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

    @Jessica Harriet

    It depends what type of property you are looking for. Move-in ready SFH's, 3-2's and 4-2's are getting pretty expensive to the point where they don't make sense as rentals but you can still pick up small homes, 3-1's and 2-1's which need some work for <100k. Depending on the area, rents could be $900 - $1200, more or less. Vacation rentals are very viable here as well. It's a vacation spot with beautiful summers and tons of sandy beaches all along the coast. A person bought the property right next to my rental at the same time as me and does weekly rental on the bottom unit and 12 month on the top. She is getting >$2k per week for her 3-2 unit. I love living here. If you can handle the winters it's a great place. Summers are absolutely awesome.

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  • Account Closed
    Contractor · Los Angeles, CA · Member since 2015 · 887 posts · 323 votes
    9y

    @Jessica Harriet check out this link. It is helpful in analyzing cities using the CAFR (Comprehensive Annual Financial Report) Here @Brandon Hall shows us how to look for the important information that will help you make a more informed decision. All the best to you. 

    https:www.biggerpockets.com/renewsblog/2015/05/10/invest-out-of-state-how-to-analyze-a-city/?utm_source=newsletter 

    Jorge

    1Reply
  • Michael Henry
    Real Estate Consultant · Brookfield, WI · Member since 2014 · 873 posts · 350 votes
    9y

    @Jessica Harriet

    Milwaukee, WI is a really good market to invest in, but housing supply is low. Many investors are purchasing around the mid price range which makes it very competitive. If you are able to purchase at a higher price point you will be okay. 

    0Reply
  • Kurt Pauley
    Realtor · Minneapolis, MN · Member since 2016 · 245 posts · 107 votes
    9y

    @Jordan Moorhead I tend to disagree that cash flow is the main reason for buy and hold. Bill Syrios (podcast 140) who owns 700+ rentals states the opposite. Cash flow is the cherry on top and the real money is the appreciation and equity that comes with having tenants pay off your mortgage.  This is the case if you're truly buy and hold and looking toward the long term.  It is about the appreciation over a large chunk of time and not short term.  IMO

    1Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    9y

    @Kurt Pauley I don't disagree but buying rentals that don't cashflow isn't a risk I'm willing to take. If something happens you are in a lot of trouble if they don't.

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  • Marc Jolicoeur
    Investor · Minneapolis, MN · Member since 2012 · 187 posts · 117 votes
    9y

    If I was moving anywhere in the country and hoping to land in a good RE market for buy and hold, I would probably avoid the coastal areas where prices are high and rentals barely cashflow.

    I have been able to get 8% cap rates in Minneapolis duplex and suburb townhome this year.  8% is tough to find but its out here.  You have to be patient and willing to fix up places before renting them.

    Job growth is very strong, vacancies extremely low, incomming residents from other places, and the two urban cities are growing and popular with millennials. 

    At the same time I think I would look long and hard at Milwaukee, Madison, and Grand Rapids before choosing Minneapolis.

    Madison has a captive audience with student housing needs near the campus and downtown.   Even crappy rentals can fetch $550 per bedroom and I think its pretty much recession proof as long as you stay within the University's free bus loop or walking distance to the U or the Capitol.   Its a nice town.  I would not be concerned about the rentals but may be concerned about my own job security as its a smaller city with fewer employers.

    Millwaukee looks to have a large housing stock of cheap houses and I think you might be able to do better than 8% cap rate.  The issue I would worry about is job growth and vacancies.   Try to research these two trends in MKE.

    Grand Rapids - I know little about but I hear its a great place.

    1Reply
  • Mark A.
    Investor · Madison, WI · Member since 2015 · 47 posts · 16 votes
    9y
    I was born and raised in Madison WI. After leaving for college I came back to Madison to raise my own family. Madison's real estate market is strong and I don't expect to see it decrease in a downturn as hard as some other cities (because of the strong job market, the university, and it being a more stable Midwest town).
    0Reply
  • Maggie Maddox
    Real Estate Broker · Austin, TX · Member since 2017 · 12 posts · 1 vote
    9y

    To piggyback on Mark's comment above, Madison has sustained population growth and stable economic drivers. Madison is anchored by UW healthcare industry and state government and those drivers are not going anywhere. During the recession, the unemployment was at 6% with the national average being 10%, so even during downturn it showed resilience. I also agree that Milwaukee holds promise depending on what your REI goals are.

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  • Luke Williams
    Investor · Puyallup, WA · Member since 2017 · 8 posts · 6 votes
    9y

    Interesting how many experts on Seattle there are here who don't live in Seattle, or other markets they are commenting on, for that matter. One of the issues that no one talks about is wages, which in South Lake Union (downtown Seattle) is currently supporting rents at $4,500+ for millennials who work at Amazon. Personally, I'd rather live on the water in Newport Beach for those prices. Here you have a tech economy, just like in San Francisco/Silicon Valley. It keeps prices high and the metro area is spreading out further and further. There are still deals (that cash flow) to be had in Pierce, Thurston, Mason, Cowlitz, and Clark Counties, but they aren't easily commutable to Seattle, at least not 40-60 hours per week. If you're a remote/virtual employee, then yes. That is how a lot of people here are making side incomes from real estate, in addition to their tech job. So, it really depends upon whether you're going to be a full time investor and/or if you have to work a corporate office job (in Seattle) on top of your investing.

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  • Andrew Magoun
    Investor · Yarmouth, ME · Member since 2016 · 54 posts · 35 votes
    9y

    @Jessica Harriet, the Portland, ME real estate market is very hot right now and a rent stabilization effort is on the ballot in November. That said, it's a great place to live and Portland has a lot to offer, especially if you like good food, good beer, and the outdoors.

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