash flow. Maybe I’m too old for that 🙂
    John Brodrick from Elkridge, Maryland
    Replied over 1 year ago
    So what’s to stop people from buying these houses instead of renting? That is like a 12K dp, if I were them I would just buy. If these were tech centers you could say people want temporary housing because they job hop a lot. Buy the demographic I imagine living there would probably much rather stay in one place?
    Richard Feeley from Hobbs, New Mexico
    Replied over 1 year ago
    I lived in Midwest for last 20 years and 6 more prior to that, so I can chime in on this article. This article is definitely right on with regards to price levels being crazy low. I know houses in the middle to northern part of Michigan’s lower peninsula that were 30K (there were cheaper houses but they were not as good of quality). So $60K is not hard to find. Also, as the author said, the people are not as pretentious–more down to earth. Median income used to be $60K, which is why they would a lot of people still rent.
    Brent Crosby Rental Property Investor from Farmington, UT
    Replied about 1 year ago
    Hi Engelo, My biggest concern with the Midwest is falling population rates. If my knowledge of economics holds up if there is falling demand with static supply you will eventually experience higher vacancy rates would you not? Also, all things considered why not invest in states like Texas and Florida that still have great cap rates (although slightly lower than states you mention such as Ohio and Indiana) and have demographic trends on their side such as increasing population? I’ve looked seriously at Dayton, Ohio for example (which you also have mentioned in the comments) and I see falling population coupled with high crime. If I could get past this concern I’d be investing in the Midwest without hesitation.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 1 year ago
    Thanks Brent, There are many micro markets that have a “boom” in population growth. Don’t always trust the media pundits. Find the right people that are on the ground. Much success
    Brent Crosby Rental Property Investor from Farmington, UT
    Replied about 1 year ago
    Thank you Engelo, Do you have a website or favorite way that you use to locate these micro markets?
    Engelo Rumora Specialist from Toledo, OH
    Replied about 1 year ago
    Not really Brent. It’s just a “leave no stone unturned” type approach. Conduct countless hrs worth of research and meet a tonne of people. Once you start doing deals in a market you will “pockets” that are inundated with demand. Much success
    Ahmed Hamza Investor from Saint Clair Shores, Michigan
    Replied about 1 year ago
    Been living in Michigan for about 4 years now and couldn’t agree more!
    Engelo Rumora Specialist from Toledo, OH
    Replied about 1 year ago
    Thanks Ahmed. Michigan is a great market.
    Nikki B. Nguyen
    Replied about 1 year ago
    Hi Engelo, Thank you for a great article and insight! Echoing from JOHN BRODRICK’s comment, what is stopping residences from buying rather than renting?
    Engelo Rumora Specialist from Toledo, OH
    Replied about 1 year ago
    Thanks Nikki, Foreclosures on their record, bad credit scores, low income, tight lending criteria, etc… This will change one day IMO. It’s much “cheaper” owning a $60,000 property than paying rent on one. Folks will borrow money again one day and start buying instead of renting and this might drive prices up Much success