Top 5 Markets for Cash Flow vs Appreciation

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Top 5 Markets for Cash Flow vs Appreciation

Alexandra Feig
Member since 2017 · 13 posts · 18 votes

I've committed to buying my first investment property in the US by end of this year.  I just purchased a condo in Singapore which is my primary residence but I hope will also be a rental property in the future, but am wanting to invest in US.

My stats:

Budget: ~100k SFH or ~150k for MFH (maybe up to 200k)

SFH vs MFH: Since I live abroad, I thought MFH would make more sense. However, given my budget I'm thinking SFH might make more sense.

I'd be curious to see what you would say are the top 5 markets for cash flow vs appreciate for both SFH and MFHs.

The ones that have popped up on my list (more for cash flow) are Indianapolis, Kansas City, Birmingham, Huntsville, Jacksonville.  For appreciate I was looking at Orlando and Tampa.  I have family in Florida and Illinois, so I was thinking I'd prefer to invest closer to those locations.

Thanks for the help!

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Nick GiulioniPro Member
Rental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
4y

Hi Alexandra, I'm from California but started my real estate journey here in Indianapolis. Now, I have almost a hundred doors. I would love to share my experiences and chat you more if you're interested.

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  • Nick GiulioniPro Member
    Rental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
    4y

    Hi Alexandra, I'm from California but started my real estate journey here in Indianapolis. Now, I have almost a hundred doors. I would love to share my experiences and chat you more if you're interested.

    4Reply
  • Milton ChamberlainPro Member
    Real Estate Agent · Kansas City, MO · Member since 2019 · 236 posts · 107 votes
    4y

    Hi Alexandra,

    Singapore?! That is pretty cool that you live there!

    I am a realtor in the KC Metro. I own 3 single families with plans to buy more MF. I work with and frequent investor group meetings and have my finger on the pulse in KC market.

    I can't speak for the other 4 mentioned markets, but for KC, it is not uncommon to find 7.5-10% cap (turnkey) rates in both SF/MF. Not super common but they do pop up. Property values in the KC metro appreciated 10.2% in the last year, with many counties hitting 13% and Leavenworth County hitting 14%. This has helped boost cap rates closer to 10 as rents have followed the appreciated property purchase prices.

    Feel free to contact me to discuss things like what you are targeting, add value vs turn key, mgmt companies, different areas, etc.

    take care!

    [email protected]573-356-1607
    2Reply
  • Joshua JanusBusiness Member
    Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
    4y

    I would advise checking out Columbus, Ohio. It is a great place to get a hybrid mix of cash flow and appreciation. The population is growing annually and companies are pouring capital into development around the city such as Google, Facebook, Intel etc. 

    [email protected]614-502-5316Podcast Guest on Show From DoorDasher to $1.5 MILLION in Real Estate (All at 22 Years Old!)
    3Reply
  • Dena Puliatti
    Property Manager · Huntsville, AL · Member since 2017 · 302 posts · 246 votes
    4y

    Excited for you!  I'm in Huntsville.  Most investment properties are for appreciation and some cash flow.  But appreciation is what is really going to help you with your buy and hold.

    0Reply
  • Michael K GallagherBusiness Member
    Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
    4y

    @Alexandra Feig welcome!  and man investing in Singapore thats incredible!  i'd love to hear about that experience.  

    Regarding best cashflow vs Appreciation markets in the country?  I can really only speak for the two markets that I service, Columbus and Dayton OH.  And they are the perfect example of one is a strong cashflow play, and one is a strong appreciation play, with a bit of cashflow mixed in.  In Dayton you can pick up a 4 plex of 1 bd 1 bath units for the $200K range you are talking about.  But in 5 years, it will probably still be worth about 200K.  So it makes BRRRRing and flipping very difficult, but the overall capital needed is very low for the potential returns.  Columbus on the other hand is going to give you the appreciation of a major metro area.  In your price range you are most likely going to be in up and coming areas but it could certainly be a market that performs well for you.

