Choosing a Rental Market- Analysis Paralysis!

Realtor · Portland, OR · Member since 2022 · 14 posts · 19 votes

Hello everyone,

I am looking to purchase my first investment property this year and am having some trouble deciding on a market. I know to look for areas that are landlord friendly, have population/job growth, limited seasonal/environmental issues, high rent/price ratio, and areas within my budget (under $200Kish). However, my issues run into seeing a few markets that look good and then I can't seem to finalize my decision on which is better or where to really focus my time searching. So far I've been interested in Cleveland, Columbus, Birmingham, and Memphis.

Am I missing anything in my criteria? Does anyone have a system they use to filter through the endless available markets and narrow down your options to something a bit more manageable? Any words of wisdom are welcomed too!

11 Reply

222 views

Most Popular Reply

Henry ClarkPro Member

Developer · Member since 2020 · 4k+ posts · 4k+ votes

Your best market, best returns, best risk/reward as a first time investor is where you live and your own housing. You have far more options than a larger investor.

7 Reply

See this reply in the discussion

29 Replies

Jump to latestLatest

Sort by

Henry ClarkPro Member
Developer · Member since 2020 · 4k+ posts · 4k+ votes
2y
Your best market, best returns, best risk/reward as a first time investor is where you live and your own housing. You have far more options than a larger investor.
7 Reply
Jordan RayBusiness Member
Real Estate Agent · Memphis, TN · Member since 2023 · 642 posts · 333 votes
2y
Quote from @Alex Johnson:

Hello everyone,
I am looking to purchase my first investment property this year and am having some trouble deciding on a market. I know to look for areas that are landlord friendly, have population/job growth, limited seasonal/environmental issues, high rent/price ratio, and areas within my budget (under $200Kish). However, my issues run into seeing a few markets that look good and then I can't seem to finalize my decision on which is better or where to really focus my time searching. So far I've been interested in Cleveland, Columbus, Birmingham, and Memphis.
Am I missing anything in my criteria? Does anyone have a system they use to filter through the endless available markets and narrow down your options to something a bit more manageable? Any words of wisdom are welcomed too!

Let me know if I can help in Memphis!
[email protected]662-642-1458
Jordan Ray - eXp Realty5112 Reviews
Website View Page
1 Reply
Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
2y
Right now, it's clear you aren't looking at properties in real life, so it's not surprising you are stuck in analysis paralysis. Looking online and running numbers when you aren't looking at anything in real life will never give you the confidence to pull the trigger. It's like a video game you are playing with real money.
Do you have friends from local meetups who invest in any of those areas? Do you have boots on the ground in any of those areas? How did you make that list? Where is your competitive advantage in those areas?
[email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
Zen and the Art of Real Estate Investing59 Reviews
Website View Page
4 Reply
Henry ClarkPro Member
Developer · Member since 2020 · 4k+ posts · 4k+ votes
2y
OP you’re a realtor. Look through the listings in Portland and where you might live.
1. What is your personal situation? Single, roommates, spouse kids, etc.
2. Do you need to live in a specific area or can you choose?
3. Look for both cash flow and value add.
4. Look for the worst house in a great neighborhood with good school system or near major attraction.
5. Look for a demo home in a new development in a great neighborhood.
6. What is your rent rate versus mortgage payments? Can you get a roommate. Could be travelling nurses near med centers. You’re looking for your unfair advantage versus other investors.
7. Look for a house you can ADU, BRRRR, or sell off a lot.
8. Look for a nasty lot that you can split 2 or 3 times. Hire an excavator or bulldozer and leave big trees. Build a small pond. Has a great view. Walk out basement potential. Etc.
9. Any town near you look for a flat topped church or old elementary school for sale. Move into it and slowly rehab.
10. Rent near a military base. They have guarantee funds from the government. Any issues you call their commanding officer.
If your looking for the same 3/2 perfect home or 4 unit MFH everyone else is looking for they have you beat as a new investor. Use your unfair advantages.
Tax free capital gains in primary 2 out of 5 years. Guarantee good renter, you. Already positive cash flow if your paying rent out. Part of the sales commission goes to you when you buy. Possibly all of the sales commission goes to you when you sale. You know the market. You can vet your team plumbers, electricians, your the property manager, insurance, banking, etc. You have the unfair advantage. Use them.

