Starting out & starting new - but where? WI, MN, MI or NY?

Question

Hey there!Just posted this but I believe in the wrong category, since I cannot delete/move, here I go again:I'm totally new on here and to this whole world of real estate investing, but I am eager, have a little bit saved and ready to take the plunge.I'm interested in rentals, wholesaling, flipping, but still just starting out. I wanted to start getting a real estate license as well, wherever I'll end up.Situation: I've been living in WA and am now wanting to move to the Great Lakes area this fall (gut feeling in combination with affordable prices), but I don't know where exactly. Minnesota seems great and was my first choice when it comes to nature. Wisconsin? Sure, seems nice too if I can find a liberal pocket! Michigan, especially mid to north could be sweet, too. And upstate NY draws me in too (multi families there seem so cheap there...). * I've never been to any of them and know nobody. I'm too flexible it's getting hard to focus. Question:From a market point of view as of now and 2026, Is there any region that is already too hot with cash flow getting less and less, or a region that has been solid and will probably continue to be? Can I go wrong with any of these?So far from what I've read they all seem rather similar, or not? Just learned about the lake effect snow, so that might be something to consider.I know for myself I'll want to live more rural in a forested area with acreage, but wouldn't mind to house hack in a multi family for a year if it's not too urban. I'll probably start out focusing on wholesaling to get some more personal cash flow to invest (my current income is location independent), so wherever I move first, that area would be my starting point to look for deals/buyers. And I know that out of state investing is always an option and I wouldn't be too far, but for a beginner I think the closer the better...right? *I will probably get my MI or NY real estate license as I already paid for an Aceable Agents WA state course and can switch to MI or NY, but not to WI or MN. I could do that transfer later though if it'll be WI/MN.I'd be very appreciative of any pointers. :)Thanks!Lisa

Kiernan LaFaver · Answer

I’m an agent in the Syracuse area! As you mentioned , MFH is the name of the game in the city. Rents are fairly stable across the city, and houses are at all price points. Obviously, lower priced properties tend to need a bit more work and a turn key property is likely going to run in the 200K+ range. That being said, the market has been pretty consistent since Covid, and I’m only expecting it to grow with the coming of micron (NY’s largest private equity investment) in Clay (about 25 minutes from the city). For that reason, I’m a bit bullish on the area here. Would be happy to discuss the opportunities! It can definitely be a bit overwhelming especially with being your first property

Aaron Zimmerman · Answer

I'm a little biased but I think Minnesota is great. There's so many amenities with living there and overall good quality of life. There's many suburbs or exurbs where you can do this in Minnesota.

wisconsin and Michigan are also good. I'd imagine the laws are a little more pro landlord there compared to NY and MN

Jimmy Lieu · Answer

Glad to see you here on BP, Lisa! Love the energy you’re bringing and the fact that you’re open-minded about different strategies while also trying to figure out where to land. The Great Lakes region does have a lot of affordable options, but you’re right that each state has its own quirks, especially when it comes to landlord laws, weather, and long-term growth. Michigan and upstate NY can look very cheap on paper, but taxes can eat into returns and some areas have stagnant or declining population, so you want to make sure the fundamentals line up. Minnesota and Wisconsin both have solid pockets but can be tougher from a landlord law standpoint depending on the city. What I’d suggest is not just looking at price but focusing on job and population growth, landlord friendliness, and whether you can realistically build a team there. That’s one reason why I’d recommend at least looking into Columbus, Ohio. I moved here from Portland, Oregon back in 2020 and now own 10+ rentals, and what drew me in was that the macroeconomics are on fire—tons of population growth, job growth, and massive developments like the $26B Intel project, plus Amazon, Google, Microsoft, Honda, LG, Nationwide, and others expanding here. It’s landlord-friendly, you can still find properties in the $120–180K range that hit the 1% rule and cash flow, and appreciation has been strong. For a beginner, having that balance of affordability, landlord-friendly laws, and strong fundamentals makes a huge difference, and it also helps that Columbus has an active investor community and plenty of property managers used to working with out-of-state investors. You’re not wrong that you can wholesale or invest in any of the states you mentioned, but if you want a market that is both beginner-friendly and has long-term upside, Columbus should definitely be on your radar. Happy to connect and answer any questions you have!

