Aspiring Investor: I need help picking a city

Member since 2023 · 3 posts · 10 votes

I’m looking to buy my first rental property. I have about $45K to use. What’s a good city to deal search in and do you have an agent that you would recommend?

I'm active duty military and am not opposed to out of state investing. I've looked around online at cities like Cleveland, El Paso, and Montgomery but have not seen any obvious deals. I just want to narrow down my search to a good neighborhood and fully commit to buying my first property.

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Eliott Elias

Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes

Invest in the market you live in. $45,000 can get you into a flip in San Antonio.

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Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
Invest in the market you live in. $45,000 can get you into a flip in San Antonio.
5 Reply
Greg ParkerBusiness Member
Realtor, Contractor, Property Manager · Montgomery AL and Kowaliga, AL · Member since 2017 · 669 posts · 536 votes
3y
In a number crunch of 300 cities using 10 metrics ranging from home prices to tax rates to vacancy levels, WalletHub determined that Montgomery, Alabama, was the nation’s most affordable city for homebuyers. Rounding out the top 10 of affordable homeownership cities were Flint, Michigan; Toledo, Ohio; Detroit; Akron, Ohio; Warren, Michigan; Pittsburgh; Yuma, Arizona; Springfield, Illinois; and Palm Bay, Florida
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Quote from @Michael Estacion:

Read "Long Distance Real Estate Investing" by David Greene. He provides some solid wisdom for finding a market and the help needed.
Look for Dave Meyers on BiggerPockets or their YouTube channel. He's their data guy and shares the best states/cities to invest in right now. he's a good guy to follow if you are actively investing.
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Account Closed
Real Estate Agent · San Antonio, TX · Member since 2016 · 67 posts · 58 votes
3y
@Michael Estacion I'd have the same advice as @Eliott Elias - ideally you put that money into your own backyard first then expand your scope outwardly.
Would need to understand your goals and objectives as well, since I assume there's a reason you wouldn't look locally?
As far as out of market, out of state, etc. I speak with a lot of out of state investors and some common things I think that would be helpful for prospective long distance investors to consider:
1) It's really, really, really difficult to analyze multiple markets, especially for newer folks. Weeding through big picture trends & projections is one thing but being able to filter through that all, then, understanding the submarkets enough to recognize and execute a deal is a whole other issue entirely.
2) Let's say you do manage to zero in on one and land on a few submarkets to focus on. Ultimately, you end up picking the real estate team (and his/her/their resources) as much as the city itself, bc your success ultimately depends on their ability to be your eyes and ears managing your asset. You don't want to be in the position of doing all that research but not finding competent and reliable people to guide your investment!
**I bring up this last point bc I hear a lot of folks having this discussion and asking about market A, B, C, etc; not so much of an emphasis on the people you'll ultimately select to help you deploy this strategy successfully. Long distance investing can be great, in theory, it's just highly preferable to go local if you can!
Good luck with your search, and if you are open to entertaining San Antonio as an option, feel free to reach out!
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Account Closed
Columbus, OH · Member since 2023 · 427 posts · 254 votes
3y
The midwest in general is a great area to invest if you're not opposed to OOS. Cleveland is a great market for cash flowing on a SFH or 2-4 unit multifamily. Lots of affordable entry points. Columbus also a great market to invest in, with lots of appreciation and a price:rent ratio that still allows for cashflow.
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Jimmy LieuBusiness Member
Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
3y
Quote from @Michael Estacion:

I’m looking to buy my first rental property. I have about $45K to use. What’s a good city to deal search in and do you have an agent that you would recommend?
I'm active duty military and am not opposed to out of state investing. I've looked around online at cities like Cleveland, El Paso, and Montgomery but have not seen any obvious deals. I just want to narrow down my search to a good neighborhood and fully commit to buying my first property.
Hi Michael, I personally love Columbus Ohio and as someone who works with a lot of out of state investors - there's so many catalysts for why you should invest here. Specifically, there's job growth (Intel, Honda, Amazon, Nationwide, etc) and the population is growing (unlike Cleveland or Cincy). I really see Columbus Ohio as an extremely safe bet for the next 10-20 years. Plus, there's still so many positive cash flowing and 1% deals here in Columbus Ohio. Just this month, I’ve gotten under contract for my clients for multiple 20%+ cash on cash rental properties so there’s definitely tons of opportunity here. As a local investor and agent here in Columbus, let me know if you have any questions or want to connect!
[email protected]614-300-7535
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Doug Spence
Investor · San Diego, CA · Member since 2016 · 1k+ posts · 975 votes
3y
@Michael Estacion Welcome to BP! I'm also active duty military, and I was in your shoes about 5 years ago. I wanted to get started in real estate but didn't know where to begin. I started with "Long Distance Real Estate Investing" like @Nathan Gesner recommended, and that book was hugely impactful for my growth as a real estate investor.
Its easy for folks to say "invest where you live" but us military folks really need to be comfortable with out of state investing because we typically move every 2-3 years. It might make sense for you to buy in San Antonio, but don't feel like you HAVE to. Almost all of the real estate I have purchased has been outside of the state I live so its definitely possible!
Don't hesitate to reach out if I can help in any way.
Good luck and keep us updated on your journey!
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Steven Foster Wilson
Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
3y
Quote from @Michael Estacion:

I’m looking to buy my first rental property. I have about $45K to use. What’s a good city to deal search in and do you have an agent that you would recommend?
I'm active duty military and am not opposed to out of state investing. I've looked around online at cities like Cleveland, El Paso, and Montgomery but have not seen any obvious deals. I just want to narrow down my search to a good neighborhood and fully commit to buying my first property.

Hey Michael, the midwest is one of the best places to go to. This will generally depend on what you're after. Looking for cashflow? Look into Cleveland, its got good cash flow potential with appreciation happening as well. Looking for appreciation? Come to Columbus, there are still 1% deals, but the more attractive part is the population growth and other economic drivers!

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Andres Murillo
Real Estate Agent · Los Angeles, CA · Member since 2022 · 137 posts · 106 votes
3y
Birmingham and Montgomery in AL are great options—plenty of solid homes in solid neighborhoods with good cash flow on the market. Connect with the right investment agent (*cough*me*cough*) and get some completely renovated, easy-start SFRs for that investment. Whichever agent you choose (*cough*me*cough*) can help you connect with the right kind of property manager. Many of these working-class neighborhoods will do better with local management vs national brands. There are plenty of tenants that are tech-savvy enough to work with the online portals of national PMs, but local managers are critical in the case that your tenant prefers to pay in person or mail their check to a physical location nearby.
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Michael Estacion
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Member since 2023 · 3 posts · 10 votes
3y
Quote from @Nathan Gesner:

Quote from @Michael Estacion:

Read "Long Distance Real Estate Investing" by David Greene. He provides some solid wisdom for finding a market and the help needed.
Look for Dave Meyers on BiggerPockets or their YouTube channel. He's their data guy and shares the best states/cities to invest in right now. he's a good guy to follow if you are actively investing.