5 Reply
Account Closed
Realtor · Cleveland, OH · Member since 2023 · 340 posts · 215 votes
2y
Hi, Ohio is a great place to invest in real estate. I am an Ohio Realtor and if you have any questions, please feel free to contact me. Thanks!
Regina Blake-Ohio Realtor
1 Reply
Samuel DioufBusiness Member
Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
2y
Columbus, Ohio is a great market if you're leaning towards appreciation. The other markets you are looking at are going to be more cash-flow focused due to the smaller population and infrastructure growth.
I think out of the cities you chose Columbus is your best option. You will see some of the best returns with the lowest risk involved.
[email protected]614-662-1652
Reafco - Samuel Diouf528 Reviews
Website View Page
3 Reply
Charles Granja
Rental Property Investor · Kansas City/Chicago · Member since 2021 · 126 posts · 113 votes
2y
You should invest locally first if you can. If you househack, you will learn costs and how to rehab a house. That is much more valuable than buying a property out of state
2 Reply
Jeremy MelloulPro Member
Real Estate Agent · Columbus, OH · Member since 2022 · 83 posts · 83 votes
2y
Hey Alex! Columbus is definitely the market to invest in. Let’s chat.
380-222-6485
3 Reply
Becca F.
Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes
2y
I agree with the comments about investing locally or within a reasonable drive, say 2 hours.

@Henry Clark made some great points and you're a realtor so you can use that to your advantage. The reality is that 2024 is a challenging market with higher prices and interest rates.

I still believe in West Coast appreciation. I invest in the Bay Area (pre-2013) and Indianapolis metro area. I posted many times about this but I'm going through a lot of challenges with Indy. What was supposed to cash flow on paper isn't my reality - my suggestion is don't buy Class C inexpensive properties OOS (best left to locals). Being 2000 miles puts me at a disadvantage to not be able to check on my Indiana properties.
If you're considering OOS, I would highly recommend flying there. Video tours, photos, Google map images don't show a lot of things. Also look at property tax rates, how often properties are re-assessed and if there's a cap on property tax increases. I had 17% property tax increases recently in Indy. I'm going to be the dissenter here but I may exit out of the Midwest in the near future.
This is a great post about cash flow and why numbers on spreadsheets only present a partial picture.
https://www.biggerpockets.com/forums/12/topics/1171104-the-m...
4 Reply
Alex Johnson
OP
Realtor · Portland, OR · Member since 2022 · 14 posts · 19 votes
2y
Quote from @Jonathan Greene:

Right now, it's clear you aren't looking at properties in real life, so it's not surprising you are stuck in analysis paralysis. Looking online and running numbers when you aren't looking at anything in real life will never give you the confidence to pull the trigger. It's like a video game you are playing with real money.
Do you have friends from local meetups who invest in any of those areas? Do you have boots on the ground in any of those areas? How did you make that list? Where is your competitive advantage in those areas?
I have realtors and property managers in some of the areas. The list came from mentors and my own research primarily. I’ve been going to more meet ups recently but haven’t been able to connect with anyone in person that invests in the markets I’m interested in.
1 Reply
Alex Johnson
OP
Realtor · Portland, OR · Member since 2022 · 14 posts · 19 votes
2y
Quote from @Henry Clark:

