Investing in new markets
Member since 2023 · 25 posts · 20 votes
Investing in new markets
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Member since 2019 · 18 posts · 24 votes
3yHi. I am in NY and invest out of state.
So how to choose a sold market when investing in out of state? First, we look on a macro level (cities to invest in) and then micro level (specific areas within that city). The cities must meet the criteria below.
Macro level: Rent to value ratios, Unemployment rate, Population growth, Major employers, Workforce diversification, Landlord tenant laws
Micro level: Crime rate, Owner occupancy rate, Vicinity to retail and jobs
In short, we are investing in landlord friendly markets with high rent to value ratio, positive population growth and opportunities. Within that, we select areas with low or no crime, which are close to jobs and to the downtown core.
Some good markets - OH (Cleveland, Columbus Dayton, Cincinnati) ST Louis, Memphis, Detroit. Also sunbelt states - Alabama is our next market.
All good markets are saturated and will become saturated quickly, but don't let that stop you! There are great deals for everyone.
50 Replies
- Property Manager · Columbus, OH · Member since 2023 · 3 posts · 3 votes3y
Hey Keith,
I'm out here in the Columbus, OH market and our team has been excited with the direction things are headed. We are a rapidly growing city that can handle the expansion and don't have many barriers that would prevent our properties from appreciating as projected. Google just announced that they intend on opening 2 new data centers along with an Intel microchip factory as well. Lots of opportunity for investors to get in on the market before word gets out about Columbus!
- Member since 2023 · 25 posts · 20 votes3y
Hi Jared thanks for the note. Been seeing a trend with folks promoting Ohio. How difficult is it to do business in the state? Are transaction fees/closing costs really high? Is the market saturated with investors or are there enough deals to go around for everyone? Thanks in advance!
- 3yJoshua JanusBusiness MemberRealtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
Columbus, Ohio is a great market to invest in. The population has been growing here year over year over the last decade, it is home to The Ohio State University which has over 50,000 students that live here along with those that visit, and it also holds a diverse range of young professionals and traveling nurses to fill the demand of the multiple business corporations and hospitals stationed here. The appreciation rate in Columbus has been 8% higher than the national average over the last year. Tech companies are continuously moving here and establishing a footprint in Columbus as well. Intel is a great example, who is building the largest chip manufacturing plant in the US right here, and it will be a $20 billion dollar investment that brings a few new thousand jobs.
Another example of economic growth is the upcoming Ohio State University Wexner Medical Center Inpatient Hospital which is a 1.9million square foot hospital that will bring over 800 new beds and a thousand new jobs.
https://abc6onyourside.com/news/local/new-osu-hospital-expected-to-transform-health-care
Here are a few more recent investments
https://news.wosu.org/news/2022-02-08/rumpke-to-build-50-million-recycling-facility-in-columbus
Check out The Complete Guide to the Columbus, Ohio Real Estate Market which goes through the Columbus, Ohio market in depth and will give you a better scope of where the highest levels of growth are taking place and where to look to invest.
- Real Estate Agent · Columbus, OH · Member since 2023 · 161 posts · 217 votes3y
I would also recommend researching Columbus, Oh. As a local investor, I think we have a great combination of appreciation and cash flow. Happy to connect and share more!
- JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes3y
Right now, you probably can't go wrong anywhere with a buy/refurb/flip strategy. With interest rates up, homeowners are holding on to their homes until interest rates come down again. The pool of buyers continues to grow. Fewer houses are available for purchase. Bidding wars don't help, because high interest rates make it harder for buyers to hit their required debt to income ratios. With continued logistics problems, labor shortages and the high cost of materials, builders can't simply start building more to meet the demand. The answer is to buy and upgrade existing inventory, which seems to be your target. My only advice to tag onto that is find properties in peripheral neighborhoods and buy at least 4 homes on the street. That way, you turn the street yourself, instead of waiting for the market to produce more refurbing buyers that will eventually turn the street.
- 3yVicki X.Pro MemberInvestor · Member since 2022 · 186 posts · 155 votes
Quote from @Keith Tarasiewicz:
Hello!
I have been tasked with picking new markets to take our flipping/wholesale business to and was wondering what parts of the country investors are having the most success finding good deals in? We're currently in a handful of states on the east coast (Virginia, Maryland, DC, Pennsylvania) and prefer to branch out from there, but are open to suggestions.
I've liked the data I'm reviewing in the southeast but my fear is so does everyone else and those markets will quickly become saturated.
Thanks in advance Bigger Pockets community!
Best,
Keith
Some States around you are good markets too: NC, GA, FL.
