Best areas for cash flow on east coast

87 Replies

I know this is a loaded question...I am selling a property in NY and live in Maryland.  I do not like the idea of an out of state rental but looking for a good area for cash flow and the least amount of headaches.   I have been more than disappointed with the quality of property managers I have experienced...again it has been just my luck....I am tempted to just invest in the stock market but I I prefer to have some assets in real estate.  I am interested in the carolinas as well as northern Florida but again being out of state has shown me the many disadvantages.  Maryland is an option, however with the high taxes and property values not sure it is an area that will show much cash flow or appreciation.  Just interested in your experience and advice.

I would invest in balitmore city of you are looking for cash flow and even if the property doesn't appreciate you still have a good investment.  Similar to a dividend earning stock or mutual fund where the value of the stock doesn't increase but you get paid every quarter. 

Welcome to Biggerpocket!

Congratulations on your sale of your house. I totally understand where you are coming from. My husband is active duty so we move around a lot. Our goal is to be able to retire early using the cash flow of our houses. I looked at hiring a property manager and was totally unimpressed. In my website/blog I talk about how we invest in class a properties that we are able to manage ourself long distance. We have been very succesfful doing following a Southwest Airlines model. Investing in great areas with smaller returns but also low expenses due to tight management and being in a highly desired area.

@ Elizabeth C., I would love to hear more details about how you find and manage your long distant properties.

@Marylyn B.  I live in Raleigh, and it's not a great area for cash flow but I follow what I think is similar to Elizabeth Colegrove 's model as far as buying in good areas. They are a little lower than the 1% rule! but I also have less than 50% of my rent in expenses. This is due to very low vacancy and quality tenants. It works for me!

Hi @Marylyn B.  

Don't go to the dark side (stock market) !! 

I've been investing out of state successfully for many years, and I'm a cash flow investor. Picking the right market is crucial, then figuring out your team, then the deal (the deal is last!). I would be happy to share any resources with you, too (and @Janine Smith  ).

Best of Luck!

Andrew

We do invest in the stock market as well, as it can be less hassle and higher returns than property.  But during the crash (and it is extremely hard to call when to sell), the property we had stayed rented and rents kept flowing, and it helped prove that having different income streams is important to a healthy portfolio while we waited out the stock market returning to normal.  Our stocks have way outperformed our rentals in the last few years, but we are more confident in having both.  

@Dawn Brenengen said exactly what I would have about Raleigh.  We are very happy with our investments there, and can recommend a very good property management company if needed.  

It's important to diversify!  I max out retirement accounts in the stock market, and I have a few rental properties.  Stocks have very much outperformed real estate in the last few years, but now that the stock market is at an all time high, I'd like to start pushing more cash to real estate again.

I appreciate the responses.  Although I have had some difficult experiences in out of state ownership, the idea of investing too much in the stock market seems too risky and I do feel diversification is the key.  I am also interested in states where a landlord friendly atmosphere is present, I have seen the opposite in NY.   I am very interested in many of your responses and I believe it can be done, with the right research and guidance.  My previous properties were inherited.  I am under contract to sell one and hope to find an investor to purchase the other duplex as it has long standing tenants that will never leave. LOL. I will check some of the websites you have mentioned!

Baltimore city is BEST IMO. You can easy rent at 2-3% on your purchase.

I'd be very careful in MD.  We have one there (lived in Annapolis for a while), but when turning it into a rental, found it to be a very tenant-friendly state.  Annapolis, for instance, has permit and inspection requirements, and more strict fair housing than federal.  You even have to pay tenants 3% interest on the security deposit, even though there's no account available that pays that.  

Also, they recently only failed to enact a rent control law by just a few votes, and some are saying they are bringing it up again hoping to pass it this time.  I think it includes provisions for tenant being able to stay if they want and landlord only being able to raise rent a small percentage no matter how long they stay.  So I won't be investing any more in Maryland.

Originally posted by @Eddie T.:

@Marylyn Brennan Where in NY are your properties?

