Too many options, scared to make a wrong decision

Lender · Springfield, MO · Member since 2023 · 104 posts · 78 votes

2y

I live in Springfield, Mo, and have seen a lot of people be successful in this market. Love seeing the pros and cons of this market from an outside perspective. I wouldn't have thought of Willard as a good school district.

There are a lot of good places in Springfield where crime rates are very low and places with better school districts as well. Just need to know the area.

Would be happy to talk with you about the area and investment properties if you would like.

3 Reply

Jim Moore

Investor · Member since 2024 · 16 posts · 10 votes

2y

Hi Eric

My team works with a lot of new investors in the Austin/San Antonio area.

In a nutshell, we help you identify, acquire and manage the property. The corridor South of Austin toward San Antonio along I-35 is experiencing tremendous growth and there are brand-new homes with lender incentives that make things very attractive. Property taxes are a lot lower here (sub 2%) than in prime Austin.

I'd be happy to connect and tell you more.

1 Reply

Luka Milicevic

Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes

2y

@Eric Rice

Are you sure you're talking about the right Franklin TN? That's the furthest description of Franklin that I could think of.

I live in Franklin and it is the goal of everyone in the area to eventually move there. My wife and I constantly talk about it - Once you move here and experience it, there is no going back to your old life.

The pros you mentioned are spot on, but I have to add a few.

The city is incredibly clean and well maintained. Can't emphasize that enough. I bike early in the morning - 5am. The landscaping crews are already out at that time with headlamps mowing grass, mulching, trimming, etc. Sanitation department has brush pick up every week. Leaf pick up through out the fall and winter. The city has predominantly buried utility lines so there are few overhanging power lines. This doesn't seem like a big deal until you actually go somewhere else and notice how big of a deal it is. They implemented under ground utilities decades ago so even the old subdivisions built in the 90s don't have overhanging power lines.

You're skeptical about the growth??? Have you seen what's in the pipeline? Do you know how many companies that you've heard of are headquartered in Franklin? Have you seen how many companies are moving their HQ to Franklin?

Nashville has had a mass influx of young professionals over the last decade. They are living predominantly in the high rise apartments downtown. Where do you think they are all moving to once they have children and need more space and better schools?

I can't recommend the place enough.

In terms of investing here, it depends on what you are looking for. The rent to value is not great. It's mostly class A owner occupied. There are places that will yield better rent to value ratios. It just depends what you want. I had an investor a few years ago where all he cared about was being in the best school zones. So this location worked for him.

If you want to talk more please reach out. I know the area very well.

3 Reply

Bradley BuxtonBusiness Member

Real Estate Agent · NV · Member since 2023 · 1k+ posts · 713 votes

2y

@Eric Rice

I'm an ex CA resident and was in a similar situation looking for an appreciation market. We looked at UT, CO, and OR because we still wanted better weather and near the mountains. We ended up in northern Nevada Reno /Tahoe area. The no state income tax was a big draw. It's landlord friendly, and the property taxes are low. (they don't reassess with the sale like CA). The Tesla factory and other tech companies moving to the area is a big plus. Close to CA to visit family and friends is also a nice benefit.

1 Reply

Eric Rice

OP

Member since 2023 · 12 posts · 4 votes

2y

Quote from @Luka Milicevic:

@Eric Rice

Are you sure you're talking about the right Franklin TN? That's the furthest description of Franklin that I could think of.

I live in Franklin and it is the goal of everyone in the area to eventually move there. My wife and I constantly talk about it - Once you move here and experience it, there is no going back to your old life.

The pros you mentioned are spot on, but I have to add a few.

The city is incredibly clean and well maintained. Can't emphasize that enough. I bike early in the morning - 5am. The landscaping crews are already out at that time with headlamps mowing grass, mulching, trimming, etc. Sanitation department has brush pick up every week. Leaf pick up through out the fall and winter. The city has predominantly buried utility lines so there are few overhanging power lines. This doesn't seem like a big deal until you actually go somewhere else and notice how big of a deal it is. They implemented under ground utilities decades ago so even the old subdivisions built in the 90s don't have overhanging power lines.

