Which? Seattle, Burlington, Minneapolis, Madison, Grand Rapids...

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Which? Seattle, Burlington, Minneapolis, Madison, Grand Rapids...

Jessica Harriet
Brooklyn, NY · Member since 2017 · 7 posts · 2 votes

Which of these is currently the best market for long-term buy-and-hold investing? What data should I gather to go about analyzing the question? Any personal experience living and/or investing in these markets? Thank you in advance for all your advice!

a. Seattle, WA

b. Portland, OR

c. Portland, ME

d. Burlington, VT

e. Minneapolis, MN

f. Milwaukee, WI

h. Madison, WI

i. Grand Rapids, MI

j. Traverse City, MI

Background: For a series of personal reasons, I need to relocate my family soon. I have a lot of flexibility in terms of where I can choose to live, and I've narrowed down the options to these nine cities or their metropolitan areas. An additional factor I would like to consider in my relocation decision is the potential I will have to build wealth through buying and renting out houses. For the sake of my query, please assume I have enough cash on hand to operate in any of these environments. Which would be the best choice for my pocketbook? For example, I would like to compare annual growth of jobs, population, home prices, and income across these markets but I don't know where to access these data for the last decade or so. 

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Natalie KolodijBusiness Member
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Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
9y

I live in Seattle

Our average home price is right about $700k. If you enjoy tying up $140,000 as a downpayment alone every time you buy then sure...it's great here. We have been hitting about 10% appreciation annual. But it's close to impossible to find cash flowing properties. 

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  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    9y

    I live in Seattle

    Our average home price is right about $700k. If you enjoy tying up $140,000 as a downpayment alone every time you buy then sure...it's great here. We have been hitting about 10% appreciation annual. But it's close to impossible to find cash flowing properties. 

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
    Kolodij Tax & Consulting
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    4Reply
  • Jessica Harriet
    OP
    Brooklyn, NY · Member since 2017 · 7 posts · 2 votes
    9y

    Thanks, Natalie! I have some dear friends in Seattle, which is why it's on my list. Is it possible to find properties that let you cover costs if not produce cash flow , assuming 20% down and average carrying costs? What about suburbs?

    0Reply
  • Paul LeasonPro Member
    Realtor · Grand Rapids, MI · Member since 2012 · 172 posts · 70 votes
    9y

    I can't talk much for the other Cities, as I don't know them, but I live in GR  where the current average home price is just going over the $200k mark. A couple years ago it was $180,000.  Grand Rapids has been in the top 10 of many surveys, from being a great city to invest in, to starting a new business and raising a family. It has a lot of forward movement right now and I have investors from CA, Denver, CO and Seattle all wanting to invest here as the numbers are  better than what they can find locally and buying in point is a lot lower. 

    I can access property data for the past years through the MLS for Grand Rapids to show its growth. For population and job growth I will have to do some digging online.

     Traverse City is another city that I love and I think would be a great place to live but I don't have a specific knowledge on the market, but what I hear from a local architect, I believe it is also booming. 

    616-717-1901
    2Reply
  • Jessica Harriet
    OP
    Brooklyn, NY · Member since 2017 · 7 posts · 2 votes
    9y

    Thank you, Paul! Can you provide links for any of these surveys? Thanks so much for your input.

    0Reply
  • Paul LeasonPro Member
    Realtor · Grand Rapids, MI · Member since 2012 · 172 posts · 70 votes
    9y

    I'll dig them out and send what I can find but GR has been hitting the headlines for the past year or so. 

    616-717-1901
    0Reply
  • Courtney Sorrell
    Rental Property Investor · Grand Rapids, MI · Member since 2015 · 55 posts · 8 votes
    9y

    @Jessica Harriet I've lived in and invested in three of those markets. Message me and I'm happy to spill all the details I have! :)

    0Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    9y
    Minneapolis. Cost of living is good, salaries are relatively high and there are plenty of deals left. Seattle and Portland are two steps away from communism. Michigan is still iffy and I wouldn't want to live in Madison personally. Out of those Minneapolis is far and above your best option in my opinion and I have family in Seattle, Michigan and Wisconsin.
    [email protected]512-888-9122
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  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    9y
    Jessica Harriet have you also been to all of these cities? Minneapolis has some of the best schools in the nation.
    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
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    2Reply
  • Account Closed
    Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
    9y

    @Jessica Harriet  Hope this can be of some help.

    1Reply
  • Jessica Wood
    Investor · IA · Member since 2017 · 88 posts · 36 votes
    9y
    Originally posted by @Jordan Moorhead:

    Jessica Harriet have you also been to all of these cities?

