Best states to buy n hold in

Buying & Selling Real Estate
12yFollow

Best states to buy n hold in

Dan Chapman
Lender · Kirkland, WA · Member since 2014 · 45 posts · 9 votes

HI, I am looking to invest out of my area as I live in California. I am familiar with a few other markets such as Denver and Seattle but they are a bit spendy too.

What states are good for lower purchase prices and greater ROI?

I have heard Texas, Tenn, Indiana...are good would be nice to buy closer to where I live though. Opinions and success stories?

thanks, Dan

MODERATOR:  OK, MY USUAL WARNING HERE.  IF YOU POST A RECOMMENDATION OF WHERE TO BUY PROVIDE INFORMATION AS TO WHY YOUR RECOMMENDATION IS A GOOD ONE.  "BECAUSE I HAVE PROPERTIES FOR SALE IN THAT AREA" IS A REALLY BAD REASON TO RECOMMEND AN AREA.

3Reply
177 views

Most Popular Reply

Tiffany Plovie
Bellevue, WA · Member since 2014 · 183 posts · 86 votes
12y

As an investor, the moment I see a city hit a Forbes or Money magazine top 'whatever' list, I stop looking in that area.

Why? Because every other Tom, Dick and Harry who fancies themselves a real estate 'investor' will be flooding those markets, paying more than what a property is worth and creating undue competition for properties that are quickly becoming overvalued anyway.

I use these lists to provide me with data about the next up and coming markets. I look at areas just slightly outside the areas listed and look for deals there.

7Reply
See this reply in the discussion

75 Replies

Jump to latestLatest
  • Robert AdamsBusiness Member
    Real Estate Broker · Henderson, NV · Member since 2009 · 1k+ posts · 373 votes
    12y
    Originally posted by @Angie B.:

    @Andrew Syrios I was going to post that same link. However that map also has to be taken with a grain of salt, since it is just applying a formula using median sales prices and rental prices and not looking at vacancy statistics or other economic factors associated with the area. Likewise, trulia heat maps are fun to look at as well to get a general idea, with the same caveats I just mentioned. I like to zoom in on an area and click back and forth on listing price and rental price to see which areas might be worth looking into. http://www.trulia.com/home_prices/

     I wouldn't use trulia or zillow for price valuations. Both have inaccurate 3rd party data.

    [email protected]702-349-9175
    The Adams Team at Rothwell Gornt Companies4.970 Reviews
    WebsiteView Page
    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    One can find nice cash flow in many parts of CA OR and WA.. just need to look at smaller venues. your not going to find what happens in the mid west were houses are routinely bought for 5 to 15k and put 10k into them and then West coast marketing companys partner with mid west TK guys and your price gets inflated.. There is a reason those properties are that price.. The reality is they never really go anywhere in value.. Where in CA. or OR or Wa you hit the right place and your house could double in 3 years never going to happen east of the rockies in the low end rental markets.

    If your inclined to go East then buy the best you can.. You will be hard pressed to collect rents on super low end properties and then end up like 1000's of other investors wondering what the heck you were thinking... I like PHX and Vegas... And I like anything that you can actually find on MLS in mid west markets that are in Owner occ neighborhoods.. those will rent easy and stay rented just don't get sucked into buying properties because they cost less than the Porsche your driving.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Robert Adams 

    And I strongly concur with Roberts statement about on line valuations.. as a hard money lender in my day... we would use these to get a ball park but they were often so out of wack either way low and not fair to borrower or way high and very risky to lender.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @James Park 

     Could not agree with you more.. I grew up in Cupertino CA in the 60's and 70's probably before a lot of you were born LOL.. It was 98% white.. We had the best public schools in CA along with Palo Alto Monta Vista Saratoga etc.. Well we experienced the Asian migration starting in the mid 70's What you get is a highly educated and motivated demographic that has money and loves to pay cash for houses and your neighborhoods will appreciate well above the norm. The last 49er game I was at the Cupertino HIgh school band played and it was 90% Asian compared to 30 years early and it would have been 98% white..

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Sharad M.Pro Member
    Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
    12y

    @Jay Hinrichs That's an excellent point. That's the market I am working in and we find it very easy to rent with long term good quality tenants. We lose some properties to owner occupants, because they are willing to pay more than us as investors. But that's a good thing for our long term investment value.

    Some of the houses that we are working on or own, we receive very strong interest from people living on the block or their families to purchase some of those properties.