I'm really enjoying Dave Meyers content, thanks for pointing me in this direction. Another friend recommended long distance real estate investing so I just need to finish the audiobook
2 Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
3y
Start local
Local = up to several hours away
There is no substitute for being hands on
4 Reply
Sam McCormackBusiness Member
Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 833 votes
3y
@Michael Estacion
Hi Micheal, Cincinnati would be a great option for you. 45k can get you a SMF or a really good SFH that DOES cash flow. I am an agent in Cincinnati, let me know what you think of that. I can answer any question you may have and we can go from there!
Let me know!
[email protected]859-443-4952
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Najma Osman
Real Estate Agent · Columbus, OH · Member since 2023 · 161 posts · 217 votes
3y
Hi @Michael Estacion, finding a good neighborhood and fully committing is best! Congrats on starting your portfolio out of state! I think this is awesome, it forces you to really be an investor instead of landlord. When considering OOS investing, look for markets with strong economic fundamentals, such as job growth, population growth, and low unemployment rates. This can help ensure that there is a demand for rental properties in the area.
It does not matter where you start as long as you develop your Core 4. The core 4 is David Greene’s long-distance investing strategy and consists of a realtor, contractor, property manager, and lender. Once you have this team in place, you should be able to invest in any market confidently. When vetting homes that are out of state, it's important to work with a trusted agent who has experience in the local market. They can provide valuable insights about the property, its condition, and the local rental market.
Since you are looking at different markets, consider looking into Columbus, Ohio. As a local investor, I think we have a great market!
0 Reply
Samuel Boyd
Realtor · Melbourne, FL · Member since 2021 · 111 posts · 51 votes
3y
@Michael Estacion I am also a newer investor and just finished my first investment project. I love the idea of identifying the market with the most opportunity, but I think that @Eliott Elias is right about starting where you live. This is what I did, and I would recommend for the following reasons:
1. It generally costs less because you can do some of the legwork yourself with minimal travel
2. Less stressful because you can be over there easily in case of a problem
3. You can probably identify an opportunity better when you are familiar with the area.
Not to discourage you from out of state investing but personally I feel like there is more room for error on your first one when you do this and its pretty crucial to get it right so you can build confidence and momentum which can carry you to the next one.
3 Reply
Aj Parikh
Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
3y
HI Michael, I am a huge fan of out of state investing and Long Distance Real Estate Investing was one of the first books I read before I built my portfolio in Cleveland. One of the strategies I used was working with a couple of turnkey companies and getting started in a mid-west market. I would love to connect and help out so feel free to reach out.

1 Reply
Jossalyn Wallace
Real Estate Agent · Destin, FL · Member since 2019 · 116 posts · 111 votes
3y
HI! Congrats on taking the leap! I personally would start with your local market. I think there are some good opportunities throughout TX. If you really wanted to consider out of state I would look at the FL Panhandle (Navarre, Gulf Breeze, Panama City Beach, etc). in addition to those markets others mentioned. We have a few military bases in the area and a strong short term rental market, so you can really choose whatever approach you want and be successful. Feel free to DM if you have any questions or want to connect! Best of luck!
2 Reply
Joe HammelBusiness Member
Real Estate Agent · Metro Detroit, MI · Member since 2018 · 614 posts · 666 votes
3y
@Michael Estacion
Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door cash flow, double digit ROI, and yes the prices appreciate and you build equity.
You just have to know how to recognize it.
I cash flow $100k a year off 20 doors and have built a ton of equity. Happy to send a screen shot of the portfolio to anyone who wants to see, it just won’t allow me to attach pics to a reply.
Purchase: $80k-$130k
Rent: $1100-$1500 (no rent control in MI)
1% rule: 1%-1.4% rule deals
ROI: 10-14%
Cash flow: $250-$350/door (after all expenses and budgeting for maint, capex, vacancy)
Appreciation: 3-15% (has been double digit for a decade)
Location: C+, B-
[email protected]248-422-1685
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Engelo RumoraBusiness Member
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
3y
Quote from @Michael Estacion:

I’m looking to buy my first rental property. I have about $45K to use. What’s a good city to deal search in and do you have an agent that you would recommend?
I'm active duty military and am not opposed to out of state investing. I've looked around online at cities like Cleveland, El Paso, and Montgomery but have not seen any obvious deals. I just want to narrow down my search to a good neighborhood and fully commit to buying my first property.

Focus on finding the right team first, then look for a market.
Greg gave some great suggestions on markets with a low entry price point and great cashflow.
Over the past 10+ years of my investing I have come across many investors making a fortune in ****** markets and it was due to having great feet on the ground.
Which proves to me that the folks working for you will make or break your investment.
No matter how good or bad the area may be.
So, focus on networking and finding great people first that will lead you to a potential market.
Make the market search itself a secondary focus.
Just my opinion.
All the best
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Account Closed
Investor · San Francisco, CA · Member since 2022 · 36 posts · 41 votes
3y
Quote from @Michael Estacion:

I’m looking to buy my first rental property. I have about $45K to use. What’s a good city to deal search in and do you have an agent that you would recommend?
I'm active duty military and am not opposed to out of state investing. I've looked around online at cities like Cleveland, El Paso, and Montgomery but have not seen any obvious deals. I just want to narrow down my search to a good neighborhood and fully commit to buying my first property.