You're skeptical about the growth??? Have you seen what's in the pipeline? Do you know how many companies that you've heard of are headquartered in Franklin? Have you seen how many companies are moving their HQ to Franklin?

Nashville has had a mass influx of young professionals over the last decade. They are living predominantly in the high rise apartments downtown. Where do you think they are all moving to once they have children and need more space and better schools?

I can't recommend the place enough.

In terms of investing here, it depends on what you are looking for. The rent to value is not great. It's mostly class A owner occupied. There are places that will yield better rent to value ratios. It just depends what you want. I had an investor a few years ago where all he cared about was being in the best school zones. So this location worked for him.

If you want to talk more please reach out. I know the area very well.

I absolutely agree about the area. We have visited twice and really love it in general.

Obviously when I talk about amenities, I am talking about shopping and certain types of commercial businesses. For example, we enjoy frequenting South Coast Plaza in Costa Mesa and Century City Mall. While the mall near/in Brentwood isn't bad, it felt very crowded to us and didn't have the variety that we are used to. It's not a dealbreaker, but it's just something relevant and significant for us personally.

Regarding my commentary on growth, I am not doubting the long-term growth element that is clearly there. My focus at the moment is on short-ish term. Should I buy in an area where the real estate prices show some signs of decline (outside of some new builds of course)? If I wait, how long should I wait? The economy isn't looking so hot at the moment. I've been reading about 10s of thousands of layoffs recently. Are there businesses in Franklin that might experience the same thing soon? If that happens, how will it affect the market there?

On a side note, I did hear the eastern headquarters for In-N-Out will be in Franklin. That alone is basically another selling point for someone from California.

My problem is, I need to create a source of revenue for my family. The fear comes from my experience in 2007, when we bought our current home. Within a month or two we were down hundred of thousands in our home's value. It was, needless to say, a bit traumatic, and we don't want to go through that again.

I'm trying to do my due diligence on this decision, but timing is also a concern and it has always been something I've had bad luck with.

0 Reply

Eric Rice

OP

Member since 2023 · 12 posts · 4 votes

2y

Quote from @Bradley Buxton:

@Eric Rice

I'm an ex CA resident and was in a similar situation looking for an appreciation market. We looked at UT, CO, and OR because we still wanted better weather and near the mountains. We ended up in northern Nevada Reno /Tahoe area. The no state income tax was a big draw. It's landlord friendly, and the property taxes are low. (they don't reassess with the sale like CA). The Tesla factory and other tech companies moving to the area is a big plus. Close to CA to visit family and friends is also a nice benefit.

Thank you, I'll look into that a little bit today. We do enjoy Lake Tahoe, and I have a friend that lives in Reno. Might be interesting. I'm actually surprised I didn't think of it before.

1 Reply

Axel MeierhoeferPro Member

Rental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes

2y

@Eric Rice Maybe I am too dense but I read your post a few times and I am missing the separation of where you want to live and what you want for investing.

I mentor people who want to invest in residential real estate to generate cash flow. From LA (I am in San Diego), to get good performance of the investment, I recommend to turn the invests you are willing to make into a small business. (I can expand more about it you are interested).

You or your wife can run it and have all the benefits of real estate investing. Your post seems to indicate that you like to develop a passive income portfolio. That's exactly what we do using 1% and 2% properties in well-performing markets.

Running it as a business means you hire all the needed services. You have property management, insurance, loans/mortgages from banks and lenders, you and tax person, and maybe someone like me who provides you with already vetted deals from trusted providers.

Yu can get some mid-size deals that maybe pay $300/month or less financed deals that pay about $800/month.

All this and a lot more details I am happy to discuss with you and your wife is related to your investing business.

Independent of that should be where you want to live. That's where your list comes in. The only connection I see is the initial cost of the place you get in your new location.

If you move to Austin I would rent right now. The other two locations you could buy a nice place with a regular mortgage. If you or your wife are eligible for VA, even better.

The investing is separate from the place you live.

I live in San Diego and in Spain and my investments are in the Midwest.

