Which real estate market for the best cash flow #s...?

Real Estate Consultant · San Antonio TX Canyon Lake TX Fort Walton Beach FL Cape Coral FL Clarksville TN Sumter SC and Lawton, OK · Member since 2008 · 139 posts · 128 votes

Assuming someone was starting out they would want to start in a market with the best ratios cost v. rents to be gained. Which markets out there cash flow the best all things considered??

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Taylor L.

Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes

Honestly there are probably a few near you in TX and OK. However rather than looking for the best cash flow markets, I'd recommend looking for those with job growth, population growth, preferable landlord-tenant laws, and a diverse economy. The health of the real estate investing market is downstream of the overall local economy.

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Taylor L.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
4y
Honestly there are probably a few near you in TX and OK. However rather than looking for the best cash flow markets, I'd recommend looking for those with job growth, population growth, preferable landlord-tenant laws, and a diverse economy. The health of the real estate investing market is downstream of the overall local economy.
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Tommy Ray
OP
Real Estate Consultant · San Antonio TX Canyon Lake TX Fort Walton Beach FL Cape Coral FL Clarksville TN Sumter SC and Lawton, OK · Member since 2008 · 139 posts · 128 votes
4y
Taylor, I agree with that. I am buying in Canyon Lake, TX... it is 45-60 mins from Austin and San Antonio for that exact reason
1 Reply
Joshua JanusBusiness Member
Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
4y
Columbus, Ohio is a top five appreciating city in the USA and is a great hybrid mix of cash flow as well depending on the areas that you are looking at.
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Jayson Cain
Lender · Manhattan Beach, CA · Member since 2017 · 423 posts · 268 votes
4y
If you're looking for cashflow, Midwest metros are great. If you want to do STRs then that expands to a lot more markets. Below are some metros where our investors currently buy properties for long-term rentals:
- Columbus, OH
- Memphis, TN
- South Bend, IN
- Baltimore, MD
- Allentown, PA
- Pittsburg, PA
- Jacksonville, FL
- Orlando, FL
Let me know if you need to make connections in those markets. I'd be happy to make introductions for you. I personally invest in Indianapolis, IN for my own portfolio so if you have any interest in that area as well, I'd be happy to connect you with some vendors.
8 Reply
Joe S.Pro Member
Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
4y
Originally posted by @Jayson Cain:
If you're looking for cashflow, Midwest metros are great. If you want to do STRs then that expands to a lot more markets. Below are some metros where our investors currently buy properties for long-term rentals:

Columbus, OH
Memphis, TN
South Bend, IN
Baltimore, MD
Allentown, PA
Pittsburg, PA
Jacksonville, FL
Orlando, FL

Let me know if you need to make connections in those markets. I'd be happy to make introductions for you. I personally invest in Indianapolis, IN for my own portfolio so if you have any interest in that area as well, I'd be happy to connect you with some vendors.
Are you buying turnkey or houses that need work?
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Tommy Ray
OP
Real Estate Consultant · San Antonio TX Canyon Lake TX Fort Walton Beach FL Cape Coral FL Clarksville TN Sumter SC and Lawton, OK · Member since 2008 · 139 posts · 128 votes
4y
Baseball player Alex Rodriguez has a credo for investing. Visit blue cities and states but invest in the red ones. The balance of landlord rights and responsibilities are sustainable there. Blue states / cities self extinguish .... making it less than fruitful for the average person to play!
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Jayson Cain
Lender · Manhattan Beach, CA · Member since 2017 · 423 posts · 268 votes
4y
Originally posted by @Joe S.:
Originally posted by @Jayson Cain:
If you're looking for cashflow, Midwest metros are great. If you want to do STRs then that expands to a lot more markets. Below are some metros where our investors currently buy properties for long-term rentals:

Columbus, OH
Memphis, TN
South Bend, IN
Baltimore, MD
Allentown, PA
Pittsburg, PA
Jacksonville, FL
Orlando, FL

Let me know if you need to make connections in those markets. I'd be happy to make introductions for you. I personally invest in Indianapolis, IN for my own portfolio so if you have any interest in that area as well, I'd be happy to connect you with some vendors.