    [email protected]614-362-2231
    2Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    4y

    @Alexandra Feig Cleveland markets have been the best performing for rentals / appreciation over the last 10 years or so. Heck  Forbes had then # 1 for 17 and 18, or was it 18 and 19,? But they were not paying attention. 6, 7 years ago you could be all in for 35k, with 25- 30% NET caps, now they are worth 100k ++,,,,,, You still can get 10%++  net caps, but not like it was ,, Oh these numbers are based on cash purchases, even high cash on cash, 

    All the best 

    0Reply
  • Kunal Mishra
    Flipper/Rehabber · Jersey City, NJ · Member since 2016 · 158 posts · 86 votes
    4y

    I think all the above mentioned markets are great. I got started in Cleveland and Columbus in 2020 , so I can def say these are good. 

    Huntsville, KC MO are def my goals for 2022. 

    I'm still trying to research what has got Jacksonville FL so much attention. Is it because it's in FL and that other places in the state are more expensive hence the choice or if there is some expected future growth. 

    1Reply
  • Alexandra Feig
    OP
    Member since 2017 · 13 posts · 18 votes
    4y

    Originally posted by @Kunal Mishra:

    I think all the above mentioned markets are great. I got started in Cleveland and Columbus in 2020 , so I can def say these are good. 

    Huntsville, KC MO are def my goals for 2022. 

    I'm still trying to research what has got Jacksonville FL so much attention. Is it because it's in FL and that other places in the state are more expensive hence the choice or if there is some expected future growth. 

    Interesting!  I haven't looked much into Cleveland or Columbus although I keep hearing about them.  Why looking to branch out, and what specifically about KC and Huntsville?  For my I was looking at Birmingham (and still am) but seemed like Huntsville might have a bit more room to grow.

    For Jacksonville, I have family in Florida, a couple hours' drive.  After some research and looking at pricepoints, it seemed that was the best option for me rather than Orlando or Tampa.

    2Reply
  • Alexandra Feig
    OP
    Member since 2017 · 13 posts · 18 votes
    4y
    Originally posted by @Dena Puliatti:

    Excited for you!  I'm in Huntsville.  Most investment properties are for appreciation and some cash flow.  But appreciation is what is really going to help you with your buy and hold.

     I'd love to pick your brain a bit more.  Was looking at Birmingham, but seemed like Huntsville might be more up and coming with potential.  

    0Reply
  • Alexandra Feig
    OP
    Member since 2017 · 13 posts · 18 votes
    4y
    Originally posted by @Bob S.:

    @Alexandra Feig Cleveland markets have been the best performing for rentals / appreciation over the last 10 years or so. Heck  Forbes had then # 1 for 17 and 18, or was it 18 and 19,? But they were not paying attention. 6, 7 years ago you could be all in for 35k, with 25- 30% NET caps, now they are worth 100k ++,,,,,, You still can get 10%++  net caps, but not like it was ,, Oh these numbers are based on cash purchases, even high cash on cash, 

    All the best 

    Any thoughts on the population growth?  That gave me some pause.

    0Reply
  • Alexandra Feig
    OP
    Member since 2017 · 13 posts · 18 votes
    4y
    Originally posted by @Nick Giulioni:

    Hi Alexandra, I'm from California but started my real estate journey here in Indianapolis. Now, I have almost a hundred doors. I would love to share my experiences and chat you more if you're interested.

    Hi Nick!  Definitely!  I will ping you!

    0Reply
  • Eric Garcia
    New to Real Estate · Auburn, GA · Member since 2021 · 42 posts · 31 votes
    4y

    Jacksonville is interesting. Prices seem to be all over the place but it does look like there are some gems to be found. 