Here are the major considerations in evaluating different markets:
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Your budget: are you looking to buy under $200K, $200-300K, $300-500K or higher? It can help you create a short list
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Population growth, employment growth, wage growth, composition of business types are the most important factors in the health of the market. There are many analysis, charts out there. Specifically. places where the millennials are attracted to are interesting as they are becoming the biggest renter and homebuyer group
(Note: Be careful with 'historical' data. The top growing markets in the last 2 years are unlikely the most sound choices. Good examples are Austin and Phoenix. Try to add the futuristic lenses into your analysis whenever you can. In the ideal case, there be a "new California" emerging somewhere in the next 10 years. But to be frank, CA's trajectory is impossible to replicate as working remote has become more prevalent, companies more “decentralized”, and more people think about not just professions, but also lifestyles these days).
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Are you able to find trustworthy realtors/PMs or even service providers? Do not get into a market before you know whom to work with. Many investors interview many to find the best one. In my case, I started in the Houston area as my friend had very good recommendations for me. So use your network to get more ideas!
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Run the numbers to understand the cash flow, and pay attention to the major cost such as the effective property tax rates. It typically range from 0.5%-2%+
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Rental regulations as some States are more friendly to renters while some more friendly to investors
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Distance to you. If you find a good area 2-5 hours drive from you, it’ll be easier to meet your team and check out the properties in person
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Certain hazards or costs that you want to avoid. Drought, flooding, snowstorms, tornados, just to name a few
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- Member since 2021 · 16 posts · 8 votes3y
Quote from @Elena Orselli:
Hi. I am in NY and invest out of state.
So how to choose a sold market when investing in out of state? First, we look on a macro level (cities to invest in) and then micro level (specific areas within that city). The cities must meet the criteria below.
Macro level: Rent to value ratios, Unemployment rate, Population growth, Major employers, Workforce diversification, Landlord tenant laws
Micro level: Crime rate, Owner occupancy rate, Vicinity to retail and jobs
In short, we are investing in landlord friendly markets with high rent to value ratio, positive population growth and opportunities. Within that, we select areas with low or no crime, which are close to jobs and to the downtown core.
Some good markets - OH (Cleveland, Columbus Dayton, Cincinnati) ST Louis, Memphis, Detroit. Also sunbelt states - Alabama is our next market.
All good markets are saturated and will become saturated quickly, but don't let that stop you! There are great deals for everyone.
Hi Elena,
Could you share few pointers/resources to help evaluate Micro level items? Specifically Crime rate?
Thanks
Steve
- Huntsville AL · Member since 2021 · 44 posts · 30 votes3y
Quote from @Hamlet J.:
Hi @Nikki Yankowski,
Thank you for your reply.
Are you an investor in Boston?
I have a rental there, 500 sqft 1 bedroom condo in Medford and I was able to get $2000/ month this past year and will try and rent it for $2150 this upcoming year.
If you're looking for a property manager who can also help you buy private message me
- Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes3y
We have been investing in Central Pennsylvania for quite some time. Cumberland County, Pennsylvania is the fastest growing county in the state. The number 1 employer is the State Government and the number 2 employer is the Federal Government, therefore the employment picture is stable and not dependent on business cycles. Building is booming, new housing is being developed and other businesses are locating in the area to take advantage of east-west and north south interstate system that is one day from 50% of the country. Ironically, one of our biggest investors here, lives in Columbus, but invests here for the better opportunities.
Delaware, also one of our favorite is growing and has traditionally been very pro-business and has attracted us since 1986 and continues to do so.
Nashville is booming. As I was there last year hunting investment targets, I counted 16 construction cranes in downstown Nashville. Amazon is building two office skyscrapers downtown for their Headquarters 3. The Titans are building a new stadium and the city is trying to attract a Major League Baseball team. All good signs for current and future growth.
Bigger Pockets Podcast #82
- 3yMin ZhangBusiness MemberReal Estate Agent · Member since 2022 · 1k+ posts · 1k+ votes
Quote from @Keith Tarasiewicz:
Hello!
I have been tasked with picking new markets to take our flipping/wholesale business to and was wondering what parts of the country investors are having the most success finding good deals in? We're currently in a handful of states on the east coast (Virginia, Maryland, DC, Pennsylvania) and prefer to branch out from there, but are open to suggestions.
I've liked the data I'm reviewing in the southeast but my fear is so does everyone else and those markets will quickly become saturated.
Thanks in advance Bigger Pockets community!
Best,
Keith
Hello Keith, my name is Min with Reafco Real Estate. I am an agent and also an investor myself. I personally focused my investments in the Columbus area and have a network of property managers, general contractors, lenders etc. that I highly recommend. If you're interested in identifying a good neighborhood to invest in.
