Where to Invest these days?

Buying & Selling Real Estate
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Where to Invest these days?

Account Closed
Registered Nurse (ICU) · San Jose, CA · Member since 2014 · 496 posts · 332 votes
I am just getting started in real estate investing with intentions of buying buy and hold cash flow properties regularly over the next six months to a year. I recently bought 2 homes in Indianapolis and plan to return there in the near future to buy more. I am curious to know if their are any other markets out there that I may have overlooked that would provided great cash flow. Please let me know where and why that market has potential. Any advice or suggestions is appreciated. Thanks everyone.
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Matt R.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
11y

Cash flow/dividend sidebar:

In stocks they call it dividend chasing which is pretty close to cash flow chasing in rei. There might be a stock that produces 10% dividends, at one time radio shack was paying 20%! This usually indicates there is a fundamental value flaw in the asset. The cash flow is high because the value of the stock/rei is so low. When this happens the asset could be on a on a longterm path to zero value. It happens in both stocks and rei. The high cash flows can be an indication of this future value loss issue. Some investors are ok with this but most experienced investors don't play that way as it eventually erodes overall wealth.

Radio Shack is 80 cents now and pays zero dividend. Many cash flow homes ended up about the same as Radio Shack. Thanks, matt

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  • Andrew Fingado
    Real Estate Investor · Berkeley, CA · Member since 2014 · 143 posts · 91 votes
    11y

    When I think of cash-flow markets I think of: 

    Kansas City, Ohio markets like Cleveland, Cincy, and Toledo, Jacksonville, Fort Wayne, Upstate NY, Milwaukee, Omaha, and Memphis.  Of course lots of parts of Michigan too.   There's a lot of them out there.  

    4Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    11y

    I like Michigan.  I'm a little bias, but I'm not wrong.

    Joe V

    1Reply
  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    11y

    Why not California....

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  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    11y
    Originally posted by @Account Closed:

    I am just getting started in real estate investing with intentions of buying buy and hold cash flow properties regularly over the next six months to a year. I recently bought 2 homes in Indianapolis and plan to return there in the near future to buy more.

    I am curious to know if their are any other markets out there that I may have overlooked that would provided great cash flow. Please let me know where and why that market has potential. Any advice or suggestions is appreciated.

    Thanks everyone.

    The Midwest is my pick.

    Especially Ohio and Michigan.

    Still lots of value here.

    With the media pimping "high unemployment" and "declining population" most institutional investors are still sleeping which is good for us smaller operators as we get to pick and choose.

    I feel like a kid in candy store lol.

    Just bought one for $25,000 that needs $20,000 in work and will sell for $100,000+

    Happy Days :)

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
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    @Engelo Rumora Life is good.  I especially like the part about, "With the media pimping "high unemployment" and "declining population" most institutional investors are still sleeping which is good for us smaller operators as we get to pick and choose.

    I feel like a kid in candy store lol."

    I work with a number of West Coast investors that flip out there, take their profits and we CF here.  "Candy" never tasted this good.

    Joe V

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  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    11y
    Originally posted by @Joe Villeneuve:

    @Engelo Rumora Life is good.  I especially like the part about, "With the media pimping "high unemployment" and "declining population" most institutional investors are still sleeping which is good for us smaller operators as we get to pick and choose.

    I feel like a kid in candy store lol."

    I work with a number of West Coast investors that flip out there, take their profits and we CF here.  "Candy" never tasted this good.

    Joe V

    Thanks Joe,

    haha - Its a large selection isn't it. My favorite are the sweet SFH but looking into even sweeter multifamily lol

    It was actually a typo

    Should have been "pumping" instead of "pimping" lollol

    I hope they wake up and smell the roses in around 3-5 years time.

    It will give us time to own thousands haha

    Thanks

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
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    @Engelo Rumora You know it.  It always makes me laugh when we're told what we're able to do can't be done.  My reply is always the same.  "Then, should I give the money and the house back?"

