MultiFamily - Phoenix / Atlanta / Indianapolis?

Question

Hi BP Experts and Community,

Newbie here looking to invest in Multifamily (Dup/Tri/Quadplex) rentals for cashflow. Currently contemplating on which market to start, especially with the current climate (i.e. rising rates/looming recession/inflation, etc.). Which city is best for a starter MUR: Phoenix / Atlanta / Indy?

Okay with lower appreciation as long as there is solid cashflow. If PP budget is around 300-600K (can be more), any thoughts on which market is better for a starter MUR investor and why?

Thanks for sharing your thoughts and expertise in advance!

Sam McCormack · Answer

Hi Wes, some good cash flow markets to look into are primarily in the mid west. Greater Cincinnati, Indianapolis, Columbus, etc. are good examples of cash flowing areas (if you find the right deal for it). I am unfamiliar with Phoenix and Atlanta though. If you have any questions about Greater Cincinnati, feel free to reach out! I'll always be here to answer whatever question you may have as best as I can!

Kenny Hall · Answer

@Wes Wong I can’t speak to other cities but Indianapolis has many small multi family options. Even in the shifting market, Indy prices haven’t taken major price cuts and rents remain strong. Rates are cutting into cashflow but will be temporary and rents will continue to rise. Let me know if you’d like to chat more about Indy and analyze some deals together.

Rob Nappi · Answer

I have an offer in on a property $90k quadplex. gross $4200

After expenses

Cash flowing me over $2k

I would say Indiana is the way to go.

DM me if you need anything.

Rob

Mike D'Arrigo · Answer

@Wes Wong We got started in Indianapolis over 10 years ago and although I am a big proponent of Indy for single family, I don't generally recomment the market for MF. Most are located in the old rough parts of the city. We've had a lot of success with multi families in Kansas City and the Quad Cities. I don't know the Pjoenix and Atlanta markets but I'd be surprised if you can get the same cash on cash returns there as you can in some of the Midwest markets where prices are lower.

Becca F. · Answer

@Wes Wong

Welcome to the BP Community! I can't speak to Phoenix or Atlanta. I'm a California investor looking for out-of-state properties. I have a SFH rental in the Indianapolis metro area (suburb) and it's cash flowing, not as much as it used to because my property taxes increased significantly. I have Class A properties in the San Francisco Bay Area and in Indiana so haven't had any tenant management issues so far, a bit afraid to look into Class C properties. My property manager owns duplexes and an apartment building in Indianapolis but he bought them before all the prices went up the last 3 years. He's doing very well with cash flow.

Your budget is much higher than mine at $600,000. I'm also looking at other areas of Indianapolis and other states. I really like SFHs but I don't know if I'd cash flow more with multi-family but price points are higher and SFH is easier to manage for me (self managing one right in California now). I'm mostly likely going to do DSCR loan if I can't qualify with conventional loan. These higher prices and interest rates have me on pause since I don't want to make a bad purchase. Good luck!

Jingru Sui · Answer

Hi Wes, I’m not sure about other market but have some acknowledge on ATL market as an active investor/agent/PM. Some of the recent seen (Past 2 month) transactions:

1. Quad bought at 640K (listed at 650K) need some cosmetic repairs in Smyrna. Current rent 4400. Market rent should be around 6000. My client bought it we are increasing the rent.

2. Duplex also in Smyrna, listed in the mid 300Ks. But gosh they got so many offers i think they eventually go above 420K. Have a client bought on the same street last year, spend $$$$ to make it brand new again but able to rent out at 1900-2000 per month on a 2 bedroom.

Not sure if they are consider great but still want to share so you can compare. Let me know what you find out about Phoenix and Indianapolis, I’m also curious to see maybe other city are performing better.

Taylor L. · Answer

All of those markets have cash flow opportunities. I invest in both Phoenix and greater Atlanta, both markets have cash flow opportunity. I know investors who do nice deals in Indianapolis, too. The deciding factor is the investor and their team!  The market is always a factor, but no matter where you are it takes work to earn cash flow.

Wes Wong · Answer

@Taylor L. -- thanks for the feedback. In terms of market knowledge, I am most familiar with ATL generally (e.g. macro drivers, econ factors, etc.) just because it's a bigger or more popular (and populous) city and have more understanding as result. But in terms of local knowledge, I'd say they are about the same to me. The PPs are in this order PHX>ATL>IND and I was wondering which market would cash flow better commensurate with the skill level/scope of control/risk level as a starter MUR investor. My current goal is to have steady streams of cashflow so wondering which market would be most beneficial for that given one PP in PHX could equal two or three PPs in IND but PHX/ATL are much bigger cities with stronger fundamentals.

What are your thoughts?

Taylor L. · Answer

Are you closer to one as compared to the others? Do you happen to know one better than the others? Market knowledge is a huge advantage. I strongly believe you should start with markets that you can learn and study more easily, so that when a deal comes across your desk you already have a reasonably good idea of its potential.

MultiFamily - Phoenix / Atlanta / Indianapolis?

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