    0Reply
  • Patrick Bavaro
    Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
    4y

    @Alexandra Feig Singapore, that’s cool!! How does the real estate market compare to the US, out of curiosity? I think that’s an excellent route to take, but do feel your options in some of the cities you mentioned with your budget will be limited. Is that $100k down, or total purchase price? Since you have ties to Florida I would highly encourage looking into SWFL (Cape coral, Naples, ft Myers etc.) where the price points are a bit lower.

    Currently I'm building a new build SFH 4/3 in Cape a coral that had an all in cost of $265k and only required 10% down. Rents are at $2300/mo and post construction appraisals for this particular model are $377k. The deals are out there! Just got to find them. Feel free to reach out if you'd like to connect about FL.

    0Reply
  • Alexandra Feig
    OP
    Member since 2017 · 13 posts · 18 votes
    4y
    Originally posted by @Patrick Bavaro:

    @Alexandra Feig Singapore, that’s cool!! How does the real estate market compare to the US, out of curiosity? I think that’s an excellent route to take, but do feel your options in some of the cities you mentioned with your budget will be limited. Is that $100k down, or total purchase price? Since you have ties to Florida I would highly encourage looking into SWFL (Cape coral, Naples, ft Myers etc.) where the price points are a bit lower.

    Currently I'm building a new build SFH 4/3 in Cape a coral that had an all in cost of $265k and only required 10% down. Rents are at $2300/mo and post construction appraisals for this particular model are $377k. The deals are out there! Just got to find them. Feel free to reach out if you'd like to connect about FL.

    I was looking at 100-150k just because of the upfront cash costs.  I could probably stretch to a total of 40k upfront costs but would want to keep it under that.  If I only needed 10% down that would definitely change the math.

    Singapore is very different - from my admittedly somewhat limited understanding so far of US market.  It's a former Brit colony so follows some of their rules - stamp duty, etc.  One of the most expensive markets in the world - think Manhatten - but Asia is blowing up and Singapore is the regional hub for most major companies.  Lots of tech, finance, health setting up or expanding operations here.  Additionally, mainland Chinese have long used Singapore to park cash.  With the political turmoil in HK and the CCP cracking down on wealth in China, more are trying to invest here to get money out of mainland.  I bought right at the perfect time - market has been crazy this year largely because of these factors- but that can also be a bad thing here.

    Government is way more involved in housing market than in the US.  Prices appreciated so much they've implemented new cooling measures to bring things down, including the aforementioned stamp duty.  However, one quirk about US citizens is we (and only a couple of other countries) have the same stamp duty treatment as locals.  That made a huge difference in affordability.

    If I stay in the region, I am wanting to look at Vietnam. 

    2Reply
  • Jay Mersfelder
    Flipper/Rehabber · Covington, KY · Member since 2020 · 81 posts · 16 votes
    4y

    @Alexandra Feig northern ky and Cincinnati both cash flow good fortunately I live here so know market pretty good.. Just started investing about 18 months ago and hoping to scale this year better

    0Reply
  • Luke Hadden
    Rental Property Investor · Member since 2019 · 72 posts · 33 votes
    4y

    @Alexandra Feig - We left Singapore last year after seven years. If you would like me to put you in touch with the RE meetup, please let me know. It's a great group. Thanks!

    1Reply
  • Cameron TopePro Member
    Property Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
    4y

    Hey Alexandra,

    Forget what the Google searches and the articles say, the best market for you will always be the one where you have a competitive advantage. 

    Start by figuring out what your competitive advantage is then leverage that to be successful with real estate. 

    Best of luck!

    [email protected]832-770-7090
    1Reply
  • Lee Yoder
    Rental Property Investor · Lebanon, OH · Member since 2016 · 224 posts · 228 votes
    4y

    @Alexandra Feig, I would look to the Midwest for cash flow and the Southeast for appreciation. However, the number one factor in determining where to invest is where you can build a team. By "team", I'm primarily talking about your realtor/broker and your property manger. The hardest thing to do today is to find a good deal, so you'll need someone sending you off-market deals. The next hardest thing to do is to manage a property well, so you'll need a good PM. 