The main reason is the performance of the investments - basically the balance of purchase price and rent income.

If your investing goals change to something else, i.e, appreciation, the situation is totally different.

1 Reply

Luka Milicevic

Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes

2y

@Eric Rice

If you're looking at a short term outlook I would say real estate is not the vehicle you should be looking into. The most important ingredient in real estate is time. You're better off flipping or developing property with a short term outlook.

The economy not looking hot and trying to time the market is a fools game. Imagine in March 2020 you looked at the economy and decided to wait on the sidelines...or worse sell. The economy was shutting down (literally), SP 500 was in free fall, widespread panic. What would have happened? You just missed out on 10 years of appreciation in 2 years.

You will never be able to time the market and trying to time the market will cost you much more than you will lose in any downtown of any kind.

1 Reply

Eric Rice

OP

Member since 2023 · 12 posts · 4 votes

2y

@Axel Meierhoefer
Hi Axel, thanks for taking the time to reply to my post.

You are obviously correct in that there aren't inherently any reasons we have to live where our investments are.

Because we are relatively new to real estate investing, I wanted to be close by for convenience mostly. I am focusing on the investment side mainly for the purposes of this post, but we are also moving. I selected places that we are both familiar with and are interested in living just to start. Any divergence is completely fine, as long as it makes sense.

0 Reply

Eric Rice

OP

Member since 2023 · 12 posts · 4 votes

2y

Quote from @Luka Milicevic:

@Eric Rice

If you're looking at a short term outlook I would say real estate is not the vehicle you should be looking into. The most important ingredient in real estate is time. You're better off flipping or developing property with a short term outlook.

The economy not looking hot and trying to time the market is a fools game. Imagine in March 2020 you looked at the economy and decided to wait on the sidelines...or worse sell. The economy was shutting down (literally), SP 500 was in free fall, widespread panic. What would have happened? You just missed out on 10 years of appreciation in 2 years.

You will never be able to time the market and trying to time the market will cost you much more than you will lose in any downtown of any kind.

I agree with you completely. I have tried timing things before and failed miserably. Another source of my anxiety.

I'm not necessarily trying to time the market perse. I just don't want to dip my toes in just in time to get frozen in place. Whatever we buy I expect we will hold on to for 10+ years. I'm just trying to pick as wisely as possible so that whatever potential economic issues are ahead, I can at least be somewhere with some resistance to it if possible.

Based on my research I think both Austin and Franklin are decent choices. Any economic downturn shouldn't hurt them too badly if my assumptions are correct. I'm just a little nervous and was hoping to gain a little extra insight before making a choice.

I just have the feeling that I'm missing something, and its difficult for me to commit to any place or investment until I resolve this.

1 Reply

Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

2y

Quote from @Eric Rice:

I'm in desperate need of some guidance or reassurance at the moment. I am feeling overwhelmed by options, things I've learned, and fear of the future.

Right now my wife and I are trying to make a huge, potentially life altering, decision. After reading books, watching videos, and learning a lot about the ins and outs of real estate investing, we are at the point where we need to make a move (or decide not to).

We have some money we would like to invest, and we are thinking real estate would be the route to take. We absolutely need this investment to become an income stream for us. We will likely move wherever we decide to invest.

We have been looking at a few different places. I'll share what we are seeing/thinking and invite any corrections or advice.

1. Austin, TX:

Pros: We like the growth and the business development going on in the area. There are areas where we believe over the next 10 years the job growth will aid us in some nice appreciation. The amenities are fantastic (shopping, restaurants, activities, etc.)

Cons: We are trying to get away from crime and other "factors" about LA that we dislike, and in many ways this city feels like a mini-Los Angeles (homelessness, crime, etc.).

2. Franklin, TN:

Pros: We love the place, the people are nice, and it seems to have a lot of what we are looking for. It appears that there has been a lot of growth here in recent years. Fantastic schools.