Are you buying turnkey or houses that need work?
We are buying both. We try to only buy quick projects that take 3months max.
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Tommy Ray
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Real Estate Consultant · San Antonio TX Canyon Lake TX Fort Walton Beach FL Cape Coral FL Clarksville TN Sumter SC and Lawton, OK · Member since 2008 · 139 posts · 128 votes
4y
I buy both. Turnkey and/or needing repairs
1 Reply
Marc RiceBusiness Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
4y
Ohio as a state offers a lot of markets, even the Columbus surrounding area offers some great stronger cash flow submarkets such as Newark, Lancaster, Delaware.
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Patrick Bavaro
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
4y
@Tommy Ray great question and I would say It depends! Are you just looking for cash flow? Or potential appreciation as well? For just cash flow, I’d probably say the Midwest has the best opportunities, but there is very little appreciation typically. For cash flow and appreciation I would say TX, AZ, and FL but you have to think outside the box to find the up and coming markets. I invest in FL and I’m currently focusing on Ocala and Cape Coral.
Currently I’m building a 4/3 new build in Cape Coral. Total all in cost is about $265k and I financed It at around 3.6% with 10% down. Rents right now are at about $2300 and climbing. Currently post construction appraisals are coming back at $340k-$410k depending on location of the property. So, I find myself in a position to sell and make a quick $100k return potentially, or keep It and rent for the cash flow and future appreciation growth. Not a bad position to be in! I’d be happy to connect to share experiences. Good luck!
5 Reply
Maurice D.
Coppell, TX · Member since 2015 · 485 posts · 310 votes
4y
some great suggestions here, however being your first investment you might want to have it close by. I like @tommy ray's suggestion.
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
4y
Cash flow is only one component and many will tell you not the most important wealth in real estate happens by value add forced appreciation and organic appreciation. Cash flow only investing takes a LOOONG time unless you can really scale fairly quickly. Especially for those trying it from out of state... One needs to look at all angles and not get focused on just one of the metrics that make real estate investing profitable long term.
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Tommy Ray
OP
Real Estate Consultant · San Antonio TX Canyon Lake TX Fort Walton Beach FL Cape Coral FL Clarksville TN Sumter SC and Lawton, OK · Member since 2008 · 139 posts · 128 votes
4y
I too invest in Cape Coral, FL but it was my focus when it melted down in 2008. Not so much now. I like/love Florida because it is multi-dimensional. Vacational rentals, flips, classic buy and hold, Classic BRRR all play well there but nailing the city submarkets there or anywhere they can justify focusing your networking and marketing into it to scale up a full time is where am at now. Real estate is always a team sport. So nailing the long term property mgr, vacation rental mgt company, tradesmen, and real estate attorney are all concurrent task to develop and refine.

Originally posted by @Patrick Bavaro:
@Tommy Ray great question and I would say It depends! Are you just looking for cash flow? Or potential appreciation as well? For just cash flow, I’d probably say the Midwest has the best opportunities, but there is very little appreciation typically. For cash flow and appreciation I would say TX, AZ, and FL but you have to think outside the box to find the up and coming markets. I invest in FL and I’m currently focusing on Ocala and Cape Coral.
Currently I’m building a 4/3 new build in Cape Coral. Total all in cost is about $265k and I financed It at around 3.6% with 10% down. Rents right now are at about $2300 and climbing. Currently post construction appraisals are coming back at $340k-$410k depending on location of the property. So, I find myself in a position to sell and make a quick $100k return potentially, or keep It and rent for the cash flow and future appreciation growth. Not a bad position to be in! I’d be happy to connect to share experiences. Good luck!

