I’m looking to invest in my next market. What are ya’ll thoughts?

4 Reply

Account Closed

OP

Investor · New York City, NY · Member since 2017 · 146 posts · 56 votes

@Remington Lyman Are you having a good experience with investments in Columbus? Why chase Cincy / Cleveland?

Remington LymanBusiness Member

Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes

[email protected]614-541-8475 Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals

Quote from @Account Closed:

@Remington Lyman Are you having a good experience with investments in Columbus? Why chase Cincy / Cleveland?

I am investing in Columbus but I have brokered in other cities in Ohio. Cleveland has more cash flow. Cincy is in the middle of Columbus and Cle

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3 Reply

Jayson Cain

Lender · Manhattan Beach, CA · Member since 2017 · 423 posts · 268 votes

Hi @Account Closed,

I have started my out-of-state real estate journey in Indianapolis. Now, I have a portfolio of long-term rentals and STRs.

I've also helped other investors with their DSCR loans and flip projects. Happy to share my experiences and chat with you more if you're interested.

Alex Olson

Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes

Hey Rob - I think looking at a different market is a good strategy. There are a lot of good deals in KC as well so if you ever decide to look back here hit me up!

Hunter Reed

New to Real Estate · Texas Christian University · Member since 2022 · 119 posts · 56 votes

Rob, from the knowledge I've required over the years median income salary is a great indictor for sustainable cash flow. Hope this helps. Good luck!

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

I'd love to answer your question in exact detail @Account Closed but to do so would be placing my "secret sauce" of the moment up on a billboard, light in neon, with flailing fan-men, and a few sign turners saying "look, LOOK".

Short-short version, your looking in the wrong MN market.

Yes, S.Metro is awesome on many levels. The down-stroke is the market is in a less fevered growth rate at this time, which is healthy, but nurf's appreciation a bit.

That said, there is areas in explosive growth pattern, support by planned city development, and for the smarty-pant's who put int he work to know those plan's ("ehe-hum") appreciation becomes a mathematical item vs guess-work.

Going 1-step further, and I am tickling on handing out my secret-sauce here, get familiar with the replacement cost of things. There is market opportunity where due to certain unique factors, one can acquire property for significantly below replacement cost value. Now that's key because it is purchasing future equity, it is, even though it's a "fair market price" today. Because all we have to know is insights on future development, the math of inventory "wash-out" for ascending prices etc etc. And the last important ingredient, vibrant tenancy base.

This is how I can still pickup properties that meet the 1% rule. I know, hogwash right, well not so. It's about knowing markets, knowing the cycles, keeping abreast of them sometimes for a decade+.

As for MN vs OH markets, for me no brianer I go MN. Economic diversity is much better in MN, rents are much better, cap on appreciation potential is higher. In REI we work on the %'s right, so I want to make my % on the highest possible $ viable. I can do the exact same performance as an OH property but profit tipple per unit.

Kasey Sulheim

Investor · Honolulu, HI · Member since 2015 · 28 posts · 8 votes

@James Hamling

What’s the secret sauce James?!! Being from MN I’m really curious to hear your insight. Thanks!

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

Quote from @Kasey Sulheim:

@James Hamling

What’s the secret sauce James?!! Being from MN I’m really curious to hear your insight. Thanks!

Things of value are never free, and those of exceptional value are exceptional not free. It's my competitive advantage of the moment, why I have the results I do and people not only pay me what they do but with a smile and a high-5.

If a person dissected what I wrote here, studied from past posts and had a dash of luck, I think a person could figure it out, maybe.

I never, ever work by impulse or emotion, I am a Strategy-Spartan.

Sam McCormackBusiness Member

Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 834 votes

[email protected]859-443-4952

Quote from @Account Closed:

@Remington Lyman Are you having a good experience with investments in Columbus? Why chase Cincy / Cleveland?