OP you’re a realtor. Look through the listings in Portland and where you might live.
1. What is your personal situation? Single, roommates, spouse kids, etc.
2. Do you need to live in a specific area or can you choose?
3. Look for both cash flow and value add.
4. Look for the worst house in a great neighborhood with good school system or near major attraction.
5. Look for a demo home in a new development in a great neighborhood.
6. What is your rent rate versus mortgage payments? Can you get a roommate. Could be travelling nurses near med centers. You’re looking for your unfair advantage versus other investors.
7. Look for a house you can ADU, BRRRR, or sell off a lot.
8. Look for a nasty lot that you can split 2 or 3 times. Hire an excavator or bulldozer and leave big trees. Build a small pond. Has a great view. Walk out basement potential. Etc.
9. Any town near you look for a flat topped church or old elementary school for sale. Move into it and slowly rehab.
10. Rent near a military base. They have guarantee funds from the government. Any issues you call their commanding officer.
If your looking for the same 3/2 perfect home or 4 unit MFH everyone else is looking for they have you beat as a new investor. Use your unfair advantages.
Tax free capital gains in primary 2 out of 5 years. Guarantee good renter, you. Already positive cash flow if your paying rent out. Part of the sales commission goes to you when you buy. Possibly all of the sales commission goes to you when you sale. You know the market. You can vet your team plumbers, electricians, your the property manager, insurance, banking, etc. You have the unfair advantage. Use them.

Thanks! All solid points but investing in my market isn’t really feasible or at least doesn’t align with my goals. Properties are above my budget in Portland and my housing situation isn’t set up for ADU’s, renting out, etc.

I’m pretty set on out of state, just looking for tips on narrowing down my options.
1 Reply
Alex Johnson
OP
Realtor · Portland, OR · Member since 2022 · 14 posts · 19 votes
2y
Quote from @Becca F.:

I agree with the comments about investing locally or within a reasonable drive, say 2 hours.

@Henry Clark made some great points and you're a realtor so you can use that to your advantage. The reality is that 2024 is a challenging market with higher prices and interest rates.

I still believe in West Coast appreciation. I invest in the Bay Area (pre-2013) and Indianapolis metro area. I posted many times about this but I'm going through a lot of challenges with Indy. What was supposed to cash flow on paper isn't my reality - my suggestion is don't buy Class C inexpensive properties OOS (best left to locals). Being 2000 miles puts me at a disadvantage to not be able to check on my Indiana properties.
If you're considering OOS, I would highly recommend flying there. Video tours, photos, Google map images don't show a lot of things. Also look at property tax rates, how often properties are re-assessed and if there's a cap on property tax increases. I had 17% property tax increases recently in Indy. I'm going to be the dissenter here but I may exit out of the Midwest in the near future.
This is a great post about cash flow and why numbers on spreadsheets only present a partial picture.
https://www.biggerpockets.com/forums/12/topics/1171104-the-m...

Thank you Becca! That’s helpful. Yeah the market and interest the best but I’m planning long term so not too much of a concern for me as long as the deal still works. I’ve been looking in B+ neighborhoods for the most part and have gone back and forth about flying down when I decide on where I’m going to invest.
Local is definitely a plan but just feasible at the moment. I’ll take a look at that post too!
1 Reply
Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
2y
Quote from @Alex Johnson:

Hello everyone,
I am looking to purchase my first investment property this year and am having some trouble deciding on a market. I know to look for areas that are landlord friendly, have population/job growth, limited seasonal/environmental issues, high rent/price ratio, and areas within my budget (under $200Kish). However, my issues run into seeing a few markets that look good and then I can't seem to finalize my decision on which is better or where to really focus my time searching. So far I've been interested in Cleveland, Columbus, Birmingham, and Memphis.
Am I missing anything in my criteria? Does anyone have a system they use to filter through the endless available markets and narrow down your options to something a bit more manageable? Any words of wisdom are welcomed too!

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.