2 Reply
Dan Bass
Kansas City, KS · Member since 2019 · 58 posts · 66 votes
4y
@Patrick Bavaro can you tell me more about what you're doing in Cape? My aunt and uncle have a couple houses there and seem to enjoy the STR. I've been interested but the prices and market seem daunting. Your numbers sound great though!
1 Reply
Patrick Bavaro
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
4y
@Dan Bass no time like the present is what I tell myself, ha! Just sent you a message
0 Reply
Brian Brown
Flipper/Rehabber · Okeechobee, FL · Member since 2020 · 41 posts · 8 votes
4y
@Patrick Bavaro Hi Patrick you say you are in a position to sell or keep for cash flow. What ate your numbers showing this property would cash flow just out of curiosity and my own knowledge, Thank You.
0 Reply
Patrick Bavaro
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
4y
@Brian Brown hey Brian, sure thing. PITI is around $1425 right now (estimate based on closing disclosure). Rents right now are $2300/mo before accounting for vacancy, capex and I plan to self manage. For capex, I'm not expecting any major repairs for the first 3-5 years at least, but that could always surprise me of course. The alternative (which I think I'm leaning towards) is to sell. My build price is $240k, and low appraisal end is starting around $340k. In 6 months, when the build is done, I'm estimating It May be slightly higher. Should It be at $340k though, I'd still be selling for a $75k profit ($25k for the land originally). If it's higher, even better! Not bad for a 1 year hold and only $25k or so out of pocket. Hope this helps
2 Reply
Danielle Jackson
Phoenix, AZ · Member since 2021 · 504 posts · 282 votes
4y
Sunbelt states - AZ, TX, FL, and GA. Focus on sub-markets in growth cities, landlord friendly, and a great mix of population/big business combined with a lack of business housing!
4 Reply
Nick GiulioniPro Member
Rental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
4y
Hi Tommy, welcome to real estate industry! I started my RE journey here in Indianapolis. Now, I have almost a hundred doors. I would love to chat more and share my experiences if you're interested.
2 Reply
Seth Young
Specialist · Southlake, TX · Member since 2021 · 213 posts · 157 votes
4y
I familiar with the OKC, Tulsa, Little Rock, Memphis, St. Louis Huntsville, Tuscaloosa, Birmingham markets. All of these markets have great cashflow!
2 Reply
John Kunick
Investor · Broken Arrow, OK · Member since 2016 · 210 posts · 314 votes
4y
Hi everyone, enjoyed reading this thread. But, the initial question is which markets are best for cash flow... I know cash flow may not be the most important to all, but the question was specifically about that topic. So, I would say the best cash flow markets tend to be in midwest/south markets where appreciation is not as "wealth-inducing".. As someone else pointed out, this is a very specific strategy and can be extremely lucrative especially if you can scale # of properties fairly quickly.. Some very good examples of these markets are Tulsa (where I live), OKC, Indy, Wichita, KC, etc... BTW, this specific strategy can also have some great tax advantages..
3 Reply
Tommy Ray
OP
Real Estate Consultant · San Antonio TX Canyon Lake TX Fort Walton Beach FL Cape Coral FL Clarksville TN Sumter SC and Lawton, OK · Member since 2008 · 139 posts · 128 votes
4y
Lots of great inputs! I talked cash flow specifically because cash flow enables quitting jobs, qualifying for Fannie Mae backed mortgages and such. Appreciation is great. But cash flow and locking down the lower rate notes and transferring all that inflation risk to the secondary market to me is the game. I feel like in a few years those 3-4% mortgages will be the primary attractive feature of those bread and butter rentals in those red leaning southern and midwestern states.
2 Reply
Seth Young
Specialist · Southlake, TX · Member since 2021 · 213 posts · 157 votes
4y
@Tommy Ray Those are some great points, especially when talking about inflation.
0 Reply
Tommy Ray
OP
Real Estate Consultant · San Antonio TX Canyon Lake TX Fort Walton Beach FL Cape Coral FL Clarksville TN Sumter SC and Lawton, OK · Member since 2008 · 139 posts · 128 votes
4y

@Nick Giulioni - I have been at it for 32 years. Always looking for new markets to go into when the value, and opportunity match the hassle. I am at your level -- 109 doors, but 21 years in the military and 2 divorces impeding my growth...
1 Reply
Cameron Braig
Atlanta, GA · Member since 2021 · 493 posts · 162 votes
4y
Having some core metrics can make it easier to filter out markets. Items like job growth, rent growth, population growth, employment diversification, income growth can help identify market trends. These fundamentals along with your goals can help you identify markets to target.
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