What markets are still worth investing in?

Question

Hi guys,

I am a newbie and looking for my first investment property. I will in CA but dont want to invest here for obvious reasons.

I have family in LV and South Florida and wanted to invest there. Spoke w/ some Invester-friendly relators there and they both seemed to say "Its very hard to get cashflow-positive property now and you can expect appreciation of 2-5%." My non-realtor friends in these places say that property values might actually be coming down right now. At these rates, it seems like it would be better (for now) to wait on the sidelines and get a high-dividend REIT.

So my questions are:

1. Is my understanding correct?

2. Are there any markets which currently do seem to have much better returns (looking to get a 4-10% cashflow + decent appreciation on a $500k-$1M property. open to short-term or long-term).

3. If so, is there any systematic way to find these markets besides word-of-mouth? (I'm a data scientist and feel comfortable crunching #s)

Thanks!

Jay Hinrichs · Answer

you make money on the buy. use your skills to find off market and undervalued real estate.

there is more to real estate than just rental props.

however for one living in CA

I do like Vegas personally ( I have invested there) as I have invested in over 20 states.. what I like about Vegas is the age of the homes you would buy at 500 to 1 mil.. no really nasty weather that adds to differed maintenance.. And a very good renter class.. WE moved to furnished Mid term and that has worked out well. Prop tax's some of the lowest the country very low insurance stucco houses tile roofs and desert landscaping all lead to ease of maintenance over time compared to FLA which of course has all sorts of weather related issues that is detrimental to houses .. high prop tax and sky high insurance ( certain areas) But its also growing.. so there is that. I have a bias for sure to the west coast compared to FLA weather totally flat terrain humidity and bugs.

Chris Seveney · Answer

1. No selling agent will tell you prices are coming down. Look at the data, they are down from their all time high.

2. Real estate is the long game, if you invest in 3-5 years besides the last 5-7 years you typically will not have significant equity gains, but when the govt pumps 6T into the economy that is why pricing went up and people made money, not because people became savvy investors. Do we think the govt is going to do the same? You most likely will not find a property that cashflows like that, but in the long run it still could be a very good investment.

Joe Funari · Answer

@Roman A Sandler I have been helping fellow investors buy & sell here in the Dallas/Ft. Worth area for many years. Yes, prices are coming down here as inventory slowly trickles back up to to pre-COVID levels. But it is still a sellers market. So you need to work with an agent that has a pulse of what to negotiate for you in a deal. Also, based on my experience there are many areas in the Dallas/Ft.Worth area that make for great rentals. I am consistently helping my investor clients purchase move in ready 3/2/2 SFR's here for less than $300K. I personally continue to buy rentals here. Its getting better and better each month to purchase rentals. And the trend is continuing in that direction here based on what I am seeing. Hope this helps.

Bradley Buxton · Answer

@Roman A Sandler

Different markets and different areas of those markets will see price changes. In the Reno, NV market prices are continuing to rise because there is still a shortage of housing supply and there are very few building start. The area is geographically restricted and naturally prevents urban sprawl like in other markets. Tech and manufacturing jobs are moving into the area from CA bringing higher wage earners. Tesla semi-truck and the lithium loop will continue to diversify the hospitality and recreation jobs in the area. There is no single data source to go to nationally to find markets. Talking with multiple investors and realtors in the target markets then crunching the numbers on the markets that work for your goals, time, energy and capital will guide you to find the right property.

What markets are still worth investing in?

What markets are still worth investing in?

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