Is this something you have been considering? Let's schedule a chat so that I can explain it to you further! :) - 3yJoshua JanusBusiness MemberRealtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
Quote from @Keith Tarasiewicz:
Hello!
I have been tasked with picking new markets to take our flipping/wholesale business to and was wondering what parts of the country investors are having the most success finding good deals in? We're currently in a handful of states on the east coast (Virginia, Maryland, DC, Pennsylvania) and prefer to branch out from there, but are open to suggestions.
I've liked the data I'm reviewing in the southeast but my fear is so does everyone else and those markets will quickly become saturated.
Thanks in advance Bigger Pockets community!
Best,
Keith
North Linden, South of Main, Vassor Village, Woodland Park, MT Vernon, Milo-Grogan, Franklinton, Merrion Village, Hungarian Village, Southern Orchards, Driving Park, Olde Towne East, Franklin Park, King Lincoln, Old Oaks, Livingston Park are all but not limited to some areas in Columbus, Ohio I think will gentrify quickly and make for great long term buy and holds.
- Real Estate Agent · Nashville TN · Member since 2018 · 35 posts · 15 votes3y
The south east is very beneficial from a tax standpoint and price points are so increasing at a predictable rate and we still have a housing shortage. I do know areas like nashville and surrounding communities do have many competitors in the area, but we have a lot of supporting that that in the near and short term will not be able to keep up with demand even with the current players in town and entering the market. And with costal and tier one markets decentralizing and utilizing remote work combined with moving headquarters or opening of second HUB's there is plenty of job growth and opportunity for years to come because those companies do not make a decision based on 1-5 year cycles they are looking for the next 30 years to relocate. So steady job growth, diversified industries, moderate price points, and growing markets-- South east does have plenty of competitors, but there is still not enough people to help curb the supply problem we have and could use more people flipping and building properties in the south east.
- Real Estate Agent · Columbia, SC · Member since 2012 · 112 posts · 106 votes3y
I will echo some of the sentiments here about the SE, but I would stick to some of the secondary and tertiary markets. Columbia, SC (I am biased), Augusta, GA, Chattanooga TN, Huntsville, AL, etc. While these markets are competitive, they are not saturated like a Charleston, Atlanta, or Charlotte.
- Real Estate Agent · Atlanta, GA · Member since 2020 · 414 posts · 233 votes3y
Hey Keith - we are still seeing lots of deal flow in Atlanta, but it is still pretty competitive at and below median home prices with no end in sight for demand.
Let me know if you have any questions - happy to chat!
- Investor · Atlanta, GA · Member since 2018 · 34 posts · 16 votes3y
Quote from @Greg Parker:
Let me know if you need any help with the Montgomery, Alabama market.
Whats your opinion on the Montgomery market? Also, are you familiar with the Auburn/Opelika market and Lanett/West Point? I'm currently in Auburn temporarily and I'm from Atlanta. I've done several deals in Atlanta and I can't wrap my mind around the lower price point properties you would find in certain areas in Alabama.
- 3yGreg ParkerBusiness MemberRealtor, Contractor, Property Manager · Montgomery AL and Kowaliga, AL · Member since 2017 · 663 posts · 536 votes
I lived in Auburn for 10 years. That area is really overpriced because of the students with the endless supply of student loans. Opelika has some good opportunity.
Not familiar with West Point market at all.
Still doing well in Montgomery. We can be all-in for 140k on a 3/2 and come really close to the 1% rule on rent rate. My company manages 700 doors in Atlanta. Hard to find a deal there anymore.
MGM Property Pros LLC - Realtor · Atlanta, GA · Member since 2018 · 139 posts · 90 votes3y
As a Native to Atlanta, I can say with confidence there are still deals despite the heavy investor interest.
Thanks to the the sprawling interstate system and influx of people moving from high priced markets such as New York, LA, DC, SF, etc. there are multiple plays to make lucrative and long term investments.
- Columbus, OH · Member since 2023 · 427 posts · 254 votes3y
The lower prices in the midwest make it a very opportunistic region for REIs. Can't speak from experience, but I hear good things about Indiana, Wisconsin, and Michigan. I'm located in Ohio, and still regularly come across 1% deals at prices far below what you'll find on the east coast.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes3y
According to data from the NAR last week Wisconsin has 3 out of the top 10 highest appreciating cities in the US in Q1 2023.
- JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes3y
@Sean Richards I'm in Tuscaloosa, but I imagine Auburn is a very similar market. Great market because of all the students. Be prepared for student lease signings in October for terms beginning the next year, in August. If you miss that window, or have someone default, it's going to be a long time until you find a replacement. But, low risk of monetary loss if you handle the parent guarantees properly. Let me know if you'd like to expand into Tuscaloosa.
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