Cons: I'm skeptical about how well the growth will continue on over the next 5+ years, especially with the questionable economic situation ahead. When we visited Franklin and the surrounding areas, there is an ocean of new building developments. The builders keep jacking the prices up and finding a good deal (or even knowing what a good deal is) is difficult. Other areas nearby that were touted as being major growth hubs like Murfreesboro appear to already be experiencing some price declines. Franklin seems to have a little of this, but not as bad. Also, the amenities aren't the greatest. The restaurant options are alright, but the shopping is so-so and you have to drive a long time to get there depending on where you're at.

3. Springfield, MO

Pros: For a city in Missouri, it does seem to draw people in to some extent and there is growth. The real estate prices are much lower and therefore we can diversify the risk across multiple properties potentially. I also have some ties to the area. The property cost vs rental rates in the area are pretty decent. For one half or one third of the cost, I can get similar rental income per property in Springfield that I could get in the Franklin area.

Cons: Appreciation is MUCH slower. Where the rental income shines, the appreciation misses the mark. Amenities are poor, crime is higher, schools aren't great. (Although one area in Willard, which is northwest of Springfield, does have good schools.)

I am also looking at the map of the United States and researching different places trying to find what I'm looking for. I feel like maybe I'm asking for too much with this investment. I want it all. Good amenities, low crime, reasonable prices with decent CoCROI. I'm sure some of you will laugh about it, but I'm just trying to figure out which things I should be sacrificing. This is going to affect my entire family a lot. I want to bring them somewhere they can be happy, but I also want to create a situation where there is a good investment producing income that they can rely on if I'm no longer able to be there.

Thank you for reading my message, and any feedback is very much appreciated.

>we are thinking real estate would be the route to take. We absolutely need this investment to become an income stream for us.

I have done well in RE, but I do not consider it low risk. If you absolutely need the investment to produce an income stream then RE is likely not the best choice. It has risk, its returns varies. There can be times like the Great Recession that affected income in many markets or Covid that resulted in many tenants not making their rent payments. In addition, residential RE is not passive even with the use of a PM.

I question if RE is the right choice for you. In addition, the current market has severe challenges due to the rates having doubled since early 2022. Commercial residential has suffered large property value declines (as has office space) in the last 2 years.

There are safe passive investments that can provide reliable returns.

Good luck

2 Reply

Michael SmytheBusiness Member

Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes

2y

First figure out the property Class you want to invest in, THEN figure out the corresponding area to invest in.

When investing in areas they don’t really know, investors should research the different property Class submarkets. If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

Our OPINION for the Metro Detroit market (always verify each area for yourself!):

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

Logical Property Management4.9453 Reviews

Website View Page

2 Reply

Rachel Chwaszczewski

Investor · Charlotte Metro and Surrounding Areas · Member since 2023 · 10 posts · 7 votes

2y

Just some food for thought to help navigate the analysis paralysis; we have often found that looking what our long/short term goals are as a whole and for the particular investment itself is incredibly helpful in feeling better about the decision that is being made. Alignment of these goals can help you clarify what exactly you want and need to get out of a particular investment. Hope that helps!

1 Reply

Todd Rasmussen

Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes

2y

@Eric Rice

What type of investing are you planning to do? Long distance and first investment I'm assuming you're looking at rentals, in which case I'm not sold on Franklin. Franklin is a beautiful town that everyone wants to live in, but as a result prices are very high and I'm not sure you are going to get as much of a return as you could on the other side of Nashville. We have scaled in SFH rentals in Clarksville to the point we "retired" last year and moved out here from Los Angeles to do it full time.

1 Reply

Carlos Ptriawan

Member since 2019 · 7k+ posts · 4k+ votes

2y

Quote from @Eric Rice:

I'm in desperate need of some guidance or reassurance at the moment. I am feeling overwhelmed by options, things I've learned, and fear of the future.

Right now my wife and I are trying to make a huge, potentially life altering, decision. After reading books, watching videos, and learning a lot about the ins and outs of real estate investing, we are at the point where we need to make a move (or decide not to).

We have some money we would like to invest, and we are thinking real estate would be the route to take. We absolutely need this investment to become an income stream for us. We will likely move wherever we decide to invest.

We have been looking at a few different places. I'll share what we are seeing/thinking and invite any corrections or advice.