As for picking a specific market - I would go after one with an increasing job and population growth. I invest and work in Columbus, Ohio. I am also looking to invest in Cincinnati and Cleveland.
[email protected]614-541-8475 Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
Reafco512 Reviews
Website View Page
2 Reply
Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
@Alex Johnson Not sure I'd invest on the west coast due to all the tenant-friendly laws!
If you are trying to pick a market, the logical process would be to:
1) Analyze their potential - which it seems you've done
2) Interview Core 4 team members and compare what they know, their approaches and how comfortable they make you feel. Just be careful of not falling for hype and be analytical!
3) Pick an area and ask the Core 4 member you spoke with to intro you to the other Core 4 members. Make sure they are all consistent with their knowledge, approach and professionalism.
---If one seems out of sorts with the rest, ask for more intros.
---If you can't assemble a cohesive Core 4, maybe it's time to go back to Step #2.
Also recommend you check out the Detroit market! There's a TON of online feedback about the city as we just hosted the NFL Draft and shattered the Nashville attendance record:)
We can also show you where there's a committed $3.5B in investment in Detroit.
Logical Property Management4.9454 Reviews
Website View Page
1 Reply
Maz Pardhan
Member since 2021 · 47 posts · 27 votes
2y
Congratulations on looking beyond where you live. I've found the best deals are rarely where you are especially on the west coast. Since the numbers may be very similar in these markets its important to have a few conversations with people on the ground that you can rely on. That could be realtors, PM co's or turnkey providers who can bring you all of that. If you can get comfortable with the team and can rely on them, this could save you headaches and costs over the long term. I've had success in Detroit, you should add it to the list.
0 Reply
Joseph Bui
Lender · Nationwide · Member since 2023 · 362 posts · 237 votes
2y
Hi Alex, I'm also based in the pacific northwest (Seattle) and own 9 doors in the midwest (Memphis and Detroit). I've had success in both and would be happy to connect and share my thoughts. I'm also looking into Cleveland as well.
1 Reply
Alex Johnson
OP
Realtor · Portland, OR · Member since 2022 · 14 posts · 19 votes
2y
Quote from @Michael Smythe:

@Alex Johnson Not sure I'd invest on the west coast due to all the tenant-friendly laws!
If you are trying to pick a market, the logical process would be to:
1) Analyze their potential - which it seems you've done
2) Interview Core 4 team members and compare what they know, their approaches and how comfortable they make you feel. Just be careful of not falling for hype and be analytical!
3) Pick an area and ask the Core 4 member you spoke with to intro you to the other Core 4 members. Make sure they are all consistent with their knowledge, approach and professionalism.
---If one seems out of sorts with the rest, ask for more intros.
---If you can't assemble a cohesive Core 4, maybe it's time to go back to Step #2.
Also recommend you check out the Detroit market! There's a TON of online feedback about the city as we just hosted the NFL Draft and shattered the Nashville attendance record:)
We can also show you where there's a committed $3.5B in investment in Detroit.

Thank you! It seems like my next step is to really drill down on getting my core 4 set up for these markets. I was thinking to try to pick my market and then find good connections, but it does make much more sense to build that up first and have people there to give me additional info.
The west coast is definitely tenant friendly! Another reason why it's not my main focus. I was under the impression Detroit was pretty tenant-friendly as well. Is that not the case?
0 Reply
Alex Johnson
OP
Realtor · Portland, OR · Member since 2022 · 14 posts · 19 votes
2y
Quote from @Joseph Bui:

Hi Alex, I'm also based in the pacific northwest (Seattle) and own 9 doors in the midwest (Memphis and Detroit). I've had success in both and would be happy to connect and share my thoughts. I'm also looking into Cleveland as well.

Thank you Joseph! I'd love to connect and pick your brain a bit. I'll send you a message!
0 Reply
Alex Johnson
OP
Realtor · Portland, OR · Member since 2022 · 14 posts · 19 votes
2y
Quote from @Maz Pardhan:

Congratulations on looking beyond where you live. I've found the best deals are rarely where you are especially on the west coast. Since the numbers may be very similar in these markets its important to have a few conversations with people on the ground that you can rely on. That could be realtors, PM co's or turnkey providers who can bring you all of that. If you can get comfortable with the team and can rely on them, this could save you headaches and costs over the long term. I've had success in Detroit, you should add it to the list.

