Investing in the midwest

34 Replies

Hi all, Im fairly new to investing although i’ve been reading/watching podcasts for a while. I became a landlord by default when i inherited property but am looking to expand. I have been looking at Detroit but have also been heavily discouraged and told not to start there by many people...But, I’m currently in the midwest and wanted your opinion on where a good place for a newbie would be to begin?

Hi Courtnye,

My wife and I became accidental landlords several years ago.  We were in Denver and that market wasn't booming like it is now.  Owning investment properties can be lucrative if done the right way.  Joining Bigger Pockets is a good start as the community here is very insightful.

With respect to location, you might want to look into Cleveland, Columbus and Dayton.  I heard good things about those areas...others may disagree but doesn't hurt to do some homework.

Here's a map that shows which states in the US are either tenant or landlord friendly: 
https://www.rentcafe.com/blog/renting/states-best-worst-laws-renters/.  It can help you choose where you want to invest.

At some point, you may want to consider buying rent default insurance.  That coverage will reimburse you a portion of your lost rent and legal expenses when a tenant defaults.  And it's tax deductible.

That's my 2 cents.

Good luck,

Aaron

What's wrong with investing in your backyard? When you have a moment update your bio so others can connect with by location.

@Remington Lyman   PM's are hard to come by but what makes you the best property manager? Curious as I'm seeking to invest in Ohio, either Cleveland and/or Columbus. -

Hi Aaron,

My wife and I currently own fourteen rental properties in California and Cleveland Ohio. I was reading your thread regarding rent default insurance and found that interesting. We have not heard of that before and would definitely like to consider that for our rental properties. Is that something that you do with your normal property insurance company? If so, do they want to drop you afterwards if you file a claim? We have had a few incidents in Cleveland where we had to evict tenants and have lost several months rent, damages and legal fees and would be very interested in this type of insurance. We would appreciate any information that you would share.

Mark and Donna Dreher

@Lamont Marable I never said I am the best property manager. I am probably the best PM for my personal clients though. I only do PM for clients that buy using me as their Realtor. This allows me to stay small and give greater attention to my client's assets than some of these larger PM companies. I will not take on assets that were purchased using a different Realtor unless the goal is to sell the asset and buy something new.

If you are looking to purchase with a different agent, then I would suggest looking at RL Property Management (@Peter Lohmann ), S4RE (@Mitch Deminski ), or Panzera. If you are purchasing in a D or low C neighborhood I would recommend Heart and Home.

Courtnye, it seems the thread has gone sideways a bit. To bring things back on point, always consider the source when asking for and receiving feedback. If they are not an investor or have limited first hand knowledge of the market you are interested in, take their advise as one of concern for your wellbeing but not necessarily in your best interest. If that is your local area you likely already know the good and bad areas; confirm your suspicions by meeting and talking with others at a local REI meeting, a property manager, broker/realtor. This forms the basis of a good team and can give you the information needed to make a smart decision. You can reference the multitude of online data sources for economic indicators but definitely choose no more than 1 or 2 markets. Cast too wide a net and catch the crap with the crappie as my dad always said.

How your current property performs is also a data point but keep in mind the economy, geography, and finance is a constantly moving target. Ie, what worked in detroit sub-market xyz 2-3 years ago may be totally different the next 2-3.

I suggest you determine your end goal, build a plan, build your knowledge, then a team, and then grow wealthy by buying for cashflow, use long term debt, and have plenty of reserves.

Originally posted by @Courtnye Nicole :

Hi all, Im fairly new to investing although i’ve been reading/watching podcasts for a while. I became a landlord by default when i inherited property but am looking to expand. I have been looking at Detroit but have also been heavily discouraged and told not to start there by many people...But, I’m currently in the midwest and wanted your opinion on where a good place for a newbie would be to begin?

The Midwest is a great place to invest, I would not start with Detroit. That may take some experience given the navigation you would need. Start somewhere like Cleveland or Cinncinatti. 

@Lamont Marable . yes i have to do that, although i’ve been on bigger pockets for a while i’m in a position where i can be more active so i still have to update everything ... but i’m in Chicago and everything is super expensive and taxes are outrageous! so i was looking elsewhere

@Courtnye Nicole

Hi Courtnye!

I started investing in Indianapolis 2 years ago. I had plenty of people tell me this wasn’t a great idea, but it’s gone really well. I manage my own properties at this point because I wanted to be involved in the tenant selection piece. The resources at BP have been extremely helpful with getting my business up and running.

I think the Midwest is a great place to invest because of the affordability of Real Estate. Rent rates are high in our market so I'm getting a great ROI.

Best of luck to you!!

@Courtnye Nicole Others have already mentioned Ohio, but I'll add my voice to theirs. Cincinnati and Dayton are great places to start! Get someone on the ground who knows the area really well so you don't end up buying something in a lower class neighborhood that will drive up vacancy/turnover/maintenance costs.

Good luck! :)

@Courtnye Nicole I am in Akron, Ohio which is a good place to invest; but since you are in Chicago, I would suggest that you get to know a market somewhere in Indiana which has a number of very reasonable rental markets. That way your properties are an easy weekend drive if you ever do decide to self-manage or need to check on your properties.

I'm on a buyer list for a wholesaler that sends out properties in Muncie, Indiana in addition to Akron which look interesting but I only do local  and self manage here in Akron.

The vast majority of US fresh water is contained in the great lakes, so the midwest has that going for us.  Will become more and more valuable over time.

Originally posted by @Courtnye Nicole :

Hi all, Im fairly new to investing although i’ve been reading/watching podcasts for a while. I became a landlord by default when i inherited property but am looking to expand. I have been looking at Detroit but have also been heavily discouraged and told not to start there by many people...But, I’m currently in the midwest and wanted your opinion on where a good place for a newbie would be to begin?

Best place to start is a location where you are able to establish a reliable network (That usually is in your own backyard) That network should include other investors, real estate agent, lawyer, contractors, handymen, mortgage broker(s),inspectors,....  If you decide to start outside of your own backyard it's imperative that create this boots on the ground network before pulling the trigger on purchasing otherwise you'll be putting yourself in a high risk situation.  

With that said, your backyard Chicago, has more than 100 submarkets, 78 in Chicago proper but many in the suburbs. If Chicago doesn't work whatever market you choose make sure there's a direct flight to that market from Chicago.  Good luck

I totally agree with @Crystal Smith .  Invest in your own backyard first (or another area that you know just as well).  Become a big fish in a small pond before finding a new pond to fish in.

There's more than enough deals here for us all.