    Podcast Guest on Show #155
    1Reply
  • James Park
    Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    12y
    @Jay Hinrichs

    Thank you for explaining this to Pete T. for me. I touched my theory on the Asian migration that took place in Cupertino, 10 years later took place in Irvine which then is taking place South Forsyth & Johns Creek 15 years later. I wrote about this in my North Atlanta Market update in Bigger Pockets.

    http://www.biggerpockets.com/forums/99/topics/108652-atlanta-market-update

    Although the demographics are not identical to that of Irvine, the area I live in and invest in is very similar to the demographics of the early Asian pioneers of Irvine California 15-20 years ago.

    Irvine Unified School District: Among some of the top ranking high schools in California.

    1. University High
    2. Northwood High
    3. Irvine High
    4. Woodbridge High

    Irvine population

    Year Population % Growth
    1971 10,081 - Year of Incorporation
    1980 62,127 616%
    1990 110,330 78%
    2000 143,072 30%
    2010 212,375 48%
    2020 308,943 45% - My prediction

    Irvine Median home price history:

    1988 $216,464
    1989 $237,410
    1990 $239,024
    1991 $242,877
    1992 $237,451
    1993 $230,598
    1994 $228,529
    1995 $229,959
    1996 $246,865
    1997 $245,437
    1998 $263,172
    1999 $278,148
    2000 $308,089
    2001 $334,741
    2002 $379,852
    2003 $461,888
    2004 $609,397
    2005 $635,675
    2006 $722,928
    2007 $665,807



    Originally posted by @Jay Hinrichs:
    @James Park
    Could not agree with you more.. I grew up in Cupertino CA in the 60's and 70's probably before a lot of you were born LOL.. It was 98% white.. We had the best public schools in CA along with Palo Alto Monta Vista Saratoga etc.. Well we experienced the Asian migration starting in the mid 70's What you get is a highly educated and motivated demographic that has money and loves to pay cash for houses and your neighborhoods will appreciate well above the norm. The last 49er game I was at the Cupertino HIgh school band played and it was 90% Asian compared to 30 years early and it would have been 98% white..
    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @James Park 

      how come your post is in light font ?  is that like ordering off the secret menu at In and Out  burger.  everyone else is dark...   would you run the numbers on Cupertino that would be exciting... My parents bought there home there for 27k in 1972... probably worth 1.2 to 1.4 now.  And I bought in Palo Alto in 1983 for 185k  but PA was more of a melting pot.. the grade school my kids went to there were kids from over 20 countries. Most because imports to HI Tech or Stanford U.  Going to have to check out your area in GA.. Because for certain that will be the highest appreciating area in the state without any question based on my experience.. the other areas of CA that saw dramatic value changes like SF were along the lifestyle lines.. were certain areas were bought up and totally transformed.. there is an area like that in Indy right now

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Steve B.
    Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
    12y
    Midwest best generally GRM's. Some of those states are actually growing. Hint : not Ohio. If you want appreciation with you cash flow that's going to take a more skillful analysis or lucky guess
    0Reply
  • Aaron Mazzrillo
    Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
    12y

    My favorite California investor is the one who thinks it's too expensive to buy here so they go out of state. It just leaves all these amazing opportunities lying around for me to pick up. Thanks and I hope you enjoy whatever it is you end up buying... if you ever get to see it.

    1Reply
  • Cory E.
    Real Estate Broker · Berkshire County, MA · Member since 2014 · 81 posts · 23 votes
    12y
    Some great info in this thread, I've recently been discussing a new state to invest in with my brother, we can't seem to decide. We have been leaning toward North Carolina.
    0Reply
  • Qulia Brunson
    Real Estate Broker · Charlotte, NC · Member since 2014 · 76 posts · 21 votes
    12y

    I agree with JPM. You have to follow the industries. Where are Fortune 500s located? What new factory or dealership is coming to town? Where are the best school systems or universities? Study your economics. For must this is a numbers game but so what if the numbers are right if the people aren't there to rent or buy.

    It's good to network with other real estate professionals but its even better to network with city officials. Here in Charlotte there is always rezoning and new construction going on. its an advantage to get first hand information from the city level.

    Now to answer your question: for the numbers game go Midwest. Tennessee, Ohio, St. Louis.

    For longevity study industries and the economy. I wouldn't use a Forbes list, although the city I'm in is listed but its more competition. You want to be in the city where other investors will learn of years after you've already been there and have them begging for your properties!!

    0Reply
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    12y

    If by "Buy n Hold" you mean monthly cashflow, Ohio and the Midwest is hard to beat. 

    Dayton, Ohio and the Midwest have a different dynamic than the coasts and other densely populated areas.