Lisa M. · Answer

Thanks for all your replies so far! Very helpful! I'm trying to figure out how to "forum" (you can't quote multiple ppl in one post? cmon... haha)@Aaron Zimmerman

Thank you! I'm somehow a bit biased about MN too, without substance however, haha. That's good to know, though. Yeah the pro landlord issue is something to potentially consider, but good screening hopefully helps to avoid issues there ideally.---@Kiernan LaFaver

Thanks for your insight on that area Kiernan, that sounds pretty good! I was looking at Syracuse before already actually.. but it's still too early for me to fully know. Still not sure if I would opt for turn key or a fixer, but probably latter. The snow isn't that bad then? :) I'll need to do some more digging, but if I happen to choose NY, I'll reconnect! :)---@Peter W.Oh that's an interesting situation you got in Rochester. Thanks for your insight! I didn't understand though - did you mean the property taxes are very high? And that's why cash flow looks better? Or you mean since the other costs are not represented correctly when running the numbers the cash flow appears better than it actually is? Hope you only have angels as tenants! But that's very interesting regarding the lakes.. Florida like beaches? Wow! But waterfalls are also gorgeous. So good to hear that you think there's not a huge difference, because, yes, in the end I want to enjoy where I live and invest, too. I'm already doing a cross country roadtrip from WA, checking out these 4 states will be a big endeavor, and impossible before winter hits. But I guess there's no way around paying actual rent instead of mortgage first. :)----@Drew SygitWow, thank you for bringing up property classes! Yes, very important. I just heard about these on the podcast but not with these exact guidelines on how to categorize them. I'll definitely go back to that when zooming in on what/where/how.---@Tim SwierczekAnother vote for MN, haha, thank you! No cash flow on a house hack is not too bad I guess, at least you're not spending on housing whilst holding the investment. :) The long term stability sounds very promising, too. Either way MN will be my first destination anyways, so yay. And thanks for offering the zoom - I'll PM you soon.

Peter W. · Answer

I'm in Rochester, NY.  We have a severe housing shortage here, especially in the desirable suburbs.  It makes being a landlord relatively easy (due to high demand and desperate renters) but purchasing a pain in the butt--really you require a bit of luck to win competitive offer.   Here, and probably most of upstate new york, the cash flow looks better than other locations, because the property houses are very high going from about 3% on the low end to close to 5% on the high end and zillow tends to underestimate the tax burden (we have village, town, school and county property taxes).   New York State just passed a new tenants rights bill, "Good Cause Eviction" which limits your ability to remove bad tenants and raise rent.  Municipalities had the option on whether to accept the updated tenant rights or not.  I believe based on some of the comments I have read here, that Buffalo is a similar story--but I only know my market.

With that said, Ontario is probably the least desirable of the great lakes.  I vacationed on the Michigan side of lake Michigan, and that lake was awesome and made the "beaches" near Rochester look like dumps.  My wife and I thought the experience was comparable to going to the beaches in Florida where she grew up (Forgotten Coast/30A).   However, we do have a plethora of waterfalls and the finger lakes which are beautiful.

With all that said, I would figure out where you want to live and then invest in the same location, rather than figure out where you want to invest than choose to live there.  Other than the Tier 1 cities, there isn't much difference in risk adjusted returns for real estate.  Even then, your returns are driven more by how you are as an operator than the city you choose.

Best of luck, if you have questions on Rochester, I'll do my best to answer.

Drew Sygit · Answer

@Lisa M.

Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location/neighborhoods to invest in.

Why is Property Class so important for investors to understand and apply in their investing strategies?

Because the Property Class dictates the Class of the tenant pool that the property will attract.

The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.

Both Property Class and Tenant Class affect what type of contractors, handymen and property management companies will work on a property.

If you buy & renovate a property in Class D area to Class A standards, what Tenant Class will rent it?

Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?

So, if you fail to apply the correct assumptions to a property, your expectations won’t be met and it may even be a financial disaster.

We use the following to rank Property Classes, in order of importance:

• Property Tenant      Pool: closely linked to location, but not always.
• Property      Location: closely linked to tenant pool, but not always.
• Property      Condition & Amenities: it’s important to, “Maintain to the      Neighborhood.”

Key metrics for each Property Class:

Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.

Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.

Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.

Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.
Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.

Where did we get our FICO credit score information from?

Check out this chart:

FICO Score

Pct of Population

Default Probability

800 or more

13.00%

1.00%

750-799

27.00%

1.00%

700-749

18.00%

4.40%

650-699

15.00%

8.90%

600-649

12.00%

15.80%

550-599

8.00%

22.50%

500-549

5.00%

28.40%

Less than 499

2.00%

41.00%

Source: Fair Isaac Company

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

Metro Detroit has 132 cities, the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying.

Drew Sygit · Answer

@Lisa M. Michigan property taxes aren't that bad and are predictable.

Also, once you buy a property, property tax increases are capped!