 The properties are in the Capital District. One I am closing on this week (yay) and  the other is not your average rental property.  It was owner occupied for most of its existence and the tenants-although always pay on time and take excellent care have not been charge the proper rent for the dwelling. This is due to an emotional attachment my parents had to them.  In addition they wish to purchase but for me to finance which I do not want to do.  Sticky situation. 

Originally posted by @Lynn M.:

I'd be very careful in MD.  We have one there (lived in Annapolis for a while), but when turning it into a rental, found it to be a very tenant-friendly state.  Annapolis, for instance, has permit and inspection requirements, and more strict fair housing than federal.  You even have to pay tenants 3% interest on the security deposit, even though there's no account available that pays that.  

Also, they recently only failed to enact a rent control law by just a few votes, and some are saying they are bringing it up again hoping to pass it this time.  I think it includes provisions for tenant being able to stay if they want and landlord only being able to raise rent a small percentage no matter how long they stay.  So I won't be investing any more in Maryland.

Thank you Lynn!! This is excellent information and exactly what I was looking for. How are the tenant-landlord policies in states such as VA, carolinas or florida--if you know?

Originally posted by @Marylyn B. :
Originally posted by @Eddie T.:

@Marylyn Brennan Where in NY are your properties?

 The properties are in the Capital District. One I am closing on this week (yay) and  the other is not your average rental property.  It was owner occupied for most of its existence and the tenants-although always pay on time and take excellent care have not been charge the proper rent for the dwelling. This is due to an emotional attachment my parents had to them.  In addition they wish to purchase but for me to finance which I do not want to do.  Sticky situation. 

 What is market rent and what are thy paying?

@Marylyn B.   Welcome to BP.  I will try to link a post that has some more info on Baltimore.  

Baltimore buy and hold market.

Hmm didn't work you might using the above for a search.  That thread even lists names of folks active in Baltimore.  The rule of thumb is that the higher quality the rental the lower the annual return.  On the reverse higher end properties seem to appreciate much better than lower end high cash properties.

Was wondering why you are selling your NY properties to buy other rentals.  Have you calculated your rate of return on them and  if they are appreciating in value?  Just a thought.

I hear you on everything you say. I live in LA, so doesn't make sense to invest here so stuck with out-of-states, PMs can suck to no end, and who knows what other problems. But! It can work. I have only bought out-of-state and it's turned out to be fine. It's all about the team you have on the ground where you are buying. It's crucial. Good PMs do exist, you just have to know where to find them. There are a lot of areas now that have good deals. The Carolinas are tough because of prices in some areas and depleted inventory in others. Northern FL is okay but cash flow will be minimal to negative and hurricanes never helped anyone. If you are up towards NY/Maryland, Philly is a big hot spot right now. Other than Philly I recommend Houston and Dallas in Texas, both good markets.

Originally posted by @Marylyn B.:
 Thank you Lynn!! This is excellent information and exactly what I was looking for.  How are the tenant-landlord policies in states such as VA, carolinas or florida--if you know?

Don't know Florida.  Raleigh and Chesapeake both have instituted a rental registration requirement -- annoying, but neither yet require inspections.  Raleigh's is only $15 per home, Chesapeake's is higher.   Chesapeake's Section 8 program is getting too strict for me to consider another Section 8 tenant, and I don't work with Section 8 in Raleigh so not sure how they are.  But so far, I've had no issues regarding special hoops landlords must jump through in either of those places, and systems seem to be fair regarding tenant versus landlord issues.  Virginia has added "elderly" to the fair housing classes so you cannot discriminate on age, but that hasn't affected me as it's not as confusing as Annapolis' source of income and marital status categories or their inspection requirements.  Annapolis was an eye-opener, and I will be more careful choosing future target areas.   

Hey @Marylyn B. I'm looking to invest out of state since the capital I have available would not even buy a studio apartment in NY. If you could share some of the experiences you've had with your out of state investment property it would be greatly appreciated.