    We are dominated by a lot of available land for building, and often a surplus of housing stock. We had population declines when the auto manufacturing declined in the area, leaving behind more houses than families.

    As a result, there are lot of low priced homes available in decent rental areas. There are also areas where the majority of homes are essentially abandoned. (we don't buy there, but others do.)

    Combined, all those factors make for a great rental market, but low/no appreciation in a lot of areas.

    I read a report recently where Dayton has slight population uptick for the first time in something like 40 years, so the market dynamic may be slowly changing.

    0Reply
  • Bryan Kipke
    Investor · Nashville, TN · Member since 2014 · 35 posts · 11 votes
    12y

    Hi Dan,

    Tennessee is a great place to invest and specifically Nashville.  Downtown is undergoing a tremendous redevelopment and growth.  The Nashville area population is estimated to grow by 1,000,000 in 10 years or 100,000 a year.  Rent rates are OK but if you are looking to buy and hold it is a great time to find a house in an up and coming neighborhood and hold it for several years.  

    I do not have the stats in other cities but I believe that Chattanooga and Knoxville are also great buys right now.  I would stay away from Memphis.  Some might say that the rent ratios are amazing and prices are cheep, but there is a reason for that.  

    1Reply
  • Salvatore Lentini
    Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
    12y

    @Darrin Carey

    I was just about to post and ask if anyone had any thoughts on Dayton, OH. I'm from PA where I buy and hold and also flip.....but thinking of buying and holding in Dayton. Anyone else out there familiar with the area? Darrin, do you have any recent news stories you've come across. I've been digging around online and finding a mixed bag of thoughts on Dayton's prospects.

    0Reply
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    12y

    @Salvatore Lentini 

    Dayton Business Journal keeps a pretty good tab on what's happening. Here's a start.

    http://www.bizjournals.com/dayton/blog/2014/06/off...

    http://www.bizjournals.com/dayton/blog/morning_cal...

    http://www.bizjournals.com/dayton/blog/morning_cal...

    http://www.bizjournals.com/dayton/news/2014/06/11/...

    http://www.bizjournals.com/dayton/news/2014/06/11/...

    I'm seeing a lot a of jobs and job growth in the area, in a variety of industries. A lot of the companies are smaller (<1000 employees), so the new job base will be very diversified instead of dependent on a single industry or employer. When GM shut down the last big plant several years ago, it forced Dayton to open it's eyes to the future instead of clinging to the past.

    It's very different from when I moved here 10 years ago. Back then the area was on life support. Now I see new construction happening, and the area's starting to show life again. Companies who refused to put money into Dayton are now expanding. Everything combined makes me think Dayton's decline is over.

    There's still a lot of changing to happen and past neglect to clean up. I see that as an opportunity for real estate. I'm acquiring properties to buy and hold in key areas that will benefit from what's happening. I expect certain neighborhoods will appreciate very well, and in the meantime I collect positive cashflow.

    0Reply
  • Salvatore Lentini
    Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
    12y

    @Darrin Carey

    What are your thoughts on:

    1050-1060 section of Linden Ave, Dayton, Oh 45410

    If I could get a place for $15K that needs $5K in minor repairs to get it rental ready. Do you think $700/mo rent is likely/possible?

    0Reply
  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
    12y

    @Salvatore Lentini

    I'm assuming a 3 bedroom, which is the most common in that area. 

    Directly on Linden av, $700 is a stretch but possible. $700-$725 on a side street certainly. If it's the 4 bedroom, then you should be able to.

    I looked at a "house" in that section of Linden a couple months ago, turned out it was an empty lot. I'd certainly take the time to visit, or get a third party to give you a separate evaluation. 

    The rent will vary a lot depending on updates. The better tenants are looking for newer windows, efficient furnaces etc.

    0Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    12y

    @John E.  WOW! I'm so impressed with the quality of your posts, no matter what your age! I can't wait to hear about what you guys are going to be doing in he future. It's exciting to see young people on here with such passion and a hunger for knowledge. Keep it up! 

    0Reply
  • Account Closed
    Real Estate Investor · Member since 2013 · 35 posts · 11 votes
    12y
    Originally posted by @Patrick Snyder:

    I think most people become comfortable investing close to home, and can make good arguments for their choices. If it's me, I'd look for the lowest cost of ownership and maintenance, as well as purchase price. In addition, I would look for landlord friendly states, areas with a stable economy, and states that have low property taxes and low/no state income taxes. Having researched numerous markets in past years, and having more info now than five years ago, I would say Arizona, Texas, Nevada, and Florida fit the bill quite well.