    Joe V

    5Reply
  • Tim Dingman
    Professional · Detroit, MI · Member since 2014 · 25 posts · 13 votes
    11y

    I'll second @Joe Villeneuve on Michigan. I understand trepidation about Detroit, (although there are great CF deals here,) but people often don't realize that a lot changes once you cross 8 Mile. A lot of towns that border the city are actually pretty nice, and many tend to have lots of renters. (The farther-out suburbs have more homeowners, so that would be better territory for flippers.)

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
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    @Tim Dingman Correct.  I'm always amazed at how many people act as if Michigan is in Detroit.

    Joe V

    4Reply
  • Michael S.
    Rental Property Investor · Shelby Twp, MI · Member since 2014 · 47 posts · 20 votes
    11y
    Originally posted by @Joe Villeneuve:

    @Tim Dingman Correct.  I'm always amazed at how many people act as if Michigan is in Detroit.

    Joe V

     I believe that some of that perception comes from a lot of people from Metro Detroit who often say that they are from Detroit because that is the city the the rest of the country can identify and locate.

    0Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    11y
    Originally posted by @Michael S.:
    Originally posted by @Joe Villeneuve:

    @Tim Dingman Correct.  I'm always amazed at how many people act as if Michigan is in Detroit.

    Joe V

     I believe that some of that perception comes from a lot of people from Metro Detroit who often say that they are from Detroit because that is the city the the rest of the country can identify and locate.

    I agree with that.  I grew up in Madison Heights.  Live right now in Lincoln Park.  Have lived in Auburn Hills, Royal Oak and Ferndale.  I always say Detroit when talking to out of town People.

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  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    11y

    I like the cash flow market possibilities in Southern Colorado. Generally speaking, a more attractive tenant demograhic than most of the traditional cash flow markets you come across. And yet not large enough for the hedge fund types to muck it up. Thanks, Matt

    2Reply
  • William McGuire
    Madison, MS · Member since 2014 · 13 posts · 3 votes
    11y
    Jackson, MS. When it comes to rent vs price points I haven't seen anyone post anything compared to the return rate I have here
    1Reply
  • Lance A WhitePro Member
    Flipper/Rehabber · Lincoln, NE · Member since 2014 · 171 posts · 54 votes
    11y

    Omaha and Lincoln Nebraska are great spots. The retail housing market is still tight which makes for a sellers market for after rehab properties.

    1Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    11y
    Originally posted by @William McGuire:

    Jackson, MS. When it comes to rent vs price points I haven't seen anyone post anything compared to the return rate I have here

     OK William.  What have you got?  What are your numbers?

    Joe V

    0Reply
  • William McGuire
    Madison, MS · Member since 2014 · 13 posts · 3 votes
    11y

    the properties I come across usually produce 3-5 percent return on investment monthly. I sold a house this week for 16.5 that is renting for 650. I sold a house last week for 28.5 that is renting for 900. I have a package deal for 10 houses right now for 210k that is pulling in 7k when it is fully rented. As of now 2 are vacant but move in ready. 

    1Reply
  • William McGuire
    Madison, MS · Member since 2014 · 13 posts · 3 votes
    11y

    O and i have a dozen or so rehab projects between 3-10k that need between 5-10k of work that produce the same rent. I don't know many rehabbers so I am having trouble with these 

    0Reply
  • Kyle Overman
    Chicago, IL · Member since 2014 · 6 posts · 0 votes
    11y

    what about oklahoma city?

    0Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
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    @william What are the Cash flows...with a PM and debt?

    1Reply
  • Sara Cunningham
    Investor · Chesapeake Beach, MD · Member since 2013 · 273 posts · 37 votes
    11y

    I say Oklahoma too. I bought a triplex earlier this year for $30,000 Put $15,000 into it and am now getting $1,220 a month.