Agreed with Remington on what he is saying about all cities. I am just in Cincinnati and Northern Ky

Sam McCormack Realtor

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Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

Here is my issue with the OH markets. Consistently there has been and is this massive drive of remote buyers, CA-$, WA-$, NY-$ etc. buying in OH because "it's cheaper". That massive popularity of "cheaper" has inflated OH prices, it's simple demand-supply curve mathematics, get all kinds of out state $ coming in to buy on perceptional value and they change the metrics of "fair market value" too perceptual value vs market fundamentals.

So, what happens when the remote buyer stops buying?

I recently toured the TN markets and liked a lot of what I saw but heard the scariest of response repeated over and over and over as I asked "what is supporting this appreciation level in pricing?", "oh, it's the CA-$ buyers".

When a markets prices are supported by OUTSIDE factors, it's not an enduring action unless that market is doing something to evolve the market itself to infill market support for such.

"a" major employer or two does not infill that gap, or let's call it what it is, a bubble. There is a risk of deflation or a "burst" unless that hollow is infilled by local economy actions, factors that raise median wages. The median income in OH is only $31,078. By the math that means median rent is only healthy at or below $854.65 per month. If want to take median household that's $61,938 which places health cap on rents of $1,703.30

Median HOUSEHOLD income in Cleveland is $33,678! Household not individual! Cincy $45,235.

The numbers do not say anything of in-state economic viability for median home prices. The math shows the issue.

For comparison the median household income of Minneapolis is $70,099. A city I actively invest in Rogers MN median household income is $137,031. Maple Grove $118,479, Plymouth $119,813, Otsego $114,087, Ramsey $101,996.

I know that to get the $2,500+ in rents I like to have, tenants need to have household income of $90k+ for healthy viability. To try to get that consistently, from a market of such low median income below the threshold, well it's a setup for failure.

How can rents hold, appreciation hold when affordability is not there? For me, what I see is a matter of time, and since I don't know exactly when that time runs out, I prefer to stick to places where I don't have to sweat the shot-clock. My biggest unknown is if I am going to clock 5% appreciation this next year or 10%+.

Yes, prices are cheaper in those markets, and for good reason, way WAY to many people wearing blinders to that fact.

Jimmy LieuBusiness Member

Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes

[email protected]614-300-7535

Quote from @Account Closed:

I’ve been investing in real estate primarily for cashflow and using those funds to snowball my efforts so I can reach financial independence and buy more property. I have built a sizable portfolio in Kansas City and after much thought I think it’s safe to say I should diversify and enter a new market.

I currently own a healthy mix of multi-family (2-4 units) in suburban areas and a couple single family. It’s a strategy that has worked well for me and my tenants have been mostly low maintenance. For anyone who might suggest I should scale into larger property, I have tried, but the properties tend to be older, heavy on maintenance, and few exist outside of city limits. I had to sell a 12 unit building in 2022, for a profit, but it cost me a relationship with my management team as there were several maintenance requests weekly that was just sucking up their time. The experience wasn’t great for me.

Anyway, I am stuck deciding between: Minneapolis, Indianapolis, Columbus

On paper, I think there’s a lot to like about all 3 markets like solid population growth, influx of jobs, low climate risk, and lower property prices. I am aware that Columbus probably will have the brightest future but as of today it seems to have the lowest immediate cash flow of the 3 options. Indy/Minny seem to offer cheaper property and a greater return right now.

I have been looking at property south of Minneapolis in Farmington, Apple Valley, Shakopee and seeing suitable options but can’t help but think Columbus’s growth will just outshine everyone else. Maybe in 10 years a house in Columbus will double in value while my “investment” in Minneapolis is up 15%

Anyway, maybe someone with more knowledge can share their valuable opinions

Hi Rob, 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. As a local investor and agent here in Columbus, let me know if you have any questions or want to connect!

Jimmy Lieu, Red 1 Realty4.9122 Reviews

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

@Account Closed

if you're succeeding in KC why go into another market?

Devon Shaw

Real Estate Agent · St. Louis, MO · Member since 2017 · 77 posts · 68 votes

Hello!

I am an investor focused agent in the Central Indiana market. I would love to connect and answer any questions you may have!