    While Michigan has several markets with good price-to-rent ratio, when you factor in everything else, I think you can do better. The Midwest has pretty high property taxes, and unlike a mortgage payment, they never get paid off. I have relatives in Phoenix who own a $350k house and their taxes are like $1200/year. The cheapest house I own (in Lansing )has property taxes that are around $1800/year, and that's for a house that I bought for 30k.

    ...

    What is a high property tax?

    In Collin County (Plano, Allen, McKinney) Texas, my $127k taxable value house costs $3,151/year (2.48%) in tax... That is pretty steep in my book!  

    In North Carolina, my tax rates are around the 1% mark, depending on the county I am in.  For instance, a deal I am looking at right now in Mecklenburg County (Charlotte) has a tax value of $73k, and the tax is $962/year (1.32%).  This is in a higher priced county, but still!  The states you listed, at least Texas and Florida, have no income tax, but high (in my mind) property taxes... Just curious what your percentages are on your properties? 

    Thanks!

    1Reply
  • Fred Conway
    tampa, FL · Member since 2014 · 86 posts · 23 votes
    12y

    I think it's going to be more about the cities in those states than the actual states you purchase in. For example, it wouldn't be a good investment to buy a house in west Texas like Amarillo and expect it to gain any real value or produce cashflow because there is an overall lack of economy and population. Dallas and Fort Worth, along with the Houston are usually noted as great areas to buy and hold because of the good schools in the suburbs and career opportunities. More career focused individuals (in my opinion) would create a solid stream of renters because they are less likely to want to purchase a home if they know they may be moving on to another city or job in less than 3-5 years. Houston and Dallas have this type of environment vs cities where people are born and raised their entire life. I've heard cities with large millitary bases are good for this reason.

    0Reply
  • Patrick Snyder
    Real Estate Consultant · Lansing, MI · Member since 2011 · 356 posts · 306 votes
    12y

    The percentage is different on each house, mostly due to the fluctuation in prices. Assessors don't account for changes street to street, when that really makes a difference. The sev doesn't change when you buy a house, no matter what you pay for it.

    As for what's high versus low, it does depend on what you're used to. Taxes for a house around here in the 120k mark will also run around that three grand mark, and I do consider it high. But people who invest in Connecticut and New Jersey probably think three thousand is low. Considering you don't have the state tax, it makes a huge difference to your bottom line. It's the totality of cost of ownership that would dictate my choices if I was comfortable investing anywhere. Since property taxes can't be avoided ( although I think there's legislation in north Dakota to eliminate them), I think that Arizona and Nevada make good choices.

    1Reply
  • Patrick O'Sullivan
    Real Estate Broker · Phoenix, AZ · Member since 2010 · 52 posts · 12 votes
    12y

    I am a bit biased being in Arizona but there are good properties in good areas that may not get the cap rates in other markets, but people like to live here and are coming to Arizona. Even with our recent increase in pricing, there are good homes and multifamily properties that reach the market and even others that never do. Many of the bigger players have left town so demand is down and is now considered a buyer's market for the most part. You just have to know what you want, be prepared to jump and jump quickly.

    0Reply
  • Jay C.
    Seattle, WA · Member since 2014 · 308 posts · 170 votes
    12y

    @Dan Chapman

    This is a bit off topic but here goes.

    I have to wonder, why on earth would anyone want to buy and hold outside of their area? Take for instance Seattle. Certainly a hot market but a short drive away you pickup nice properties for far less. It goes without saying if you buy properties not in your area the headaches are compounded and costs as well. You are in effect at others mercy for honesty and having your interests in mind. Speaking for myself no thanks. Now for myself I take care of my properties myself. For someone who pardon the pun "doesnt have a clue" on repairs and such then my post is mute and they could buy rentals in China.. As this site is proof more and more folks are in this now that cannot hang a picture frame.

    In closing just look for strong employment base and branch out.

    0Reply
  • Wendell De Guzman
    Investor · Chicago, IL · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    Florida is a good one to buy-and-hold. It's population is projected to grow so much so that it will overtake New York's population by 2015. Here's the news from CNN:

    http://www.cnn.com/2013/12/28/us/new-york-florida-...

    This is one of the reasons I am personally investing in FL.

    0Reply
  • John E.
    Boston, MA · Member since 2014 · 152 posts · 63 votes
    12y

    @Wendell De Guzman Holy cow! There are a whole lot of people headed towards Nashville, TN in the coming years! I'm assuming you've been in that market for some time- How has the inward flow of new folks in town affected property values and your real estate business?

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free