1. Austin, TX:

Pros: We like the growth and the business development going on in the area. There are areas where we believe over the next 10 years the job growth will aid us in some nice appreciation. The amenities are fantastic (shopping, restaurants, activities, etc.)

Cons: We are trying to get away from crime and other "factors" about LA that we dislike, and in many ways this city feels like a mini-Los Angeles (homelessness, crime, etc.).

2. Franklin, TN:

Pros: We love the place, the people are nice, and it seems to have a lot of what we are looking for. It appears that there has been a lot of growth here in recent years. Fantastic schools.

Cons: I'm skeptical about how well the growth will continue on over the next 5+ years, especially with the questionable economic situation ahead. When we visited Franklin and the surrounding areas, there is an ocean of new building developments. The builders keep jacking the prices up and finding a good deal (or even knowing what a good deal is) is difficult. Other areas nearby that were touted as being major growth hubs like Murfreesboro appear to already be experiencing some price declines. Franklin seems to have a little of this, but not as bad. Also, the amenities aren't the greatest. The restaurant options are alright, but the shopping is so-so and you have to drive a long time to get there depending on where you're at.

3. Springfield, MO

Pros: For a city in Missouri, it does seem to draw people in to some extent and there is growth. The real estate prices are much lower and therefore we can diversify the risk across multiple properties potentially. I also have some ties to the area. The property cost vs rental rates in the area are pretty decent. For one half or one third of the cost, I can get similar rental income per property in Springfield that I could get in the Franklin area.

Cons: Appreciation is MUCH slower. Where the rental income shines, the appreciation misses the mark. Amenities are poor, crime is higher, schools aren't great. (Although one area in Willard, which is northwest of Springfield, does have good schools.)

I am also looking at the map of the United States and researching different places trying to find what I'm looking for. I feel like maybe I'm asking for too much with this investment. I want it all. Good amenities, low crime, reasonable prices with decent CoCROI. I'm sure some of you will laugh about it, but I'm just trying to figure out which things I should be sacrificing. This is going to affect my entire family a lot. I want to bring them somewhere they can be happy, but I also want to create a situation where there is a good investment producing income that they can rely on if I'm no longer able to be there.

Thank you for reading my message, and any feedback is very much appreciated.

Missouri

1 Reply

Johann Villalvir

Real Estate Consultant · San Francisco, CA · Member since 2023 · 109 posts · 71 votes

2y

You should definitely add Indianapolis, IN to your list of choices

2 Reply

Carlos Ptriawan

Member since 2019 · 7k+ posts · 4k+ votes

2y

Quote from @Eric Rice:

I'm in desperate need of some guidance or reassurance at the moment. I am feeling overwhelmed by options, things I've learned, and fear of the future.

Right now my wife and I are trying to make a huge, potentially life altering, decision. After reading books, watching videos, and learning a lot about the ins and outs of real estate investing, we are at the point where we need to make a move (or decide not to).

We have some money we would like to invest, and we are thinking real estate would be the route to take. We absolutely need this investment to become an income stream for us. We will likely move wherever we decide to invest.

We have been looking at a few different places. I'll share what we are seeing/thinking and invite any corrections or advice.

1. Austin, TX:

Pros: We like the growth and the business development going on in the area. There are areas where we believe over the next 10 years the job growth will aid us in some nice appreciation. The amenities are fantastic (shopping, restaurants, activities, etc.)

Cons: We are trying to get away from crime and other "factors" about LA that we dislike, and in many ways this city feels like a mini-Los Angeles (homelessness, crime, etc.).

2. Franklin, TN:

Pros: We love the place, the people are nice, and it seems to have a lot of what we are looking for. It appears that there has been a lot of growth here in recent years. Fantastic schools.

Cons: I'm skeptical about how well the growth will continue on over the next 5+ years, especially with the questionable economic situation ahead. When we visited Franklin and the surrounding areas, there is an ocean of new building developments. The builders keep jacking the prices up and finding a good deal (or even knowing what a good deal is) is difficult. Other areas nearby that were touted as being major growth hubs like Murfreesboro appear to already be experiencing some price declines. Franklin seems to have a little of this, but not as bad. Also, the amenities aren't the greatest. The restaurant options are alright, but the shopping is so-so and you have to drive a long time to get there depending on where you're at.