We are seeing continued to growth, improvement and expansion. While finding cash flowing deals in good neighborhoods in Indy proper has become more difficult, we've been having great success in some of the surrounding suburbs at VERY affordable price points.

Account Closed

OP

Investor · New York City, NY · Member since 2017 · 146 posts · 56 votes

@Nicholas L. - Mitigation Risk, economic diversity, boredom. I've collected about 50 properties in Kansas City. I'm starting to desire new pastures.

@Devon Shaw - Cool. What suburbs would you recommend I look at? What price point is a good entry? Would love to chat more about it. Indy feels similar in a lot of ways to KC.

@Jimmy Lieu - I appreciate your input. I think Columbus thus far has peaked my interest the most just because it's on a wildly different economic and growth trajectory than KC. I read recently that the city is planning for 3x the population by 2040 and that's just insane. Do you think we can chat more?

Alfath AhmedBusiness Member

Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes

[email protected]614-802-5698

Quote from @Account Closed:

I’ve been investing in real estate primarily for cashflow and using those funds to snowball my efforts so I can reach financial independence and buy more property. I have built a sizable portfolio in Kansas City and after much thought I think it’s safe to say I should diversify and enter a new market.

I currently own a healthy mix of multi-family (2-4 units) in suburban areas and a couple single family. It’s a strategy that has worked well for me and my tenants have been mostly low maintenance. For anyone who might suggest I should scale into larger property, I have tried, but the properties tend to be older, heavy on maintenance, and few exist outside of city limits. I had to sell a 12 unit building in 2022, for a profit, but it cost me a relationship with my management team as there were several maintenance requests weekly that was just sucking up their time. The experience wasn’t great for me.

Anyway, I am stuck deciding between: Minneapolis, Indianapolis, Columbus

On paper, I think there’s a lot to like about all 3 markets like solid population growth, influx of jobs, low climate risk, and lower property prices. I am aware that Columbus probably will have the brightest future but as of today it seems to have the lowest immediate cash flow of the 3 options. Indy/Minny seem to offer cheaper property and a greater return right now.

I have been looking at property south of Minneapolis in Farmington, Apple Valley, Shakopee and seeing suitable options but can’t help but think Columbus’s growth will just outshine everyone else. Maybe in 10 years a house in Columbus will double in value while my “investment” in Minneapolis is up 15%

Anyway, maybe someone with more knowledge can share their valuable opinions

I personally invest in the Columbus market and I have also seen a lot of out-of-state investors doing the same because of the strong economic base in Columbus. I just read a published article today by the Columbus Dispatch that Franklin County home values are supposed to rise by 30-35% with re-appraisal. We have had nearly a 39% property value gain from 2019 to 2022 in the Columbus market.

ReafCo | Ahmed Group 533 Reviews

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

@Account Closed

OK - makes sense! Congratulations on your success so far.

Just curious - are you considering diversifying into other asset classes? Or do you want to stay mostly / entirely in RE?

Account Closed

OP

Investor · New York City, NY · Member since 2017 · 146 posts · 56 votes

@Nicholas L. - I would rather pay down a loan or two instead of investing in equities to mitigate risk if that's what you're asking. From my perspective, I like to buy stocks while I'm raising money to buy my next house, but it's far more exciting to just get the monthly rental income.

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

@Account Closed

agreed, I always include paydown to "buy" cash flow when I'm looking over my portfolio and thinking of what to do.

at this point I'm looking for (and finding) seller finance deals. interest rates are making it tough to cash flow on a traditional LTR.

Kiersten Hegna

Member since 2023 · 21 posts · 8 votes

Hi Rob. We are just starting out so probably not your best contact. I did, however, just post about the Minneapolis market and am very curious about it. I’m in the Twin Cities and looking to learn about what to look for in the small multi-family sector so would love to chat. If you need eyes on anything here happy to help!

Kasey Sulheim

Investor · Honolulu, HI · Member since 2015 · 28 posts · 8 votes

Quote from @James Hamling:

Quote from @Kasey Sulheim:

@James Hamling

What’s the secret sauce James?!! Being from MN I’m really curious to hear your insight. Thanks!

