Good cities/markets for young professional with savings?

Question

I'm 27 and finally got $200k saved up for my real estate investment journey. It's always been a dream of mine to move to the U.S. (currently live in Europe) together with my girlfriend and invest in real estate. My current employer just approved my transfer to the U.S. and has offices in almost each of the major cities in the U.S. so I'm looking for a city with a great cash-flowing real estate market (preferably also a nice city to live in so I can convince my girlfriend haha). I want to buy some small multifamily rentals (duplex/triplex/fourplex) and make down payments with my current savings, continue to work a couple of years and retire when my cash flow covers my living expenses so I can go full-time real estate.

Any recommendations in terms of cities would be most welcome! Currently thinking of Charlotte, NC, or Austin, TX (probably with investments in San Antonio), but I wonder if there are better (growing) markets for cash-flowing properties with a growing market that are nice to live in?

Alexander Szikla · Answer

New York City! The center of arts, culture, nightlife, media, tech and finance that is coming back STRONG!

Definitely house hack via FHA in NYC right now. If you can get a 4 unit and a basement, that would be ideal and create major cash flow and equity creation, plus you can not worry about a property manager and boost your yield.

Personally, I am very bullish on New York and NYC itself. Sure it suffered due to COVID, but you want to buy when there is distress. I think all the folks who moved away are already getting bored and already coming back. Plus, the vaccine is getting rolled out which will curb the spread tremendously. Now is the time to buy.

Cap rates came all the way down to 3% (or below!) during the "boom" times but COVID has loosened everything up and now 5% can be had in Manhattan, 6%-7% in Brooklyn and even 8% in the Bronx. Nationwide rates hit a low of 2.7% - so there has really never been a better time "spread" wise.

Long term, I think NYC will come back as it always has time and time again. I am also a great believer in investing when there is distress and deploying capital when you can.

If you are looking for yield in the short run, Manhattan may not be for you. However, it is certainly the most attractive it has been in years from a cash flow perspective. If you are seeking out asset accumulation and equity appreciation over the long term then there are certainly fortunes to be made. And there is still plenty of cash flow opportunities in the outer boroughs if you buy right!

Christopher Gossage · Answer

I would look into Jacksonville FL, a lot of people moving here and the market is still lower than most metropolitan cities in the U.S. Inventory is tight however investors are still finding decent deals on rentals for cash flow. Considering there are 3 Naval bases there is always a high demand for rentals. As far as living here there's the beach, springs, and St Augustine are just a few thins to do!

James Carlson · Answer

Hey @Gill Dupree. A premature welcome to the states. I'm not in Austin, but I'm a big fan. Lots of a pockets of commercial and residential spots. Outdoor activities. Obviously, the music scene is awesome. And lots of people and tech money moving in. All point to a good long-term buy.

As you pointed out, it's not the best for cash flow. We work with clients and invest ourselves in Denver and Colorado Springs, which similarly don't do that well with cash flow. But damn, they're great places to be, have 300 days of sun, the best beer selection in the country, and a diversified and growing economy. I'm fine breaking even as we hold for the next 20 years when we'll have Seattle or Bay Area prices.

Whatever path you take, I wish you the best. Cheers!

Brian Holt · Answer

@Gill Dupree

Tampa Florida

Matthew Brill · Answer

I would first look at states with investor friendly tenant-landlord laws. I'd also look at states with no income tax in the south. That would really put you in Florida, Texas and Tennessee. You can find cash flowing markets in each state, just matters how close to a big city you are. In Florida, I'd look around Orlando, Tampa, and Jacksonville.

Samara Huntley · Answer

Hey Gill,

Maybe I'm biased, but I like what Charlotte has to offer! Both for the personal life and the real estate side of things.

Inside the city limits, of course, it is a little difficult to get good cashflow as the prices have exploded in the past few years, but in the submarkets there is still great opportunities for cash flowing properties. And as Charlotte continues to grow at astronomical rates (roughly 120 people a day) it is overflowing into these submarkets causing them to explode as well! All to say, with Charlottes diverse/growing economy, great job and population growth, overall affordability etc. I'd check it out.

Also, not too bad of a place to live. Decent weather year round, beach and mountains both 3 hours away, tons of parks/outdoor activities, museums, great breweries and restaurants!

Good luck on your search of the cities, I wish you the best!

Stephen Karagosian · Answer

@Gill Dupree I hope you're able to find your way to the US. I would suggest you check out Colorado! There are several great locations here. Personally, I call Colorado Springs home. If you like hiking, skiing, mountain biking or the outdoors in general I would say you should check out the area.

I lived in the San Antonio, TX area a few years ago and I really enjoyed it there, however, Colorado Springs just feels more like home for me!

David M Trapani · Answer

Some of my current favorites -

Palm Springs, CA

Franklin, TN

Smoky Mountains, TN (Pigeon Forge, Sevierville, Gatlinburg)

Clarksville, TNSacramento, CA

San Francisco, CA

Daniel T Stockman · Answer

@Gill Dupree - I think this will be a great adventure for you (and your girlfriend)! Additionally, having 200k to invest in to a few properties will help jump-start your journey!

I'd echo the comments about Austin.  While a fun city to live in, prices there have exploded since I first moved to Texas (12 years ago).  If you are considering other Texas market's I'd consider the DFW area.  There are many submarkets within it where prices & cash flow vary greatly. DFW has also seen massive growth across all parts of the city due to many corporate headquarter relocations and the continued growth from distribution warehouse developments.  It's a market where you can live in a nicer/trendy part of town while also being able to drive to your rentals in a different part of the city.

Best of luck on your journey. I look forward to hearing updates, as you formalize your plan!

Amelia Evans · Answer

Hello!!!

Here is a reference for houses for sale in Charlotte , it's a real estate agent, they were very helpful in getting my property.

I hope it will be of great help to you =)

good luck!

Good cities/markets for young professional with savings?

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