Please suggest some good rental markets

Starting Out
10yFollow

Please suggest some good rental markets

Pinaki M.
Little Rock, AR · Member since 2016 · 36 posts · 12 votes

I just joined this site. I am a complete newbie and I'm a few chapters into "The Book on Rental Property Investing" by Brandon Turner. My goal is to buy some properties and rent them out for cash flow. Now the problem is, I live in the San Jose, CA area where the current prices are out of my reach. Recently I have been told that for my current job, I am allowed to work remotely from anywhere in the county. This opens up a lot of possibilities. I have been thinking of moving out of California to another state where I can get better ROI than CA. My plan is to move to this place, buy a property or two and manage them myself.

So my question is, what cities/town/states should I consider where I can get a decent ROI? For starters, let's assume that I am open to moving anywhere in the country where prices are relatively cheap and where I can get good returns.

All suggestions and advices will be greatly appreciated. Please help me out. Thanks!

4Reply
124 views

Most Popular Reply

Al Williamson
Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
10y


Wow @Pinaki M. you've got a winning opportunity.

But I want to expand the discussion a bit. Before you move, you need to have your "why" well defined. Why do you want this cash flow? Is it be happier?

If so, that really tells you that you should move to somewhere that makes you happy.

Real estate markets change all the time. Things go wrong no matter how smart you are. You don't want to be stuck somewhere and doing something that makes you unhappy.

So, start with the end in mind. Then pick locations that meet your "why". Then pick investments that you would be happy with even if (and when) things go sideways.

Best to you. And I hope "Murphy" never visits you.

8Reply
See this reply in the discussion

31 Replies

Jump to latestLatest
  • Simen Gundersen
    Investor · Oslo, Oslo · Member since 2016 · 86 posts · 17 votes
    10y

    What a great opportunity! This definitely opens up a lot of possibilities. I myself are currently researching Indianapolis considering purchasing a turnkey property there. I can shoot you a PM with further info when I have something more concrete and if I decide to pursue it. Anyways it might be worth looking into for you aswell

    Good luck!!

    1Reply
  • Edward Rhoads
    Rental Property Investor · Indianapolis, IN · Member since 2016 · 200 posts · 87 votes
    10y

    Simon is correct Indianapolis is a great market for rentals as the rents are pretty decent but the properties are not too expensive.  Just try to buy outside of the Interstate 465 loop.  Inside the loop is tough until you have lived in the town for a year or two.

    2Reply
  • Al Williamson
    Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
    10y


    Wow @Pinaki M. you've got a winning opportunity.

    But I want to expand the discussion a bit. Before you move, you need to have your "why" well defined. Why do you want this cash flow? Is it be happier?

    If so, that really tells you that you should move to somewhere that makes you happy.

    Real estate markets change all the time. Things go wrong no matter how smart you are. You don't want to be stuck somewhere and doing something that makes you unhappy.

    So, start with the end in mind. Then pick locations that meet your "why". Then pick investments that you would be happy with even if (and when) things go sideways.

    Best to you. And I hope "Murphy" never visits you.

    8Reply
  • Alex Franks
    Rock Hill, SC · Member since 2015 · 1k+ posts · 597 votes
    10y
    Originally posted by @Al Williamson:


    Wow @Pinaki M. you've got a winning opportunity.

    But I want to expand the discussion a bit. Before you move, you need to have your "why" well defined. Why do you want this cash flow? Is it be happier?

    If so, that really tells you that you should move to somewhere that makes you happy.

    Real estate markets change all the time. Things go wrong no matter how smart you are. You don't want to be stuck somewhere and doing something that makes you unhappy.

    So, start with the end in mind. Then pick locations that meet your "why". Then pick investments that you would be happy with even if (and when) things go sideways.

    Best to you. And I hope "Murphy" never visits you.

    @Al Williamson

    @pinaki M

    That is a good point. Been away from the site for a bit, my choice needed to jump on my own projects.One of the main points I  have been hammering home for new and older investors is exit. Not just exit strategie on flips or rentals , but exit from this business. How and when? I been going for a bit and have my ups and downs in this business. Still hammering away here in the Carolina's which the the whole south eastern states are great cash flow. The cash flow numbers will most always look attractive because of our low entry point on most deals. Compared to California or most northern markets. I want to be out of the business in 7 years just a private lender in 3 to 5 years time. Hopefully having 200 ( apartment units now with all the craziness out their) I think I will need more. So goals is what I will discuss next not rental markets.

    @pinaki M

    I could give a list of 15 states that folks are buying and why. I would go to my local rei meeting and see where folks are buying. Unfortunately  here most folks are sales folks that will come out and tell you how great their market is and why. Then the resellers will jump in and claim that the markets they are working in are the best. So again no right or wrong answer.