    3Reply
  • Scott Swanson
    Griffith, IN · Member since 2019 · 114 posts · 56 votes
    4y

    @Alexandra Feig, @Lee Yoders comment, was the only person that addressed what you MUST have when you buy long distance rentals. He mentioned a team. That means you need a solid property manager, a good realtor, an honest contractor and someone who can be trusted to evaluate properties for you properly. In other words, without "solid" boots on the ground, you're asking for trouble. Investing long distance can bring you wealth, but if you don't have a solid team to assist you, you could very well get burned! So be careful. Best of luck to you.

    1Reply
  • Zach Grigg
    New to Real Estate · Huntsville, AL · Member since 2021 · 15 posts · 9 votes
    4y

    @Alexandra Feig if you're talking about Huntsville, AL, there's definitely an attraction to the housing market for both SF and MF homes. We have seen an increase in value and demand in the HSV area (Madison County) and surrounding counties. I actually live just over state line in TN and even we have been affected positively as far as appreciation and equity growth. Cash Flow is definitely possible depending on your goals and what type of property you're looking to purchase, but it's primarily an appreciation market. I believe the market will start becoming more cash-flow friendly once the market starts to balance out - which could be a few months to a few years, I wish I had a crystal ball to predict this change. There's a lot of reason why we are seeing our market go through this upswing, but things are looking good for the future of HSV and the surrounding areas. 

    There's also some interesting markets in TN. Everyone's shooting to Nashville right now, but TN is becoming a go-to place for many people because of the cost of living and taxes. Just something to think about!

    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    4y

    @Alexandra Feig population growth,  really ???  Sorry you seem like an analyst vs investor. All the best and good luck to you 

    0Reply
  • Carlos Flores
    Wholesaler · Tampa, FL · Member since 2021 · 15 posts · 3 votes
    4y

    Hey @Alexandra Feig I specialize in off market rentals/flips in the Tampa Bay area, this area is great for appreciation and solid cap rates from the get go. We run into a lot of MFH deals as well that are cash-flowing as they sit. and I have connections with realtors/property managers/contractors in the area in case you need a team over this way. I would love to chat a bit more about what your previous experiences have been investing and what you're looking for in the Tampa Area. 

    0Reply
  • Jesse Rodriguez
    Rental Property Investor · Los Angeles, CA · Member since 2020 · 141 posts · 61 votes
    4y

    @Nick Giulioni Hey Nick, I’m also from California. I have one property in Wisconsin but looking to invest in Indy. I would like to connect!

    0Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    4y

    @Alexandra Feig you might need to refine your criteria a little further. Is your primary objective cash flow of appreciation? What kind of balance are you looking for? When considering appreciation, you'll need to look at historical trends. Currently, virtually every major market has been experiencing unusually high rates of appreciation. Today's appreciation is not sustainable and isn't indicative of the future. When you're evaluating markets on the bases, you'll want to keep this in mind. The appreciation rates in most markets are artificial. Of the markets that you've mentioned. I like Kansas City and Indianapolis a lot. Both are solid cash flow markets but have seen strong appreciation rates in recent years. Additionally, they have good population growth, job growth. modern/diverse economies, reasonable property tax rates and favorable landlord tenant laws. Additionally, I would add the Quad Cities, particularly Davenport, IA to your radar. Davenport is a great sleeper market that hasn't been oversaturated by investors and is a great cash flow market also. 

    3Reply
  • Danielle Jackson
    Phoenix, AZ · Member since 2021 · 504 posts · 282 votes
    4y

    Congrats on getting started in the US! You already mentioned Jacksonville (especially given family in the area) and its a great market for both cash flow and appreciation. Beating national average for YoY rent growth, employment, and population. If you can swing it, MF is always a great way to mitigate vacancy risks, plus increases cash flow potential. Great start for your US investments. Best of luck. 

    0Reply
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