What other Midwest city has as much investment planned as Detroit, yet offers such affordable real estate investments?

$2.5B New Center by Henry Ford Health, Pistons owner and Michigan State University
https://www.clickondetroit.com/news/local/2023/02/08/incredible-investment-in-our-city-25b-detroit-neighborhood-redevelopment-to-begin-in-2024/

$1.5B Investment, 12,000 temp jobs, 6,000 New Jobs: District Detroit Development
https://www.detroitnews.com/story/business/2022/11/15/district-detroit-1-5b-development-to-include-housing-retail-hotels/69649853007/

$1.4B Total as Hotel Added to Hudson Site

https://www.detroitnews.com/story/business/2023/11/02/hudsons-site-hotel-plans-move-ahead-as-city-issues-permit/71426631007/

$439M Gilbert Foundation investment in Detroit

https://www.henryfordmsu.org/news/september-2023/gilbert-family-foundation-announces-nick-gilbert-neurofibromatosis-research-institute

$400M Investment, 517 New Jobs: Norway’s Nel Hydron

https://businessfacilities.com/nel-hydrogen-will-build-400m-gigafactory-in-southeast-michigan#:~:text=In%20Southeast%20Michigan-,Nel%20Hydrogen%20Will%20Build%20%24400M%20Gigafactory%20In%20Southeast%20Michigan,green%20hydrogen%20using%20electrolyzer%20technology.

$300M Huntington Place Renovations & New Detroit Hotel

https://www.crainsdetroit.com/real-estate/huntington-place-renovations-new-hotel-deal-reached

$200M Chase Investment in Detroit

https://www.axios.com/2023/09/28/detroit-rebound-jp-morgan-investment

$44M Investment, 237 New Jobs: Bollinger Motors

https://michauto.org/bollinger-motors-plans-44m-metro-detroit-investment/

$21.5M Investment for Detroit west side Dexter Neighborhood

https://www.clickondetroit.com/news/local/2023/11/01/neighborhood-on-detroits-west-side-receives-more-than-215m-in-investments/

$20.6M Investment, 186 New Jobs: BorgWarner

https://www.crainsdetroit.com/auto-suppliers/borgwarner-invest-206-million-create-186-jobs

$11M, 200 New Jobs: Volkswagen Scout Brand Investment in Detroit

https://www.teslarati.com/volkswagen-scout-11-million-detroit-investment/

New Detroit Developments to Be Excited About

https://www.metrotimes.com/detroit/15-new-detroit-developments-to-be-excited-about-photos/Slideshow/32734721/32735392

3 International Companies Choose Detroit

https://www.detroitregionalpartnership.com/international-investment-comes-to-detroit-region/

6 New Residential Developments in Detroit

https://detroitisit.com/6-new-residential-developments-in-detroit-to-know-about/

Contact us with any questions you have.

Nicholas L. · Answer

@Lisa M.

here are my miscellaneous reactions.

1. "I've been living in WA and am now wanting to move to the Great Lakes area this fall (gut feeling in combination with affordable prices), but I don't know where exactly."

-I'm going to leave where to move to, to you.2. "From a market point of view as of now and 2026, Is there any region that is already too hot with cash flow getting less and less, or a region that has been solid and will probably continue to be? Can I go wrong with any of these?"-Well... every market is going to be slightly different.  The only thing I would say here is, like @Peter W. said, I'd pick where you want to live, and then invest there.  If you pick a slightly more expensive area, you can go an hour or so out from there to find cheaper markets.  If you pick a less expensive city, great, invest there.3. "wouldn't mind to house hack in a multi family for a year if it's not too urban."

-House hacking is the best way to get started, period, full stop.  It works in California and it works in Cleveland.

4. "I'll probably start out focusing on wholesaling to get some more personal cash flow to invest"

-Have you wholesaled before?  It's not really an easy way to generate 'cash flow.'  You're going up against businesses that spend thousands or tens of thousands of dollars a month to market.  It's really, really difficult.

5. "I know that out of state investing is always an option and I wouldn't be too far, but for a beginner I think the closer the better...right?Yes.  Out of state investing is much more challenging than it's made out to be.  Investors also had a lot of tailwinds going for them from right after the GFC to about 2021 - rising prices, more inventory, more availability of contractors - and those are all gone now.

Hope this helps

Lisa M. · Answer

Wow, that's impressive! I am definitely not ruling out Michigan yet. Got to get more into these kind of stats for all the markets I'm considering, but Detroit is looking very promising for sure! Thanks!

Starting out & starting new - but where? WI, MN, MI or NY?

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