    Lets really focus on goals and time frame in what you are trying to accomplish? That  is going to be the main question to answer and discuss. What do I mean by that. For example I want 10K in positive cash flow In 3 to 5 years. Then you can go about building a system to accomplish this. After you pick a few market to visit.

    Feel free to Pm or go back through and read a lot of what I wrote about turn key and different states.

    Alex

    4Reply
  • Pinaki M.
    OP
    Little Rock, AR · Member since 2016 · 36 posts · 12 votes
    10y

    @Simen Gundersen Thanks. I will look into Indianapolis. Feel free to PM me if you have more info to share. I will do the same. Good luck with your research. Enjoy the summer in beautiful Norway :)

    0Reply
  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    10y

    @Pinaki M. Well if you are planning to live wherever you decide to invest, think long and hard about your choice, and be sure to visit the area.  Indianapolis is a great city to invest, and probably my favorite of the major midwest cities.  Given their harsh winters, and hot humid summers, would I want to live there?  Probably not.  I'll take the NW, where I live any day over that.  But that's just me.  It doesn't keep me from investing in Indiana, Jacksonville, Fl and other places far away from home.

    1Reply
  • Pinaki M.
    OP
    Little Rock, AR · Member since 2016 · 36 posts · 12 votes
    10y

    @Al Williamson Al, thanks for your reply. You brought up a very good point. I asked for "best markets anywhere in the country" more as a starting point. Of course, I do have some personal preferences as to where I do or do not want to live, but then I am a bit flexible too. For example, I have been really wanting to live in Oregon (or the northwest in general, which would also include Montana or Idaho), but the RE markets there don't seem very conducive for cash flow (especially Oregon). Whereas places in the midwest like Indianapolis or Kansas City (I see these two names constantly come up in BP forum discussions along with some others in the same region) would not have been my first choice to live at, but if they are much better prospects for making money, I could consider moving there. I hope you get the idea. One of the places I have always liked is Colorado, and Colorado Springs is one of the top contenders in my list (perhaps Fort Collins too, but prices are already very high in FC and it's relatively smaller, so CS probably wins over FC). 

    Thanks again for your thoughtful post. This brings up the questions I was going to ask anyway:

    1. How is the market in Colorado Springs? I see the prices are still relatively lower than other cities in Colorado. Do anybody on this forum invest in CS? What is the cash flow like?

    2. In general, I would prefer a place with some natural beauty (like hills, green, etc.) and with an open-minded, educated and somewhat diverse population (doesn't have to be nearly as diverse as California or New York or Chicago, just to clarify), and that still doesn't feel like a big city and is not too crowded. So if anybody has any suggestions on which places will be a good fit, please do let me know. And yeah, it needs have a decent cash flow for rentals too :)

    0Reply
  • Pinaki M.
    OP
    Little Rock, AR · Member since 2016 · 36 posts · 12 votes
    10y

    @Alex Franks Thanks for your reply and bringing up some good points. Can you give me the list of the 15 states/places you mentioned about? That will be helpful as a starting point.

    As to what I want to accomplish, I can't think too far ahead at this point (with no experience at all in this area), but I can tell you of the possible scenario I have in mind for the more near future. Let's say I want to invest under $200,000 for a 4-plex that generates about $3000 in rent per month. After maybe a couple of years, I want to buy another 4-plex generating similar income. If things are going well at that point, I can make bigger plans, but for now this is the farthest I can think of :)

    0Reply
  • Trevor Kolb
    Colorado Springs, CO · Member since 2016 · 59 posts · 33 votes
    10y

    I live in Colorado Springs and have just put an offer in on my own first home here. The lower end market (Under $200k) is a hot sellers market here and quality homes disappear about as fast as they are listed. Rental rates are high enough to make good cash flow, and with 4 military bases surrounding the area, there are plenty of potential tenants here. Mountain views are amazing but I've heard people from the coast comment about missing the ocean. :) Feel free to drop a line and pay a visit sometime. If you're going to invest somewhere, I recommend visiting and just getting a clear sense of which market you would like to work in. Maybe find meet-ups in each city you feel is competitive and ask some of the local investors in each place to show you the town. Nothing beats a hands on experience. 

    1Reply
  • Andrew Pearson
    Property Manager · Greenville, SC · Member since 2016 · 15 posts · 5 votes
    10y

    As an Indiana native, I may be biased, but I do consider Indiana a great place to live. Now I'm a newbie as well so my advice may not be the best, but in regards to Indianapolis, I can tell you that based on my research, most of the economic and real estate growth in the Indianapolis area (and the entire state) is mostly occurring to the North, Northeast, and Northwest of Indy. Hamilton, Hendricks, and Boone counties would probably be good to look into. The properties can be more expensive, but it may be worth it to have renters who are likely more dependable than inside the 465 loop.

