Best Recession Cities for investment

Best Recession Cities for investment

Member since 2020 · 13 posts · 7 votes

I'm 33 and looking to relocate. I was an interior designer (cabinet sales basically) in Denver, Colorado before the corona. Now I'm provided with a new opportunity. Im not going back to my old job and I can basically move anywhere USA.  The high cost in Denver had me priced out of the game of homeownership/investment properties (wish i found contract sales sooner). Although I am expecting prices in denver to correct in light of current events, I have decided not to stick around (been there 9 years and ready for a change). 

I'm researching cities that may be best for coming opportunities in the RE market and want to open up the national discussion from members. How do you feel your city will fair? Is it overpriced or underpriced currently? how is the population growing? (Denver was non stop young people) Do you expect prices to correct and fall if they were high (denver, san fran, boston, scottsdale/phoenix, seattle, La to name a few) 

Personally I liked the idea of "B' cities before the rona ever showed up. Following one of  the trends of millennials moving to generally southern, smaller towns in search of cheaper prices, better taxes, young vibe: I see that holding (Nashville, baton rouge, Raleigh, charlotte,  Ashville, Charleston, lots of Florida) 

My Insight to share:
I have experience in Coastal SC and Savannah (lived there 5 years -Bluffton, Hilton head, Savannah). I personally am biased towards savannah (love it) but it has some major problems (crime) and decent steady growth but not explosive growth. I am already seeing lots more houses coming on the market, ones that were under contract two months ago are suddenly available again,  tons of new spec houses in the big suburb developments are littered on realtor.com. Not sure how those will play out or what the opportunity is there for the new builds. In general, my senses tell me there are better areas out there.  There is industry around but nothing too large ( Gulfstream, Georgia pacific, daniel defense) but they have already been hit with layoffs and aren't bulletproof. I went to Savannah college of Art and Design (SCAD), a very popular school in that area that is also a keystone in renovating and investing in the city. Most of the students that go there would stick around if there was a supporting high-paying tech job market but there just isn't for most of these fields- interaction design - UX design - industrial design - design management - graphic design - fashion design - etc. Lots of my friends ended up in bigger cities to work for IBM, google, Microsoft and larger design firms in places like Seattle , Austin, san Fran >  and some in Raleigh where even the bigger companies like IBM are opening up campuses. So that gives you an idea of the area and job market income limitations -There is money obviously there just not the higher paying jobs on average. I think the play in Savannah is buying close to SCAD buildings ( the campus is scattered throughout the city) and rent them to students with the long option of selling years away (5-7).  Charleston is a step up from savannah economically, historically and its larger. I'm not as familiar with it but that's a consideration.

What are your favorite areas right now, where would you set up shop for the next 5-10 years if you were starting out?

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Troy GandeeBusiness Member
Real Estate Broker · Charleston, SC · Member since 2013 · 795 posts · 454 votes
6y

@Brandon Schaffner I'm hesitant to say Charleston is "recession proof", but as far as the South goes, we have a staggering amount of industry. Our economy is also pretty well diversified. We have a ton of tourism, which fuels hospitality. We have a lot of Govt jobs thanks for the Air Force Base and Naval Weapons stuff. The ports and rail provide a lot of great jobs. We have a half dozen international manufacturing companies. Quite a bit of tech. There are more to mention, but these are the primary ones. Savannah is a great city, but I don't think they're nearly as developed as Charleston economically. Charleston is quite a bit more expensive than Savannah, though.

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  • Brandon SchaffnerPro Member
    OP
    Member since 2020 · 13 posts · 7 votes
    6y

    @John Vela-Garcia What kind of areas are you looking at in savannah for 150K? Maybe my question is how comfortable do you feel/what's your involvement in the neighborhoods for that range? 

    I've toured sav homes the past two months and for 150k I usually find the neighborhood to be "okay" in terms of safety, although there are some gens here and there. There are definitely some attractive Cheap (sub 100K) rehabs that Im passing over, due to the area. I will be extremely hands-on at first and doing remodeling myself until I get to more of a management point and sub out the work.  My father did this for 30 years in other areas of the country and he's had his fair share of break-ins and tools stollen. 

  • Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes
    6y

    @Brandon Schaffner I think what you will find in the KC market is a diversified set of properties, strong employment that is also very diversified (tech, engineering, health care, ag, animal health), great down town, progressive on both side of the state line, and great school (from grade school to college). So i guess what I am saying is that KC is a good market to weather any storm as we do not depend on any single thing. It is all pretty strong. This is how we weathered the last recession and will weather this one. Also - look at our coronavirus case count. Very low compared to other metros of similar size. Just saying...

  • Rental Property Investor · Savannah, GA · Member since 2018 · 174 posts · 129 votes
    6y

    @Brandon Schaffner

    Yeah I wouldn’t go out that far. I keep my search to Chatham county which goes out to Georgetown, Pooler, and Port Wentworth. That being said, I’m really focusing East of 516. Don’t really car to go out as far as Georgetown and Pooler, and I don’t think there’s a necessity to with the opportunity closer and surrounding downtown.

  • Kansas City · Member since 2019 · 162 posts · 54 votes
    6y
    @ Brandon Schaffner, irrespective of the location you chose to settle down, you'll then want to consider your market entry strategy (which I'm sure you're already doing). Since it sounds like you may have a larger amount of bandwidth than you have previously, I'd consider buying a multifamily house that has a fair amount of room for improvement. Look for a B/C class property in an A/B class area. Invest the time you have right now in renovating it yourself. That way even if property prices take a nice nosedive in the near term, you won't have all your cash tied up in it (just more sweat equity), will have some appreciation margin for error due to the upgrades you put into it yourself, and will have more flexibility for cash flow than a SFR. With this approach market timing will matter much less, since the goal is cash flow > asset appreciation.

    Just my $.02. Hope its helpful! 

    Good luck!

    Originally posted by @Brandon Schaffner:

    I'm 33 and looking to relocate. I was an interior designer (cabinet sales basically) in Denver, Colorado before the corona. Now I'm provided with a new opportunity. Im not going back to my old job and I can basically move anywhere USA.  The high cost in Denver had me priced out of the game of homeownership/investment properties (wish i found contract sales sooner). Although I am expecting prices in denver to correct in light of current events, I have decided not to stick around (been there 9 years and ready for a change). 

    I'm researching cities that may be best for coming opportunities in the RE market and want to open up the national discussion from members. How do you feel your city will fair? Is it overpriced or underpriced currently? how is the population growing? (Denver was non stop young people) Do you expect prices to correct and fall if they were high (denver, san fran, boston, scottsdale/phoenix, seattle, La to name a few) 

    Personally I liked the idea of "B' cities before the rona ever showed up. Following one of  the trends of millennials moving to generally southern, smaller towns in search of cheaper prices, better taxes, young vibe: I see that holding (Nashville, baton rouge, Raleigh, charlotte,  Ashville, Charleston, lots of Florida) 

    My Insight to share:
    I have experience in Coastal SC and Savannah (lived there 5 years -Bluffton, Hilton head, Savannah). I personally am biased towards savannah (love it) but it has some major problems (crime) and decent steady growth but not explosive growth. I am already seeing lots more houses coming on the market, ones that were under contract two months ago are suddenly available again,  tons of new spec houses in the big suburb developments are littered on realtor.com. Not sure how those will play out or what the opportunity is there for the new builds. In general, my senses tell me there are better areas out there.  There is industry around but nothing too large ( Gulfstream, Georgia pacific, daniel defense) but they have already been hit with layoffs and aren't bulletproof. I went to Savannah college of Art and Design (SCAD), a very popular school in that area that is also a keystone in renovating and investing in the city. Most of the students that go there would stick around if there was a supporting high-paying tech job market but there just isn't for most of these fields- interaction design - UX design - industrial design - design management - graphic design - fashion design - etc. Lots of my friends ended up in bigger cities to work for IBM, google, Microsoft and larger design firms in places like Seattle , Austin, san Fran >  and some in Raleigh where even the bigger companies like IBM are opening up campuses. So that gives you an idea of the area and job market income limitations -There is money obviously there just not the higher paying jobs on average. I think the play in Savannah is buying close to SCAD buildings ( the campus is scattered throughout the city) and rent them to students with the long option of selling years away (5-7).  Charleston is a step up from savannah economically, historically and its larger. I'm not as familiar with it but that's a consideration.