    Minneapolis has some of the best schools in the nation.

     I'm with Jordan on this one. When you say "family" do you have young children?  We are currently moving to the suburbs of Minneapolis for this sole reason.  Their schools are top knotch. I also plan to buy and hold real estate once we get there. 

    0Reply
  • Dan O'NeillPro Member
    Rental Property Investor · Traverse City, MI · Member since 2016 · 130 posts · 34 votes
    9y

    I have owned a rental in Burlington, or rather just across the river in Winooski.  It is a university town with lots of young professionals. It has a large teaching hospital as well. I rented out a 3 bed 2 bath condo there for 5 years for $1700/month and that was likely less than I could have got as I had 0% vacancy for the 5 years.  My tenants were always groups of 3 young professionals.

    I now live in the Traverse City area.  There is a big shortage of rentals in Grand Traverse County, Leelanau County and Benzie County.  There is some new inventory coming in TC, high-end stuff and more reasonably priced rentals are always in short supply.  I am currently working on my first MI rental, a triplex in Benzie County.   

    2Reply
  • Jessica Harriet
    OP
    Brooklyn, NY · Member since 2017 · 7 posts · 2 votes
    9y

    @Courtney Sorrell Thank you. Will do. And @Jordan Moorhead and @Jessica Wood thanks for your thoughts on Minneapolis. We do have children, yes, which will be a major factor in our decision. Good to hear you think there are plenty of deals there. 

    1Reply
  • Jessica Harriet
    OP
    Brooklyn, NY · Member since 2017 · 7 posts · 2 votes
    9y

    @Account Closed I agree we are *probably* in a housing bubble, but different from the last one. Your charts include Seattle and Portland, but do you think any of the other markets in my list are experiencing less of a bubble? 

    0Reply
  • Jessica Harriet
    OP
    Brooklyn, NY · Member since 2017 · 7 posts · 2 votes
    9y

    @Dan O'Neill Thanks very much for your thoughts on Berlington and Traverse City. Is it difficult there to find cash flow properties the Michigan counties you mention? How are you enjoying living there?

    0Reply
  • Jeff StephensPro Member
    Rental Property Investor · Portland, OR · Member since 2017 · 101 posts · 78 votes
    9y

    Jessica--congrats on your impending move...that is exciting!  I think you will find there are tremendous differences in all of these markets.  I think it's going to be difficult to create meaningful apples-to-apples comparisons between these cities (but I think that's OK, and I'll explain why).  

    I live in Portland, OR, for instance, and am obviously very familiar with Portland, and somewhat familiar with Seattle.  I too am a buy-and-hold investor, but I definitely would NOT call Portland or Seattle "cash flow markets"! If you're familiar with "the 1% rule" (the monthly rent-to-purchase price ratio), you'll find in Portland you are doing very well if you can get even about a 0.65%.  On the flip side, we have really strong equity and appreciation, and incredibly strong demand.  I don't know the other markets you mentioned, but I'm guessing that many of them have much, much different dynamics than Portland.  It took me a while to get my brain wrapped around the idea of buying long-term holds in a market with limited cash flow, but now I have a good grasp on how it fits into my own investment strategy, and I'm glad I'm investing here.

    That's my segue to what I think is the most important point:  To me, what's important is understanding your own goals deeply, having your own investment strategy, and then choosing 1-2 markets to get to know really well, that fit into that strategy.  From my perspective, there isn't really a "best market for buy-and-hold"; rather, there are "the best markets I know really well, that fit MY own buy-and-hold strategy." 

    [email protected]
    1Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    9y
    Jessica Harriet any reason why you've narrowed it down to these cities? A few people on here have mentioned "we have great appreciation but no cash flow". I don't think those are markets you want to get into for buy and hold. Buy and hold is about cashflow. Appreciation is icing on the cake but not to be counted on.
    [email protected]512-888-9122
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    0Reply
  • Account Closed
    Investor · Shibuya Ku, Tōkyō-to · Member since 2015 · 90 posts · 36 votes
    9y

    You didn't have a "g." in your list, so let me add one:

    g. Brooklyn

    Where better to invest than in your own backyard? Even if you're leaving the area, Brooklyn/NYC is about as safe of an investment as anywhere!

    0Reply
  • Chad Rittenour
    Investor · Coeur d'Alene Idaho · Member since 2017 · 5 posts · 3 votes
    9y

    I also say Minneapolis for families, if you don't need to work downtown the burbs offer much better schools.  Just started investing and don't have a great opportunity funnel but have been able to find homes that meet the 1% rule.  IM me if you have specific questions.