    Best of luck in your endeavors, and hit me up on a private message if you actually make your way here. You never know when there could be grounds for a mutually-beneficial business relationship!

    1Reply
  • Kyle McCorkel
    Rental Property Investor · Hummelstown, PA · Member since 2015 · 638 posts · 653 votes
    10y
    I say live where you WANT to live, and invest where the numbers make sense. But to answer your question, I agree that Indy is pretty solid!
    0Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    10y
    Originally posted by @Pinaki M.:

    @Al Williamson Al, thanks for your reply. You brought up a very good point. I asked for "best markets anywhere in the country" more as a starting point. Of course, I do have some personal preferences as to where I do or do not want to live, but then I am a bit flexible too. For example, I have been really wanting to live in Oregon (or the northwest in general, which would also include Montana or Idaho), but the RE markets there don't seem very conducive for cash flow (especially Oregon). Whereas places in the midwest like Indianapolis or Kansas City (I see these two names constantly come up in BP forum discussions along with some others in the same region) would not have been my first choice to live at, but if they are much better prospects for making money, I could consider moving there. I hope you get the idea. One of the places I have always liked is Colorado, and Colorado Springs is one of the top contenders in my list (perhaps Fort Collins too, but prices are already very high in FC and it's relatively smaller, so CS probably wins over FC). 

    Thanks again for your thoughtful post. This brings up the questions I was going to ask anyway:

    1. How is the market in Colorado Springs? I see the prices are still relatively lower than other cities in Colorado. Do anybody on this forum invest in CS? What is the cash flow like?

    2. In general, I would prefer a place with some natural beauty (like hills, green, etc.) and with an open-minded, educated and somewhat diverse population (doesn't have to be nearly as diverse as California or New York or Chicago, just to clarify), and that still doesn't feel like a big city and is not too crowded. So if anybody has any suggestions on which places will be a good fit, please do let me know. And yeah, it needs have a decent cash flow for rentals too :)

     So basically you want a really nice place to live for really cheap. Problem is, most really nice places to live are not very cheap and have lower initial cash flow. That's what tends to happen with supply and demand.

    The good news is if you take off your cash flow blinders you will see that there are many different ways to make a good return in REI, and just because it isn't cash flow doesn't make it speculative. When you say ROI, you need to open your mind up to consider TOTAL RETURN (of which cash flow is but a small slice) for your TOTAL INVESTMENT (don't forget CapEx and other long term expenses) annualized over the ENTIRE LIFETIME of the investment (not just the short term) ... if you learn to truly do this, then I think a world of investment possibilities will be opened up all around you, but first, those blinders have got to come off.

    0Reply
  • Norberto Villanueva
    Real Estate Consultant · Colorado Springs, CO · Member since 2013 · 325 posts · 117 votes
    10y

    @Pinaki M. - Thanks for posting, Pinaki. With an average sales price in the $290k range, a median price in the $260k range and average days on market hovering near 30 days, Colorado Springs definitely demonstrates a stronger upside potential than the Denver market. Whatever you do, make sure to align yourself with a local real estate professional more in tune with hyper local market conditions. Generalities have a way of decimating what might appear to be a meaty deal.

    0Reply
  • Pinaki M.
    OP
    Little Rock, AR · Member since 2016 · 36 posts · 12 votes
    10y

    @Kyle McCorkel But then it becomes an out of state investment, something I am probably trying to avoid. How much do ROI or cash flow do people typically make on such investments (considering a big chunk goes after property management expenses)? I would like to know some real numbers.

    0Reply
  • Pinaki M.
    OP
    Little Rock, AR · Member since 2016 · 36 posts · 12 votes
    10y

    @Norberto Villanueva Thanks for the info!

    0Reply
  • Pinaki M.
    OP
    Little Rock, AR · Member since 2016 · 36 posts · 12 votes
    10y

    @Larry Fried How do you invest in those places? Could you please share more details. Thanks.

    0Reply
  • Pinaki M.
    OP
    Little Rock, AR · Member since 2016 · 36 posts · 12 votes
    10y

    @Trevor Kolb Thanks. Do you personally invest in CS too? Or somewhere else in Colorado? The good thing about Colorado is that the cities aren't too far from each other, so I think it should be easily possible, for example, to live in CS and have rental properties in say Denver. But the not so good part is that most of those markets have already gone up in price quite a bit.