    1Reply
  • James Park
    Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    11y

    Don't just chase cash flow markets, but look for good under valued cities with a bright future. By bright future, I mean 

    1) Population growth
    2) Vibrant tech community and tech jobs
    3) Sustainable Job growth and entrepreneurial soil.
    4) Great year-round weather, mild winters & an excellent lifestyle.
    5) Low business, sales, and property taxes
    6) International city
    7) Immigration gateway city, melting pot of all cultures
    8) No history of natural disaster

    Atlanta possesses all 8, and is known as the NY or the LA of the South. From the chart below Atlanta is the 3rd lowest valued housing market after Detroit (#1) and Cleveland (#2). The population has decreased in both Detroit and Cleveland between 2010 - 2013, but Atlanta's MSA population grew by 236,214 between 2010 - 2013. Atlanta's housing appreciation by Dec 31st, 2014 should be right around 7.1% and should get back to its July 2007 peak price by 2016. The 2% rule does not mean much to me, if my property becomes almost impossible to unload in the future or if the asset value deteriorates over time. 

    4Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    11y

    If you are cash flowing a property over 500/month, with  property manager in place, why would you sell it?  The idea that "... if my property becomes almost impossible to unload in the future or if the asset value deteriorates over time."..means little or nothing to me.

    0Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    11y
    Originally posted by @James Park:

    Don't just chase cash flow markets, but look for good under valued cities with a bright future. By bright future, I mean 

    1) Population growth
    2) Vibrant tech community and tech jobs
    3) Sustainable Job growth and entrepreneurial soil.
    4) Great year-round weather, mild winters & an excellent lifestyle.
    5) Low business, sales, and property taxes
    6) International city
    7) Immigration gateway city, melting pot of all cultures
    8) No history of natural disaster

    Atlanta possesses all 8, and is known as the NY or the LA of the South. From the chart below Atlanta is the 3rd lowest valued housing market after Detroit (#1) and Cleveland (#2). The population has decreased in both Detroit and Cleveland between 2010 - 2013, but Atlanta's MSA population grew by 236,214 between 2010 - 2013. Atlanta's housing appreciation by Dec 31st, 2014 should be right around 7.1% and should get back to its July 2007 peak price by 2016. The 2% rule does not mean much to me, if my property becomes almost impossible to unload in the future or if the asset value deteriorates over time. 

    No problem finding tenants in the Detroit area.  Great cash flowing properties.  The value jumps up and down .  During the disaster and meltdown my parents properties were never vacant.  At some point it doesn't matter in the value goes down. Unless it turns into  a warzone.

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  • James Park
    Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes
    11y
    Scott and Joe,

    I attended business school in Ann Arbor, so I am familiar with the Detroit area. The point I am trying to make is that "cheap" assets is not always good and I believe that Detroit has the cheapest housing in the country. Out of all the top 30 metro city areas with a population of 2 million +, only Detroit metro and Cleveland metro have lost population from 2010 - 2013 and I see this trend continuing in the future. My other question is if your $500/month rent and your asset value is sustainable over the next 10 - 20 years?  

    The question should not be, "Where to invest these days?" but the question should be "Where can I invest were I can have cash flow and maximum appreciation potential."

    This topic has been excessively talked about in the thread below.

    http://www.biggerpockets.com/forums/48/topics/1441...


    Real wealth in real estate is not built on solely on cash flow, but on appreciation in asset value. For me, appreciation is a must and cash flow is an icing on the cake.

    I bought my primary residence in the $400s 3 years ago, and homes in my street with similar square footage is unloading quickly in the $600s. This purchase was not an accident, but strategic. My research in the metro Atlanta area since 2006 have shown me that my home within this specific location will see unprecedented appreciation never seen in the history of Georgia.    


    No problem finding tenants in the Detroit area. Great cash flowing properties. The value jumps up and down . During the disaster and meltdown my parents properties were never vacant. At some point it doesn't matter in the value goes down. Unless it turns into a warzone.

    Originally posted by @Joe Villeneuve:

    If you are cash flowing a property over 500/month, with  property manager in place, why would you sell it?  The idea that "... if my property becomes almost impossible to unload in the future or if the asset value deteriorates over time."..means little or nothing to me.

    1Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    11y

    @James Park Michigan isn't in Detroit.  You can't apply Detroit numbers in general to all of Michigan...not even the Detroit suburbs.  What you just did, was what a large portion of investors will do...and I'm thankful.  It leaves more for the rest of us.

    Joe V

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