I believe that San Antonio, TX is a great place to start. I actually bought my first property there back in Oct 2022. Home prices and rent prices continue to climb. I looked at other things like population growth, job growth, and income growth and they all were trending in a good direction. The only thing right now is interest rates for investment properties make cash flow difficult, you may even be negative by hundreds of dollars. The interest rate I have right now is 8.625% for investment properties. For better cash flow, you could put a higher down payment however since you only have 45k and median home prices in San Antonio are 310k, your options will be limited. Financing the purchase with a VA loan (0% down) or an FHA loan (3.5% down), living in the property for a year (requirement for the loan), and then renting it out may be a better option.
3 Reply
Jhandel Restrepo
Investor · Member since 2023 · 3 posts · 5 votes
3y
Hello @Michael Estacion! I’m just starting out as well. I would echo what @Account Closed suggested, specifically the part about understanding your goals and objectives.

In my opinion you really need to know what your strategy will be as this will determine where and what you will invest in. David goes into this often and I couldn’t agree more … are you looking for cash flow or equity? How will the property be used (long-term, mid-term, or short-term rental)? Do you have access to other funds, etc?

Once you have the answer to those questions you can then proceed to look at specific markets which might meet your criteria.

For example, I focus on single family homes and I choose homes which I can use as mid-term or short-term rentals. Because of this strategy, I invest in NC. It is also where I live, so I have a competitive advantage due to knowing the market well.

To help me in making the decision of where to invest in I use data from Zillow and cross reference with data from Rent-cafe. This gives me population, growth, crime-rates, unemployment rates, median home pricing, avg rent, and percent rental vs percent ownership rates.

Hope this helps!
2 Reply
Katie Greenman
Real Estate Agent · San Antonio, TX · Member since 2020 · 103 posts · 78 votes
3y
What @Account Closed said is spot on. I was going back and forth on how to get that first investment property as well and decided to purchase a primary residence here in San Antonio to house hack. Closed in May and have one roommate moving in the end of this month and currently looking for another. With two roommates my note is basically covered. Not sure of your situation but I have met a few service people at investment meet ups here in SA who have done this as well. What has you wanting to look elsewhere? Are you focusing on cash flow and cant seem to make numbers work? Many of our investor clients have pivoted to flipping or putting larger down payments. Have you considered buying a piece of land and then offering owner finance? If San Antonio is just not doing it for you, I would recommend Edinburg/McAllen/Harlingen/Brownsville/Mission areas (South Texas-RGV)? Rents are not as high with what you get here in San Antonio but comparing property condition to the same list price I find the RGV will get you a property in better shape.
2 Reply
Hamp Lee IIIPro Member
Real Estate Agent · San Antonio, TX · Member since 2019 · 1k+ posts · 832 votes
3y
Welcome to BiggerPockets!
I’m active duty military as well…
I would love to talk more about strategies in the city with you if you're open to it.
I wish you all the best.
1 Reply
Melanie ThomasBusiness Member
Real Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 490 votes
3y
Chiming in here! Austin & San Antonio, Texas is booming! Good luck & happy investing!
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Parker Reyna
Austin, TX · Member since 2023 · 11 posts · 4 votes
3y
Congratulations on your journey to start investing in real estate. There are a lot of areas in Texas that are great to invest in but it all comes down to the investor and what is easier for them and if the numbers make sense. If you are new try doing your first investment near you to better understand and learn the process. Also, trying to find the right property can be time-consuming. There are brokerages that specialize in helping investors find off-market properties. I'd be more than happy to help you find such brokerages to help you source more off-market deals!
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Max FeinbergPro Member
Real Estate Agent · Pittsburgh, PA · Member since 2017 · 150 posts · 70 votes
3y
@Michael Estacion Pittsburgh would fit what you are looking for perfectly. With 45k, you have the option of a single family rental in a B type area or even a small multi unit. Which you prefer will depend on your risk tolerance, cash flow expectations, etc. Let me know if you’d like to chat further, I’d be glad to have a conversation about some potential neighborhoods/types of properties that would work for you.
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