Which city is better to invest? Houston or Cleveland

Question

Hello everyone,

We live in WA and are looking to invest our first rental property. We have 30k we can invest, right now we are looking at Houston and Cleveland, here is what we found and are asking for some advice or ideas on which would be a better investment for us

Cleveland

Pros: cheaper, cash flow is higher

Cons: most of the houses we looked at seem pretty damaged and old, may need a lot of fixes, less popular, less appreciation

Houston

Pros: populated, more jobs, (easier to find tenants?), more appreciation

Cons: more expensive, cash flow is lower

Thank you so much!

Patrick Drury · Answer

@Lily YouIt kinda boils down to what you value more. Cashflow or appreciation. Your analysis clearly outlines one for each. If you are interested in the Cleveland market, just look at stuff more turnkey so there is less work on the front end if you don't want to do much work to this rental as long as the numbers still work.

Wale Lawal · Answer

@Lily You

I recommend you consider Houston, TX!I personally have rentals here in Houston, the cash-on-cash return and appreciation are steady.

You should select a market that will meet your investment goals.

You need a team of local professionals like property managers, contractors, agents etc.

A local Investor-Agent can help shorten your learning curve and save you a lot of headaches as they tend to understand the market better.

All the best!

Mike D'Arrigo · Answer

@Lily You these are two very different markets so you might want to refine your criteria more.  Cleveland is much more affordable than Houston so if you're limited to $30K to invest, your money will go farther in Cleveland. Also, TX has some of the highest property taxes and insusrance rates in the country so your cash flow is going to be much higher in Cleveland. You need to be particularly careful in Cleveland however and know the neghborhoods well. There are good areas and some really rough areas that you need to avoid.

Aj Parikh · Answer

I have invested in Cleveland and have found value so I will make a case for Cleveland. There are a lot of opportunities for small multi family and SFH. Also, the landlord friendly laws make it an attractive option for out of state investors. There are a lot of good property managements in the area so there are options if you have a bad experience. Definitely recommend the area and would love to connect if you want to work with a turnkey company

Steven Foster Wilson · Answer

Honestly, Cleveland was just on BP's top 10 best markets to invest in. https://learn.roofstock.com/bl...

James Wise · Answer

So we aren't even gonna talk about the major hit to the strip club economy that Houston took when Harden left?

Eliott Elias · Answer

Houston. You want to look at the long run, Texas is creating jobs like no other. People are moving here more than any other state in the nation. Says a lot

Lauren Cutchen · Answer

Start analyzing properties from both cities. The market is still hot for a good cash flowing property in the Houston area. But like the above post, you can get on the wrong side of town if you're not careful. Unless that's tolerable for you. If the deal looks too good to be true, there may be a caveat like flood zone, tenant occupied, and other hidden details. In Houston - you may want to call an insurance agent for what a typical rate is here. Also, property taxes vary in different areas of town. That'll kill your cash flow too.

James Wise · Answer

I've never been to Houston so I can't speak to investing there. However I have sold $200 million dollars of real estate in Cleveland so it ain't my first rodeo out here.

(ya'll like that Texas pun right there?)

AnywaysWhen you are looking deeper at the Cleveland market you've got to understand it's a tough market to learn. It's very easy to end up underwater if you buy in one neighborhood thinking the prices are going to be apples to apples next to another neighborhood. They won't. It's like apples to oranges from one part of town to the next. Check out The Ultimate Guide to Grading Cleveland Neighborhoods to help with this so you can buy in Cleveland with less risk.

Which city is better to invest? Houston or Cleveland

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