3. Springfield, MO

Pros: For a city in Missouri, it does seem to draw people in to some extent and there is growth. The real estate prices are much lower and therefore we can diversify the risk across multiple properties potentially. I also have some ties to the area. The property cost vs rental rates in the area are pretty decent. For one half or one third of the cost, I can get similar rental income per property in Springfield that I could get in the Franklin area.

Cons: Appreciation is MUCH slower. Where the rental income shines, the appreciation misses the mark. Amenities are poor, crime is higher, schools aren't great. (Although one area in Willard, which is northwest of Springfield, does have good schools.)

I am also looking at the map of the United States and researching different places trying to find what I'm looking for. I feel like maybe I'm asking for too much with this investment. I want it all. Good amenities, low crime, reasonable prices with decent CoCROI. I'm sure some of you will laugh about it, but I'm just trying to figure out which things I should be sacrificing. This is going to affect my entire family a lot. I want to bring them somewhere they can be happy, but I also want to create a situation where there is a good investment producing income that they can rely on if I'm no longer able to be there.

Thank you for reading my message, and any feedback is very much appreciated.

one thing that you should consider is the city regulation to rental and also property tax, it seems you are going to hit the typical mistake of newbie investor by investing without analyzing city and taxes.

1 Reply

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

2y

@Eric Rice

just to be up front and not sugarcoat anything... I agree with @Dan H.

you said you need it to be an "income stream." that's fine - but are you able to wait 3 or 5 or 10 years? that is when the payoff and the income happens.

anyone promising you "cash flow" in month 1 is selling something. that is not the way the market is working right now. this is how OOS investing works:

https://www.biggerpockets.com/forums/48/topics/1159104-overl...

over and over CA investors buy a property in the midwest that looks great on paper and turns into a money pit. the only way not to do that is to spend time in your chosen market in person, have patience, and potentially wait years like i said for that payoff.

if you're willing, go to your chosen market every month in person to look at properties, build your team, get to know different neighborhoods, go to REIA meetings, etc. if you can't do that then maybe RE isn't for you (or you should invest locally).

2 Reply

James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

2y

Quote from @Luka Milicevic:

@Eric Rice

Are you sure you're talking about the right Franklin TN? That's the furthest description of Franklin that I could think of.

I live in Franklin and it is the goal of everyone in the area to eventually move there. My wife and I constantly talk about it - Once you move here and experience it, there is no going back to your old life.

The pros you mentioned are spot on, but I have to add a few.

The city is incredibly clean and well maintained. Can't emphasize that enough. I bike early in the morning - 5am. The landscaping crews are already out at that time with headlamps mowing grass, mulching, trimming, etc. Sanitation department has brush pick up every week. Leaf pick up through out the fall and winter. The city has predominantly buried utility lines so there are few overhanging power lines. This doesn't seem like a big deal until you actually go somewhere else and notice how big of a deal it is. They implemented under ground utilities decades ago so even the old subdivisions built in the 90s don't have overhanging power lines.

You're skeptical about the growth??? Have you seen what's in the pipeline? Do you know how many companies that you've heard of are headquartered in Franklin? Have you seen how many companies are moving their HQ to Franklin?

Nashville has had a mass influx of young professionals over the last decade. They are living predominantly in the high rise apartments downtown. Where do you think they are all moving to once they have children and need more space and better schools?

I can't recommend the place enough.

In terms of investing here, it depends on what you are looking for. The rent to value is not great. It's mostly class A owner occupied. There are places that will yield better rent to value ratios. It just depends what you want. I had an investor a few years ago where all he cared about was being in the best school zones. So this location worked for him.

If you want to talk more please reach out. I know the area very well.

I 2nd, 3rd and 4th Luka here. I recently toured TN for a couple weeks, was a "deep-dive tour" and Franklin was one of our target tour's, not for investing but for residence. The wife generally does the research and drafting for residence areas, happy-wife haapy'ish-life right, lol. But Franklin really surprised me, it was a whole other level I gotta say. That's comparing against the best Dallas/Houston/TX Gulf Coast "burbs" have to offer. Yeah, no joke I credit Franklin clearing that high a bar.