    0Reply
  • Pinaki M.
    OP
    Little Rock, AR · Member since 2016 · 36 posts · 12 votes
    10y

    @Edward Rhoads

    "Inside the loop is tough until you have lived in the town for a year or two."

    Why is it tough? Does the inside of the 465 loop has bad neighborhoods?

    @Andrew Pearson Thanks for the info, and good luck to you too. I might PM you if I decide to pursue Indy as an option.

    0Reply
  • Norberto Villanueva
    Real Estate Consultant · Colorado Springs, CO · Member since 2013 · 325 posts · 117 votes
    10y

    Anytime Pinaki. Please let me know when I can help with your REI needs in Colorado Springs.

    0Reply
  • Walter Shatford
    Investor · Monterey Park, CA · Member since 2016 · 24 posts · 2 votes
    10y

    Cleveland, OH.

    Rochester, NY.

    0Reply
  • Alex Franks
    Rock Hill, SC · Member since 2015 · 1k+ posts · 597 votes
    10y
    Originally posted by @Pinaki M.:

    @Alex Franks Thanks for your reply and bringing up some good points. Can you give me the list of the 15 states/places you mentioned about? That will be helpful as a starting point.

    As to what I want to accomplish, I can't think too far ahead at this point (with no experience at all in this area), but I can tell you of the possible scenario I have in mind for the more near future. Let's say I want to invest under $200,000 for a 4-plex that generates about $3000 in rent per month. After maybe a couple of years, I want to buy another 4-plex generating similar income. If things are going well at that point, I can make bigger plans, but for now this is the farthest I can think of :)

    @Pinaki M look up some of my older post on Turnkey If you cant find it  Pm and I will search for it. That is a great plan and good starting point. Being there are so many different state that offer something very similar.

    Good luck on your goals and feel free to Pm if I can answer any questions

    Alex

    0Reply
  • Edward Rhoads
    Rental Property Investor · Indianapolis, IN · Member since 2016 · 200 posts · 87 votes
    10y

    Yes inside the loop has some very bad neighborhoods.  Then, one block away, will be a pretty good neighborhood.  It can be very tough to navigate.  Inside the loops I would put a rough estimate on bad neighborhoods (from a real estate perspective) as about 75% of all neighborhoods but that is a rough estimate.

    Outside the loops it is 95% good ones.

    0Reply
  • Elena Jobson
    Escrow Officer · Denver, CO · Member since 2016 · 64 posts · 27 votes
    10y
    THAT is the million dollar question. I've seen a lot of people post similar questions and there isn't really a clear cut answer. It all depends on what you're looking for and what is most important to you. I WISH someone would just tell me the best market to invest but although this site is designed to help all investors, many people are tight lipped when it comes to their markets because they don't want to blow up their spot. When it comes to cash flow, it seems the Midwest markets having the highest return, places like Indy and Cleveland for example have high cash flow. BUT do you really want to live in Cleveland? Probably not. ALSO although they may cash flow, the properties don't appreciate very much. I've also heard that the Chicago suburbs cash flow well. As far as Colorado goes, I would certainly stay away from Denver. Even if you find a smoking deal, it's still hard to cash flow at this rate. Even Fort Collins is getting to be very expensive. Colorado Springs will likely have better cash flow that Fort Collins and definitely Denver BUT the prices are still relatively high AND and you're not going to cash flow anywhere near what you would in the Midwest markets. I for one do not recommend Colorado as a cash flow market, being from Colorado born and raised and working in the industry. The market is crazy competitive. You can throw MLS out the window, for one. I personally am trying to get out of Colorado, I see it as a better opportunity for a flip investor than a hold investor. There are People who say to invest here because of how quickly the home prices are rising, that seems very speculative to me. I believe things will at least plateau in the next 2 years.
    0Reply
  • Nathan Astrup
    Cleveland, OH · Member since 2014 · 66 posts · 23 votes
    10y

    I actually really like living in CLE and my cash flow is great. I don't buy for appreciation.

    1Reply
  • Trevor Kolb
    Colorado Springs, CO · Member since 2016 · 59 posts · 33 votes
    10y

    @Pinaki M. In regards to your question, I am working on investing in CS at the moment. I am also a beginner, so I haven't had a deal yet but I know this is the market I want to work in for now. You're absolutely right in the assumption that most of the cities are close together, but once you've entered the mountain range, the distance and travel time can start to add up quick.

    The bottom line is what YOU want to invest in. As you'll see in BP, if you have the right attitude and knowledge to succeed, you can thrive in almost any market. Even the war zones find investors willing to risk it to get the biscuit! Just find enjoyment in what you're doing, learn something new every day, and work hard for what you want. :)

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free