    What are your favorite areas right now, where would you set up shop for the next 5-10 years if you were starting out?

  • Brandon SchaffnerPro Member
    OP
    Member since 2020 · 13 posts · 7 votes
    6y

    @Benjamin A Ersing that does help, I had been looking at single-family homes for my savannah search the past month but after reading more here I  feel the best way to go is multi for cash flow like you said. Ive got tons of knowledge in remodeling and fabrication so Im definitely looking to hire myself for rehab. 

    Based on your experience how do you feel about converting a basement/section of a SFH to a rentable apt. since cash flow is more important than appreciation. Or should I look for duplex style property? I understand that a bit of a what-if question based on the location, property, and other variables. Is it a common strategy discussed here?

  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y
    Originally posted by @Brandon Schaffner:

    @Mark Gliebe 

    Great post, I have lived in Northeastern PA, Western PA (western is more midwest mentality), Denver, and South Carolina / GA. I am impressed with the southeast as well and the trends show northerners moving here readily to escape high tax areas like Massachusetts and New York. I also see lots of younger people moving down there for the weather and a more laid back lifestyle that's being increasingly supported by the arts, music, film, culture etc.   l do see lots of opportunities in Ohio the more I read but I just don't see personal enjoyment in the midwest ( sorry midwestern people). Kansas city could be an exception. That seems like it's underrated and growing.

    I'm glad you mentioned Chatanooga as that has piqued my interest. It seems like a great area that offers lots of city amenities with the mountains and countryside nearby. I have just begun researching Knoxville and some of the others you mentioned, thanks  

     We have the best college football team, The Ohio State University Buckeyes.

    Here are some more reasons I moved to Columbus, Ohio. https://www.thecrazytourist.com/25-best-things-columbus-ohio/

  • Mike B.Pro Member
    Developer · Chicago, IL · Member since 2013 · 435 posts · 358 votes
    6y

    Anyone weighing in on Florida please @ me.

  • Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    6y

    Look for areas that have a diverse economy, specifically having no one industry over 20%. Also look for markets that have not seen very high housing price growth. Sustained affordability is important. Once that gets out of line, markets are vulnerable. 

  • Kansas City · Member since 2019 · 162 posts · 54 votes
    6y
    @Brandon Schaffner 

    Basement remodels can be done, but you'll either have to get the property rezoned, which can be incredibly difficult/impossible in some cases, or rent it under the table (not that I'm advocating breaking the law). I'd personally look for at least a duplex, ideally a triplex or quad. To your point, depends on location though. Residential multis (i.e., under 5 units) aren't super common in all markets, and in some are only in really dicey parts of town. All depends on your appetite and level of comfort with living in different types of neighborhoods. 

    Also, if you find a multi that already has rent-paying tenants in it, the mortgage lenders will take into account that monthly income in part of their underwriting. So you can qualify for a larger property, or one in a better neighborhood than you otherwise could.

    Originally posted by @Brandon Schaffner:

    @Benjamin A Ersing that does help, I had been looking at single-family homes for my savannah search the past month but after reading more here I  feel the best way to go is multi for cash flow like you said. Ive got tons of knowledge in remodeling and fabrication so Im definitely looking to hire myself for rehab. 

    Based on your experience how do you feel about converting a basement/section of a SFH to a rentable apt. since cash flow is more important than appreciation. Or should I look for duplex style property? I understand that a bit of a what-if question based on the location, property, and other variables. Is it a common strategy discussed here?

  • Rental Property Investor · Blacklick, OH · Member since 2016 · 286 posts · 253 votes
    6y

    I second @Remington Lyman on Columbus only because we have the best football team in the nation.  Check out who has the top recruiters during the pandemic - https://247sports.com/Season/2021-Football/CompositeCoachRankings/

    O-H

  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y
    Originally posted by @Ryan Mainwaring:

    I second @Remington Lyman on Columbus only because we have the best football team in the nation.  Check out who has the top recruiters during the pandemic - https://247sports.com/Season/2021-Football/CompositeCoachRankings/

    O-H

    I-O!!!

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