Things of value are never free, and those of exceptional value are exceptional not free. It's my competitive advantage of the moment, why I have the results I do and people not only pay me what they do but with a smile and a high-5.

If a person dissected what I wrote here, studied from past posts and had a dash of luck, I think a person could figure it out, maybe.

I never, ever work by impulse or emotion, I am a Strategy-Spartan.

Bigger Pockets is free and provides immense value to tens of thousands of people world wide. I think what you meant to say is that you personally will not provide anything of value for free.

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

Quote from @Kasey Sulheim:

Quote from @James Hamling:

Quote from @Kasey Sulheim:

@James Hamling

What’s the secret sauce James?!! Being from MN I’m really curious to hear your insight. Thanks!

Things of value are never free, and those of exceptional value are exceptional not free. It's my competitive advantage of the moment, why I have the results I do and people not only pay me what they do but with a smile and a high-5.

If a person dissected what I wrote here, studied from past posts and had a dash of luck, I think a person could figure it out, maybe.

I never, ever work by impulse or emotion, I am a Strategy-Spartan.

Bigger Pockets is free and provides immense value to tens of thousands of people world wide. I think what you meant to say is that you personally will not provide anything of value for free.

BP is not free, FYI. It has free components, but it does not give away anything/everything for free. The items of more value, cost, and the cost as value ascends.

Your expectation of all to serve you, for free, is abusive and ridiculous.

Devon Shaw

Real Estate Agent · St. Louis, MO · Member since 2017 · 77 posts · 68 votes

Quote from @Account Closed:

@Nicholas L. - Mitigation Risk, economic diversity, boredom. I've collected about 50 properties in Kansas City. I'm starting to desire new pastures.

@Devon Shaw - Cool. What suburbs would you recommend I look at? What price point is a good entry? Would love to chat more about it. Indy feels similar in a lot of ways to KC.

@Jimmy Lieu - I appreciate your input. I think Columbus thus far has peaked my interest the most just because it's on a wildly different economic and growth trajectory than KC. I read recently that the city is planning for 3x the population by 2040 and that's just insane. Do you think we can chat more?

We've had great luck in Anderson on both investment and leasing side. Price to rent rations are a lot better, taxes are lower, but still good rental demand and quality tenants.

We manage about 40 doors there at this point and it's been pretty solid all around for our clients.

Feel free to reach out anytime to chat further!

Tim SwierczekPro Member

Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes

Quote from @Account Closed:

I’ve been investing in real estate primarily for cashflow and using those funds to snowball my efforts so I can reach financial independence and buy more property. I have built a sizable portfolio in Kansas City and after much thought I think it’s safe to say I should diversify and enter a new market.

I currently own a healthy mix of multi-family (2-4 units) in suburban areas and a couple single family. It’s a strategy that has worked well for me and my tenants have been mostly low maintenance. For anyone who might suggest I should scale into larger property, I have tried, but the properties tend to be older, heavy on maintenance, and few exist outside of city limits. I had to sell a 12 unit building in 2022, for a profit, but it cost me a relationship with my management team as there were several maintenance requests weekly that was just sucking up their time. The experience wasn’t great for me.

Anyway, I am stuck deciding between: Minneapolis, Indianapolis, Columbus

On paper, I think there’s a lot to like about all 3 markets like solid population growth, influx of jobs, low climate risk, and lower property prices. I am aware that Columbus probably will have the brightest future but as of today it seems to have the lowest immediate cash flow of the 3 options. Indy/Minny seem to offer cheaper property and a greater return right now.

I have been looking at property south of Minneapolis in Farmington, Apple Valley, Shakopee and seeing suitable options but can’t help but think Columbus’s growth will just outshine everyone else. Maybe in 10 years a house in Columbus will double in value while my “investment” in Minneapolis is up 15%

Anyway, maybe someone with more knowledge can share their valuable opinions

I do not know the Columbus OH market but The Minneapolis, and specifically Farmington, Apple Valley, Shakopee markets are great markets for high rents, high appreciation, and great tenants.