Which state should I invest in?

16 Replies

So I'm starting out and looking to go across state lines for rentals and/or flips in just over 11 months. I'm learning all I can and trying to narrow down to a few cities for different reasons. I have a list of states I'd like to narrow down first. Generally speaking, I'd like to have my buy and hold in places where the weather is kinder to properties (less snow/freezing and fewer hurricanes, I'll take my chances with tornados and floods). 

Which three would you buy and hold in, which three would you flip in, and why? 

OR 

Which three would you NEVER buy and hold in, and which three would you NEVER flip in and why? 

Which states are just gaining traction and have recently rebounding economies? Which ones are fairly stable and look like they will be for a long time?

States in rough order of personal preference, TX is definitely #1.

Thanks!

PS I live in the San Franciso Bay Area. If I'm not doing this locally, I'm not doing this in-state. 

Texas
Georgia
Nevada
South Carolina
North Carolina
Florida
Louisiana
Tennessee
Washing­ton
Arizona
Virginia
Oregon
Arkansas
Alabama
Mississippi
Missouri
New Mexico
Indiana
Minnesota
Utah

Lupe.

I grew up in the bay area and invest out of state 100% I dont invest in CA at all.

I invest in Memphis, Cleveland, Akron and Birmingham. 

All of these markets - from my research - were the markets that made the most sense cash flow wise.

Texas to me is overpriced. I like to focus on markets that haven't popped yet.

Originally posted by @Andre Crabb :

Hi @Antoine Martel,

How do you like the Cleveland market? Also coming from the Bay Area, it looks like a good (cheap) place to get started with REI and financial freedom ;)

Cheers,

André

I like the Cleveland market. The prices are right and the rent to value ratio is great.

There are a bunch of good neighborhoods that you can invest in as well.

Would love to hop on the phone and talk about it more if you would like! 

All my investing is in the metro area of Mississippi except for one condo I own in South Lake Tahoe, CA. As far as buy and hold here, the returns on your investments cannot be beat, but I would not recommend flipping. Because appreciation is slow, you can lose your shirt doing that. I live in a house that someone bought and rehabbed to flip. They overpriced it at 139K and lost it during the recession. I snatched it up for 30K. 

@Lupe Rodriguez - I'm biased because we live/work/invest in Memphis, but one reason we do is because the tenant/landlord laws are reasonable.  I don't know anything about the laws in the other states you listed, but that is one thing that I've learned from reading the forums is those laws need to be taken into consideration.

Real Estate laws in Mississippi are landlord friendly as well, but judges have a lot of individual discretion. I find anything can happen when I go to court to evict someone. 

Probably Memphis or Little Rock. I’m already in Memphis and Little Rock is 2 short hours away, so I could go visit there just by flying into one or the other.

Unfortunately I chose Cleveland as my second market over Little Rock but the cash flow there is amazing. I got a 35k house that rents for 850. Hard to beat that really anywhere.

The c class areas in Cleveland tend to be of higher quality than other major cities in the Midwest. Property taxes can kill you though depending where you are.

Little Rock has very friendly landlord laws and low taxes. Memphis has slightly higher taxes than Little Rock but lower then Cleveland and the landlord laws are also in between.

Also a lot of quality multifamily in Cleveland. Just today I got an email for a 24 but building for 700k. That won’t but you a shack in SF lol

Originally posted by @Antoine Martel :

Lupe.

I grew up in the bay area and invest out of state 100% I dont invest in CA at all.

I invest in Memphis, Cleveland, Akron and Birmingham. 

All of these markets - from my research - were the markets that made the most sense cash flow wise.

Texas to me is overpriced. I like to focus on markets that haven't popped yet.

 These are the markets that I hope to I get into in the future. I would love to pick your brain sometime! 

Originally posted by @Adam Burns :
Originally posted by @Antoine Martel:

Lupe.

I grew up in the bay area and invest out of state 100% I dont invest in CA at all.

I invest in Memphis, Cleveland, Akron and Birmingham. 

All of these markets - from my research - were the markets that made the most sense cash flow wise.

Texas to me is overpriced. I like to focus on markets that haven't popped yet.

 These are the markets that I hope to I get into in the future. I would love to pick your brain sometime! 

 Reach out Adam and we can connect

Indianapolis, Jackson, and Detroit. Rent to purchase ratios are fantastic and the growth of these cities is stable. The key to any investment out of state is your team on the ground. A great team in an average market is significantly more valuable than an average team in a great market.

@Jeff Wallenius :

Detroit is the proverbial black sheep and shorthand for warzone. I also see you sell turnkeys, which makes me think of the fable of the Three Tradesmen, but I'll bite and ask why buy there? Also, how do you feel about the tax foreclosures that so many people seem to be capitalizing on?

Also, let's not change this thread into a political debate on the morality of the tax foreclosures in Detroit. We're barely sticking to the topic (this is a state thread and we're talking cities, not that I mind).

Detroit has seen some fantastic regrowth in downtown as Dan Gilbert has infused large amounts of capital into the core. This revitalization has then extended into neighborhoods with a Mayor that by all accounts (time will tell), is dedicated to restoring these residential communities. Neighborhoods that were once ghost towns have come back, East English Village, Chandler Park, etc. have been redone and are now thriving. Chase has infused $150m and are looking to do more. Neighborhoods such as Fitzgerald are being redone by the city with 167+ lots to be made into gardens, play areas, or revitalized lots. Along with the lots in that area, 92 homes will be renovated and partnerships with local banks are in place to provide financing for new homeowners. Time will tell as Detroit still has quite a few hurdles to overcome but I believe it's worth dipping your toe in the water on a property or two. Home values rose this year for the first time in 17 years. 

The tax foreclosure issue is a slippery slope and both sides have reasonable arguments. I'll save that conversation for another thread!