    1Reply
  • Adam Widdicombe
    Investor · Farmington, MN · Member since 2017 · 57 posts · 26 votes
    9y

    @Jessica Harriet

    I live in Minneapolis and I would not move here just to invest in real estate. There are some valid points about schools and the economy, but houses are priced high and by the time you get here and start networking it will only get worse. 

    I think most seasoned investors would tell you to move to Milwaukee...The President just announced that FoxConn will build a huge plant just south of Milwaukee. The city is in rebuild mode. I was just there a few months ago and I was really impressed with how the city has grown and is adapting to that growth. 

    The nice thing about Milwaukee is, you can live 30 mins away and be in a great school district. 

    There are a lot of people on here that invest and work in Milwaukee...@Michael Henry would be a great resource for you. 

    Best of luck!

    Adam

    1Reply
  • Bill S.Pro Member
    Moderator
    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
    9y

    @Account Closed so I love charts as much as the next guy. I would suggest that some data be added to the chart such as a trailing average line or a best fit trend line. Everyone talks about the bubble but the great recession/correction took out more than the bubble in our market as far as number of residential units constructed. I'm not sure we are all that overpriced if you do some best fit trending. That said, the FED has been printing money like mad men and that has to go somewhere. 

    2Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    9y
    Originally posted by @Jessica Harriet:

    Thanks, Natalie! I have some dear friends in Seattle, which is why it's on my list. Is it possible to find properties that let you cover costs if not produce cash flow , assuming 20% down and average carrying costs? What about suburbs?

    Suburbs are better- but rent reduces as well. For example I live in Everett, we're about 20 miles North of Seattle. 

    Here you can get houses in the $300-400k range (sometimes a little lower) they will be at or just under 1000 sq feet if they are under $300k. And likely between 1,000 and 1,500 sq if they are in the 300-400 range. Rents on a 2 bedroom small house will hit 1300-1500 if it's fairly nice...but it's tricky because most of these areas aren't super nice. So you can't out-renovate your location. Houses that are a little bigger will rent varying on age and location. I rent a 1200sq ft house from 1902 that has had a couple updates, and is definitely "rental" quality for $1650. It would sell right now for about $280-300 is my bet. 

    You likely CAN find something that breaks even- but banking on appreciation can be a little risky

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
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    0Reply
  • Account Closed
    Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
    9y

    @Bill S. I agree with you on the Fed. From what I've read, that money has been used by banks to invest in the stock market and by large corporations buying up their own stocks. Profitability and production are not up commensurate to P/E Ratios. 

    All that to say, there is a **lot** of money coming in from outside the country buying up real estate in the west. Almost all of the increase in real estate has been in the west.

    Spot The Outlier - Seattle Home Prices Go Vertical As Laundered Chinese Money Flows In

    http://www.zerohedge.com/news/2017-07-26/spot-outl...

    0Reply
  • Jim Clous
    Investor · Traverse City, MI · Member since 2016 · 3 posts · 2 votes
    9y

    Hello,

    I live in Traverse City. The general MLS market here is high here particularly for starter homes (but so are rents). My brother sold a house that his wife inherited for $128k. It was a 3/1/2 had gravity fed heat for the first floor & no heat upstairs, it had one 3/4 bathroom (that a 6 foot tall person could not stand up in the shower) and it would need to be significantly remodeled. The wiring was bare wire on insulators throughout the basement & it had asbestos. The exterior was ugly - I thought it should have been demolished even before i found out about the wiring & asbestos.

    Traverse City is a great tourist town year around.  Homes on the water rent out for $1000. to $2500. per week.  So, there are some possibilities too.

    2Reply
  • Justin H.
    San Diego, CA · Member since 2017 · 7 posts · 0 votes
    9y

    @Adam Widdicombe "The President just announced that FoxConn will build a huge plant just south of Milwaukee."

    Worth noting that FoxConn has made announcements many times before about building giant plants in the US and, to my knowledge, none have ever come to fruition.

    0Reply
  • Paul LeasonPro Member
    Realtor · Grand Rapids, MI · Member since 2012 · 172 posts · 70 votes
    9y
    Jessica, I found one snippet on job growth in GR: https://www.google.com/amp/s/articles.mlive.com/business/west-michigan/index.ssf/2017/07/grand_rapids_ranked_no_1_in_us.amp GR was also the fastest growing city in MI in 2016 with over 6000 new residents. GR lies in Kent County FYI. https://www.google.com/amp/s/articles.mlive.com/news/grand-rapids/index.ssf/2016/03/michigans_fastest-growing_metr.amp
    616-717-1901
    0Reply
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