For investing purposes TN bothers me on the gap between median incomes and median prices, that's troubling. Growth is in many part's/way's off the chart's but I question how much thought is going into intelligent planned, structured growth and how much is just buck-wild unchecked growth. City services matter, and I found that sorely lacking TN wide, little things that make big differences like parks, sidewalks, drainage waste water etc etc..

Nashville is simply awesome, but sorely lacking parking. But, maybe an opportunity in disguise of a headache.

But Franklin.... as our TN guide's said to us Franklin is not where persons go to "make-it", ya move there because you "made-it", lol. They were TN locals' so temper it with that, didn't seem to bougie to me but it was exceptionally nice. I also thought Chattanooga was "ok", and was told I was being a bit of a "snob" as it's supposed to be rather amazing or something, lol.

2 Reply

James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

2y

Quote from @Eric Rice:

I'm in desperate need of some guidance....
....We absolutely need this investment to.......
....trying to find what I'm looking for.

Ok, guidance you want Eric.... REAL no BS legit actual guidance not just pandering pitches to "come to where i can make some money off selling you stuff".... Ok, here it is:
Your heads so far in the cloud's of fantasy land that we'd need a telescope to see your toe's....... In now way shape or form are you being realistic, responsible, or actionable.

Perfection is not a location on a map.

Success is MADE. Success is a construct of forming idea, effort, blood, sweat and tears into physical existence. Failure IS the norm, success is the rebel living in flagrant denial to the norm. That's reality.
I don't know a single investor of business owner of success who doesn't have hours upon hours of tales of all the sh#t one has gone through over the years, the near misses, the fail-up's, the actions and effort's on the road to "success".

Nothing of this is realistic. Realistic is picking your home, your chosen community, and than putting in the work to earn your career, and place in it.

2 Reply

Luka Milicevic

Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes

2y

@James Hamling

You considered moving here and didn't tell me???? Come on now....

A house in my neighborhood just went under contract. What a missed opportunity, I could have had a RE mastermind as a neighbor!!!

What you said about Nashville is all spot on. I will add a few comments on recent developments.

The city.....and more so the residents are finally waking up to the problems that we have developed with the mass, almost unchecked growth over the past 10 years. The new mayor is heavily pushing infrastructure overhaul. He was formerly on the mass transit committee and has a pretty good handle when it comes to that. The former mayor had a proposal 5 years ago that was too ambitious and too ahead of its time. It was voted down. We have another referendum vote in November that I think might have a fighting chance.

The airport is also having a MASSIVE expansion. Complete overhaul, new terminals, dedicated bus lanes, new interstate exits/on ramps, etc.

Let me know when you decide to make the move to Franklin :-)

0 Reply

Evan HoppleBusiness Member

Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2023 · 284 posts · 420 votes

2y

@Eric Rice

Live where you want to live and invest where you want to invest. Binding your living arrangement with your investments is tough and you most likely won't be able to optimize both

[email protected]614-924-8151

Reafco Real Estate

View Page

2 Reply

Eric Rice

OP

Member since 2023 · 12 posts · 4 votes

2y

Quote from @Michael Smythe:

First figure out the property Class you want to invest in, THEN figure out the corresponding area to invest in.

When investing in areas they don’t really know, investors should research the different property Class submarkets. If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

Our OPINION for the Metro Detroit market (always verify each area for yourself!):

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

That is very interesting. I haven't seen it all laid out like this before. Although I imagine it might be slightly different in various regions, this is a great starting point. Thank you so much.

0 Reply

Eric Rice

OP

Member since 2023 · 12 posts · 4 votes

2y

Quote from @Dan H.:

Quote from @Eric Rice:

I'm in desperate need of some guidance or reassurance at the moment. I am feeling overwhelmed by options, things I've learned, and fear of the future.

