First time investor picking a market...

9 Replies

We are first time investors who having read the books, forums, and listened to the podcasts, are getting close to taking action. We’ve decided that a turnkey rental is likely the best way for us to get our feet wet in rental investments, we don’t have a ton of free time for management, and live in an area where buying a rental property is out of reach ( San Jose, CA ), as such we’re looking out of state. Areas we’ve started to hone in on are Memphis, Houston, and Dallas. We’ve read a lot about these markets here on the forum but I’m wondering if people here have up to date opinions on these markets? Thanks in advance for any responses, these forums have already been invaluable to us!

Memphis is tougher than the other 2. But also the cheapest so depends on your $.  In Memphis you need great property management for any asset to perform.

@Tim B. Hi and welcome to the site.  I would say that even more important than the market, is the provider you choose to work with.  Make sure whichever you are considering that you thoroughly vet, include a visit to the market and a face to face with the provider.  PM is particularly important for the long term success of your investment.

I live in Texas, and so will stick to what I know.    I find myself leaning towards Dallas over Houston.   Houston, with its proximity to the coast and economic history feels to me like a bigger risk.   If you are looking in Texas, I would recommend you look up and down the I35 corridor (San Antonio to Dallas/Ft. Worth).  https://www.bizjournals.com/houston/news/2018/09/19/houston-among-countrys-largest-economies-but.html

Hello, if you’re looking in Texas, I highly suggest looking in San Antonio as well and not just in Dallas or Houston. There are a lot of appreciating areas around town with properties being rehabbed and raising the value of turn key rentals. Shoot me a message and I can discuss more with you.

Beware of Texas taxation. Remember to calculate the higher rate as part of your analysis. This is especially critical for us Cali folks since we will be paying a high rate by default.

@Tim B. You're going to find that the cash flow and cash on cash returns are much lower in Dallas and Houston vs Memphis. TX has some of the highest property taxes and insurance rates in the country which really hurts cash flow. Memphis would be a much better cash flow market, however, I would encourage you to look at the Midwest, particularly Indianapolis and Kansas City. Those are two of the best cash flow markets in my opinion due to the fact that they are very affordable but also have strong economic and demographic trends. Both have solid job and population growth with diverse economies and employment bases. I'd be happy to chat about either of those markets if you'd like.

Here is article by Oxford Economics on World cities with maximum population and GDP growth by 2030...

Here is ranking of cities with maximum population growth expected in North America.. (Number in Millions...)

https://www.oxfordeconomics.com/Media/Default/landing-pages/cities/OE-cities-summary.pdf

Another Article... by PWC... US Market to watch in 2019...

https://ulidigitalmarketing.blob.core.windows.net/...