Which is the best city to purchase Multifamily house for rent?

26 Replies

Please suggest, Which is the best city to purchase Multifamily house for rent in USA?

I have thought of Houston TX, Dallas TX, Austin TX, North Carolina and Edison New Jersey.

How is Connecticut for the real estate investing?

@Rama Motwani

The mid part of the USA, specifically the Midwest (St Louis, Chicago, Kansas City) to Ohio (Cleveland) and all the way down to Houston TX are definitely great areas for rentals: you get much more for the money and the rental demand is very good. 

I have been investing in multifamily properties (I like smaller building, up to 4 units) in the Midwest since the early '90s and I could not go wrong.

Connecticut - it's hard to cash flow as in the Midwest. It is better for fix and flip.

I’m biased towards Los Angeles, but that’s only because I live here. 

@Rama Motwani I would say that the best city to invest in is the one that works best for your situation. Every area has there pros and cons. What are your biggest fears when thinking about the different cities?

Some things to consider is your risk tolerance and your budget. Would you rather spend less money and accumulate more homes or build slowly and buy in higher priced areas with less margins but much more responsible tenants. Also I suggest finding a local team that you can work with to keep you on the right path and help you avoid the war zones.

Kevin Hoag, Real Estate Agent in OH (#1090522) and OH (#2015002538)
216-505-4677

Head many good things about Memphis for 4 flats over the years.  

Connecticut can be challenging, especially Fairfield County. If you look in the New Haven area or central/northern CT, you could find some good deals. Just be aware that the areas with higher cash flow can also be higher in taxes and crime. (Bridgeport, Waterbury, Hartford) There are a couple good meetup groups that you can check out for networking and education. There's SoCT REIA that meets in Norwalk and CT REIA that meets in Meriden.

I also agree that the midwest and south offer great opportunities for investing. Your money is likely to go farther there.

As a beginner investor I like to invest in what I know.  I invested in my home town first, Stamford.  I'm a 5 minute drive from the property, I know the area, I personally screen them and tour them, it works for me.  I'm not comfortable enough to go outside, or more than an hour away.  I'm in Stamford, CT and cash flow is difficult to come by unless it's an off market deal.  There are better areas, but like others have said, crime, taxes, tenants, are all higher risk from what I've found in CT.  I know everyone hates on Zillow but I love their rental estimate feature, it's fairly accurate.  It's great to see the rent comparisons on different homes.  

This post has been removed.

Originally posted by @Rama Motwani :

Please suggest, Which is the best city to purchase Multifamily house for rent in USA?

I have thought of Houston TX, Dallas TX, Austin TX, North Carolina and Edison New Jersey.

How is Connecticut for the real estate investing?

I always find it interesting when out of state investors talk about the local CT market :) 

If you would like to discuss some of the markets in the north central parts of CT, feel free to give me a call as that is the area I focus on. Bristol - Middletown - Vernon up to Springfield MA.

Good luck! 

Filipe Pereira, Real Estate Agent in MA (#9557050) and CT (#0807610)
(860) 990-9103

I would say Austin just based on the fact that rent is going up and were one of the fastest growing areas in the country

@Peter Sinclair

I am trying to understand your reply... Why would you recommend a market to someone asking for advice based on your biased opinion simply because you live there with no facts to back it up? I too am in the greater Los Angeles area but I would not recommend Los Angeles because most properties don't quite cash flow like they do in the MidWest- not saying properties don't cash flow in L.A. (Don't mean to sound like I'm rude just trying to learn and understand just like everyone else here)

All the best,

Jorge

Depends what's most important for you (cash-flow, steady tenants, appreciation, low/high entry point, market cap rates, etc.) Each of the cities you mentioned can offer different advantages and disadvantages when it comes to multi-family. First identify what's most important for you and work with people who can help you get there.


Hope it helps!

A better question is, "What area of my city is the best for purchasing multifamily housing?"

Originally posted by @Jorge Ruiz :

@Peter Sinclair

I am trying to understand your reply... Why would you recommend a market to someone asking for advice based on your biased opinion simply because you live there with no facts to back it up? I too am in the greater Los Angeles area but I would not recommend Los Angeles because most properties don't quite cash flow like they do in the MidWest- not saying properties don't cash flow in L.A. (Don't mean to sound like I'm rude just trying to learn and understand just like everyone else here)

All the best,

Jorge

Los Angeles has no real slow season, there’s always a steady flow of applicants (if there isn’t you may be priced too high). The weather is nice, so we don’t have to worry about freezing pipes. Unfortunately, these things listed above make it an expensive place to buy and live, but with enough money it isn’t that hard to find a place that needs some work, renovate it, and rent it out it for some good prices. 

Now I cant speak to what’s going on in the Midwest.. my research is only limited to my backyard. That’s why I’m biased, LA is the only realestate market I know (more specifically East LA and Boyle Heights). 

Warmly,

Peter

@Rama Motwani  

as @Mario Bellavia and @Filipe Pereira alluded to the small state of Connecticut is wildly different. It definitely has its struggles, like big companies leaving the state and fiscal issues, but also has a lot of pros (being close to NYC and Boston) and still has many Fortune 500 companies. 

Some of the other cities you mentioned are rapidly growing and Connecticut is growing at a small clip in Fairfield County and is stagnant in most other parts of the state. I think something to think about is what size property you are looking at and your situation. For example, if you don't have any ties or connections to the other cities you mentioned and you would have to get on a plane to visit them to learn more then I would not do that for a 2 or 3 family. However, if you are looking at 200 - 300 units that will change the equation.

Best of luck!

Edison? Thats very specific.

@Peter Sinclair

If you don't mind me asking when did you purchase and for how much? What were your rehab costs? What are you charging for rents and what are your monthly expenses? I am curious to know what cash flow is like in East LA/Boyle Heights... 

Thanks for your reply and I look forward to your next reply.

Best,

Jorge

Originally posted by @Jorge Ruiz :

@Peter Sinclair

If you don't mind me asking when did you purchase and for how much? What were your rehab costs? What are you charging for rents and what are your monthly expenses? I am curious to know what cash flow is like in East LA/Boyle Heights... 

Thanks for your reply and I look forward to your next reply.

Best,

Jorge

I made this post showing my latest in East LA

 https://www.biggerpockets.com/forums/522/topics/511740-east-los-angeles-multifamily

A little more than a year ago we acquired a duplex built in the early 90s (so not under RSO) for $475k w/ 40% down.. Renovation were just over $80k. After paying mortgage and expenses we profit about $1900-$2000 each month. With the profit we apply it to the principle only each month. Trying to get the mortgage paid off ASAP. 

Could you share your experiences too with SoCal, I’m interested in other locations. 

@Peter Sinclair

I don't have the kind of cash to invest in Los Angeles and was curios to what your experience was and what your cash flow was. I see that you purchased in the '90's so that will probably explain your great cash flow. Congrats to you on that one. I don't see myself acquiring an property anytime soon in the Los Angeles area anytime soon as it is far too expensive right now and my cash is limited. I am currently looking to invest in Milwaukee where the cash flow play is pretty good. Thanks for sharing and all the best to you.

Jorge

@Rama Motwani Nort End, and Black Rock in Bridgeport have good cash flowing properties. Derby, and the lower part of New haven county, are also good cash flow areas.. Like @Jonathan Makovsky mentioned CT definitely has its struggles, I think what has saved the state is its close proximity to NYC.

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