Right now my wife and I are trying to make a huge, potentially life altering, decision. After reading books, watching videos, and learning a lot about the ins and outs of real estate investing, we are at the point where we need to make a move (or decide not to).

We have some money we would like to invest, and we are thinking real estate would be the route to take. We absolutely need this investment to become an income stream for us. We will likely move wherever we decide to invest.

We have been looking at a few different places. I'll share what we are seeing/thinking and invite any corrections or advice.

1. Austin, TX:

Pros: We like the growth and the business development going on in the area. There are areas where we believe over the next 10 years the job growth will aid us in some nice appreciation. The amenities are fantastic (shopping, restaurants, activities, etc.)

Cons: We are trying to get away from crime and other "factors" about LA that we dislike, and in many ways this city feels like a mini-Los Angeles (homelessness, crime, etc.).

2. Franklin, TN:

Pros: We love the place, the people are nice, and it seems to have a lot of what we are looking for. It appears that there has been a lot of growth here in recent years. Fantastic schools.

Cons: I'm skeptical about how well the growth will continue on over the next 5+ years, especially with the questionable economic situation ahead. When we visited Franklin and the surrounding areas, there is an ocean of new building developments. The builders keep jacking the prices up and finding a good deal (or even knowing what a good deal is) is difficult. Other areas nearby that were touted as being major growth hubs like Murfreesboro appear to already be experiencing some price declines. Franklin seems to have a little of this, but not as bad. Also, the amenities aren't the greatest. The restaurant options are alright, but the shopping is so-so and you have to drive a long time to get there depending on where you're at.

3. Springfield, MO

Pros: For a city in Missouri, it does seem to draw people in to some extent and there is growth. The real estate prices are much lower and therefore we can diversify the risk across multiple properties potentially. I also have some ties to the area. The property cost vs rental rates in the area are pretty decent. For one half or one third of the cost, I can get similar rental income per property in Springfield that I could get in the Franklin area.

Cons: Appreciation is MUCH slower. Where the rental income shines, the appreciation misses the mark. Amenities are poor, crime is higher, schools aren't great. (Although one area in Willard, which is northwest of Springfield, does have good schools.)

I am also looking at the map of the United States and researching different places trying to find what I'm looking for. I feel like maybe I'm asking for too much with this investment. I want it all. Good amenities, low crime, reasonable prices with decent CoCROI. I'm sure some of you will laugh about it, but I'm just trying to figure out which things I should be sacrificing. This is going to affect my entire family a lot. I want to bring them somewhere they can be happy, but I also want to create a situation where there is a good investment producing income that they can rely on if I'm no longer able to be there.

Thank you for reading my message, and any feedback is very much appreciated.

>we are thinking real estate would be the route to take. We absolutely need this investment to become an income stream for us.

I have done well in RE, but I do not consider it low risk. If you absolutely need the investment to produce an income stream then RE is likely not the best choice. It has risk, its returns varies. There can be times like the Great Recession that affected income in many markets or Covid that resulted in many tenants not making their rent payments. In addition, residential RE is not passive even with the use of a PM.

I question if RE is the right choice for you. In addition, the current market has severe challenges due to the rates having doubled since early 2022. Commercial residential has suffered large property value declines (as has office space) in the last 2 years.

There are safe passive investments that can provide reliable returns.

Good luck

Thank you for the reality check. We are aware of the risk, but also actively trying to take steps to reduce it as much as possible. While I stand by what I said about needing the income stream, I don't think we will become destitute if it doesn't work out. It's more so that it will push us backwards pretty far relative to our goals.

0 Reply

Eric Rice

OP

Member since 2023 · 12 posts · 4 votes

2y

Quote from @Rachel Chwaszczewski:

Just some food for thought to help navigate the analysis paralysis; we have often found that looking what our long/short term goals are as a whole and for the particular investment itself is incredibly helpful in feeling better about the decision that is being made. Alignment of these goals can help you clarify what exactly you want and need to get out of a particular investment. Hope that helps!

That does help, and is a really good point. Thank you.

0 Reply

Too many options, scared to make a wrong decision

Too many options, scared to make a wrong decision

Most Popular Reply

35 Replies