Newark, CA · Member since 2016 · 38 posts · 7 votes
I live in the bay area and am looking to invest for cash flow. California isn't a great place to do that right now. I hear that the mid west tends to be the best place for cash flow. I was wondering what cities are particularly fruitful?
Rental Property Investor · Hong Kong, Hong Kong Island · Member since 2014 · 188 posts · 114 votes
10y
Hi @Alex Aguilar, the cities mentioned have high positive cashflow.
I would be interested in pointers for Oklahoma City and Raleigh. Those are very healthy cities but I did not find any easy way to invest there for an out of state investor.
Some of the cities mentioned have a secular trend of population decline, which does not bode well for the long term. You can use it to check how population changed from 1950 to now, and from 1990 to now.
Also, there is a caveat about high yield. I believe you can get 14% net even from turnkey, you can get above that in Detroit, but also in many inner cities. The worst that can happen is that the tenants vandalize the property, then once it is vacant, the property gets stripped of its furnace,boiler,windows,copper pipes and wire by burglars. (I don't know what thieves are doing with all these used furnaces/boilers/wiring. For all I know, it makes sense for them to sell them back to people who need them for rehab.)
An increase in marginal yield corresponds to an increase in marginal risk, but that risk is not born evenly by investors: the ones with bad setup end up with a vacant property, while the ones with good setup can access that higher nominal yield.
To support that "city xxx" is good for investment, one would need to know what gross yield, vacancy rate/average tenancy duration (there is a cost to switching tenant) and net yield people achieve there.
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Joe Martella Your still finding your Niche, so the skepticism is understandable. Prior to me investing in this market(My first/ever market) I did research on 5 other markets. Do your due diligence and never let anyone sway you one way or another. Thanks for checking out the properties on the site. Regarding vacancy, you will always have vacancy at some point. This is why you need to plan. Now would you prefer to have vacancy on a 100k property where the minimum operation non occupied cost you $600-$900 to operate or a property that will cost you less than $200? No brainier for me. In Milwaukee you can evict someone in less than 30 days. This is the other reason why I chose this market. Not all of my properties are in this zip code but I'll tell you this zip has provided the best cash flow in the portfolio. With respect to the properties I'm offering, Yes, they come with 1. property management 2. 3 months of vacancy coverage(first 3 months) and 3. Handyman/contractor licensed and bonded. Stay on your search and you'll be fine. I'll always be here if you have questions.
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
I usually come down to the city when I have a new property to close on. So every couple of months or so. Don't tell me there was an earthquake down there LOL! But If I don't get down, I have my property manager send me updated photos interior/exterior quarterly.
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Svetlana Foley LOL!!! That's how it is supposed to look when you put in the work!!! I'm sure you make your line or work or investing in your market look easy as well.
Investor · Woodland Hills, CA · Member since 2016 · 51 posts · 12 votes
9y
Las Vegas Nevada has some really good A properties with a decent cash flow!! Also it's a great place to invest because of the future developments planned. i.e. Faraday Future in Apex, Legalization of marijuana, possible Oakland Raiders, Wynn tower expansion, new world resort on the strip, expansion of the convention center and so on.
Realtor · New Berlin, WI · Member since 2016 · 118 posts · 47 votes
9y
@Shawn Ackerman - I am a realtor here in Milwaukee. Yes, its very easy! I set my own hours... the choice is 80 hours a week or a 100 hours. I do feel that here in Milwaukee we are very friendly, in spite of competing with each other, and people are willing to help out even when they absolutely don't have to.
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Svetlana Foley I agree with you wholeheartedly about the city. It's been nothing but love for me and my NY investors in the Mill. How far is New Berlin from the Mill?
Realtor · New Berlin, WI · Member since 2016 · 118 posts · 47 votes
9y
@Shawn Ackerman 10 min. I do business all over Southeastern Wisconsin, from Racine to Washington county, so Milwaukee is virtually the back yard for me!
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Svetlana Foley Nice. Always interested in seeing other areas. I pass Racine each time I drive up from O'hare. One day I'll stop in that area and look around. You I and @Ramon Jenkins should all hang out and talk a little real estate next time I'm in town.
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
NICE!!! @Ramon Jenkins@Svetlana Foley. Will definitely let you guys know once my flight is booked. Many people ask me how I do so well in the Mill and these connections have been my life blood. Thanks guys for taking the time. See both of you guys soon! I have a deal that should be closing Mid to late November, So I'd expect to be down around that time.
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Patrick Shawn Faherty congrats on finding a market that works for your criteria. That's the first piece of info any new investor should take into account. However I'd caution any investor to take a look at the landlord/tenant laws in Illinois. Remind me of New York. You better get 4 month security deposits before jumping in out there LOL!
I'm researching markets and Chicago has the best numbers I've seen so far.
I have to second the Chicago market. A great deal of multifamily properties and if you are able to build a strong team or network with people in the area you can really find some cash flowing properties. I just recently closed on my first 2-flat and will be looking for another 2-flat or 3-flat in the near future.
Investor / Broker · Brooklyn, NY · Member since 2016 · 665 posts · 1k+ votes
9y
After reading the entire Thread, I thought I would chime in as a Brooklyn, NY investor to contrast what has happened to me versus an investor that I know incredibly well who decided to invest in immediate Cashflow in Bristol, CT. Let's call the CT Investor Steve.
Basically, Steve and I invested in 2004 and we put in approx. the same amount, towards investments. I invested around $250k. Steve around $150k.
I bought ONE 4 Family in Clinton Hill, Brooklyn for approximately $1 Million Purchase. Steve bought 3 Townhouses in Bristol, CT, total Purchase Price around $600k.
Fast Forward to 2016.
My single 4 Family in Clinton Hill, Brooklyn is now worth over $2 Million. It cashflows well over $3k per month.
Steve's 3 Townhouses are virtually still the same price with very little appreciation. He cashflows approximately the same, around $1k per month.
Also, during this time, I had done ZERO evictions, no burglaries, no loss of rent due to vacancy turn overs, etc.
Steve, on the other hand, had a LOT of activities including a lot of evictions.
The difference in the Evictions between Steve and myself, IMO, is that I'm able to pull a Credit Report and only Accept very high Credit (usually over 700 FICO scores), while Credit Scores became useless for Steve as about all of the candidates who lived in the area and applied had low credit scores.
It might be good to think about what will happen for Steve and myself in the next 10 years.
One thing I can say, however, Steve had to move out of NYC. He couldn't afford the apartment he had because the rent tripled in the last 10 years.
Contrast that to mine where I live in one of my apts (in a different building than the one above).
This is just an observation. You can decide on your own whether or not you should take FUTURE cashflow into account, or just the 1st year's cashflow.
However, IMO, an Investor that only looks at today's cashflow will turn out very much like Steve.
Investors that take all the FUTURE cashflows into account, well, that can turn out like me.
Brooklyn, NY · Member since 2016 · 9 posts · 1 vote
9y
Very interesting thread with an array of opinion on weighing cash flow and appreciation when making investment decisions. Each investor has their own criteria. @Llewelyn A. you had either the foresight or good fortune (or both!) to invest in a market before it became red hot. As a fellow BK investor, I'm curious if you've had to make any changes to your local strategy now that the market is far more prohibitive from a cost perspective.