Thanks Maz, seems like recurring mentions of getting my team on the ground set up, so that's next on the list!
1 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
2y
@Alex Johnson Detroit-Michigan falls in the middle of the pack regarding "tenant-friendly".
As you start to build your Core Four, NEVER believe what people tell you unless they can explain it logically or provide 3rd party proof.
Here's 3rd party proof that Michigan is in the middle of the pack:)
https://realwealth.com/learn/landlord-friendly-states/
https://www.lawdistrict.com/articles/most-renter-friendly-us...
[email protected]248-209-6824
Logical Property Management4.9459 Reviews
Website View Page
1 Reply
Taz Zettergren
Real Estate Agent · Memphis, TN · Member since 2019 · 365 posts · 264 votes
2y
@Alex Johnson you're looking at the right things. I work with hundreds of investors who prefer the middle part of the country and south of the mason dixon line. Places like Memphis, Little Rock, TX, Oklahoma or even Alabama.
Would be happy to discuss the pros and cons of each. Feel free to reach out if I can be of any assistance. Best of luck!
1 Reply
Joshua JanusBusiness Member
Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
2y
Quote from @Alex Johnson:

Hello everyone,
I am looking to purchase my first investment property this year and am having some trouble deciding on a market. I know to look for areas that are landlord friendly, have population/job growth, limited seasonal/environmental issues, high rent/price ratio, and areas within my budget (under $200Kish). However, my issues run into seeing a few markets that look good and then I can't seem to finalize my decision on which is better or where to really focus my time searching. So far I've been interested in Cleveland, Columbus, Birmingham, and Memphis.
Am I missing anything in my criteria? Does anyone have a system they use to filter through the endless available markets and narrow down your options to something a bit more manageable? Any words of wisdom are welcomed too!

Cleveland is priced on the lower end nationally so you can get into cash flowing properties with less cash down and build your base of investing quicker. That's why I like it.
[email protected]614-502-5316 Podcast Guest on Show From DoorDasher to $1.5 MILLION in Real Estate (All at 22 Years Old!)
1 Reply
Brendan Harrison
Real Estate Broker · Tulsa, OK · Member since 2020 · 157 posts · 67 votes
2y
Hey there!

It sounds like you've done your homework on what to look for in an investment market, which is fantastic. Since you're considering markets like Cleveland, Columbus, Birmingham, and Memphis, have you thought about exploring opportunities closer to home in the Oklahoma City/Tulsa area? Both cities have been experiencing growth and are considered favorable for real estate investors.

When narrowing down your options, it might be helpful to create a scoring system based on your criteria. Assign weights to each criterion based on its importance to you, such as job growth being more critical than seasonal issues. Then, score each market based on how well it meets these criteria. This can help you objectively compare different markets and make a more informed decision.

Also, networking with local real estate professionals or joining investor groups in your target markets can provide valuable insights and help you gain a better understanding of each market's nuances.

Would you like more specific insights into the Oklahoma City/Tulsa real estate market?
1 Reply
Evan HoppleBusiness Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2023 · 284 posts · 420 votes
2y
@Alex Johnson

Cleveland is a cashflow market with higher rent to price ratios. Columbus has average rent to price ratios but comes with the growth potential that the tech developments bring (intel, amazon, google, etc).

Buy a turnkey deal on your first out of state investment to take some of the riskier variables out of the equation
[email protected]614-924-8151
Reafco Real Estate
View Page
3 Reply
Jason Allen
Attorney · Columbus, OH · Member since 2023 · 193 posts · 145 votes
2y
There are a ton of great deals on, and off the market here in Columbus, OH. Typically, I try to bring my out of state investors deals that meet or beat the 1% rule in rapidly gentrifying areas. Please let me know if you would like to learn more.
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.