Thanks!

i live in Philly and there are a lot of cash flow properties out here. These prolerties dont see much appreciation though. Property taxes are low too. What is your price range and cash flow expectation? Are you looking for a ready to go property? 

Originally posted by @Eddie T.:
Originally posted by @Marylyn B.:
Originally posted by @Eddie T.:

@Marylyn Brennan Where in NY are your properties?

 The properties are in the Capital District. One I am closing on this week (yay) and  the other is not your average rental property.  It was owner occupied for most of its existence and the tenants-although always pay on time and take excellent care have not been charge the proper rent for the dwelling. This is due to an emotional attachment my parents had to them.  In addition they wish to purchase but for me to finance which I do not want to do.  Sticky situation. 

 What is market rent and what are thy paying?

 this is almost embarrassing, the rents should be 1500/1500 and they are paying 1195/700.  I inherited this problem, it just is not so easy to increase the rents that much with these tenants-again the emotional ties with my parents and my brother who set them.  

Originally posted by @Marylyn B. :

 this is almost embarrassing, the rents should be 1500/1500 and they are paying 1195/700.  I inherited this problem, it just is not so easy to increase the rents that much with these tenants-again the emotional ties with my parents and my brother who set them.  

 I feel your pain. My mother's house is a duplex and her tenants pay $800 when market rate is at least $1,400. I keep trying to explain to her that she is basically paying these people $7-8k per year in subsidies but they've lived there 20 years and she's got a soft spot for them. Don't get emotionally attached to tenants!

Originally posted by @Jerry W.:

@Marylyn B.  Welcome to BP.  I will try to link a post that has some more info on Baltimore.  

Baltimore buy and hold market.

Hmm didn't work you might using the above for a search.  That thread even lists names of folks active in Baltimore.  The rule of thumb is that the higher quality the rental the lower the annual return.  On the reverse higher end properties seem to appreciate much better than lower end high cash properties.

Was wondering why you are selling your NY properties to buy other rentals.  Have you calculated your rate of return on them and  if they are appreciating in value?  Just a thought.

 Excellent question as to why I do not just keep the property! This is almost embaraassing since here goes the worse business decisions ever. This property was originally an owner occupied home on 40 acres, minutes from shopping & Albany & holds tremendous potential.  My parents build an addition on it making it a duplex-but not the usual duplex you would see in the area and I could easily charge rents in the 1500 range.  However, this is the sticky situation I inherited: My parents were elderly and lived in side B.  They rented to a family in side A for 1195 five years ago.  This rent was set low since my parents were elderly and needed help on the acreage etc.  When my father took ill him and my mom moved here to Maryland.  My brother who lives in vegas and has a high power job quickly rented the other side ( side B) to the tenant's son for only 700.  My parents and other brother died within the year.  We had 5 properties, my parents care, a subdivision of the 40 acres and my vegas brother was diagnosed at the triple funeral of my parents and brother with terminal cancer ( he is ok)- I purchased the remaining properties from him.  

The tenants love it there ( only second home they have lived in, the previously had a foreclosure) and never want to leave.  However raising the rent that high would be almost unethical, especially due to the help they provided to my parents.  The one stood outside almost crying when I drove my father away. They do want to purchase but I do not want to hold the mortgage...I heard my brother and father offered that...

If I was a hard-*** or true business person I would raise the rents in a heartbeat, but I just cannot do that.  Now that it is subdivided, it should appreciate nicely although the area itself has not shown much appreciation. the land was purchased by a family who is building 2-3 new homes and it should appreciate nicely-although the zipcode reflects homes miles away.  It was estate apprassied at 235. 

See my dilemna? go ahead call me a wimp...I just rather another investor deal with it LOL..Suggestions??

We own rental property in Greenville County South Carolina and they cash flow very well. There are a lot of opportunities for "low to mid" grade rental properties around here. Thanks to BMW, Michelin, GE, and other large scale employers we have a large tenant pool and typically have a very low vacancy rate. 

@Brian Walsh  dont jenks us here.  We love our low vacancy rates!!  Great market

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.