Best cities in US for investment/rental properties

15 Replies

This is my first post on BP...Really appreciate the site and the amount of great info it provides. 

I'm curious to get experienced investors' input on which cities in the US are the best for investment/rental properties and why. Neighborhood specific details would be great too. 

I realize this is a rather broad question but figured this would be a good place to get a wide range of quality input. 

My wife and I are currently invested in a flip operation in Tampa, FL that is winding down. So looking for our next venture....and doing some due diligence. 

Any insights are very much appreciated.

All the best, 

I am biased to Kansas City and Dayton. I have helped several investors out in both markets! PM me if you have any questions in these areas!

This entirely depends on your goals and how much capital you have access to.

@Jason Fleming if you're looking for cash flow then the Midwest us generally going to be best. There are a lot of good cash markets in the Midwest, however, some of these markets have stagnant or declining populations and jobs. Personally, I think that Indianapolis and Kansas City offer the best combination of good cash flow with strong economic and demographic trends. I've been involved in both markets for several years and know them well. Feel free to reach out if you want more insight on either.

@Jason Fleming  The best area is wherever you are going to find the best deal, but I personally hate when people suggest articles that millions of people have read.  If that is the case then Grand Rapids, MI where I live is the best area, consider Fortune, Lonely Planet and nearly ever major outlet has ranked it up top. That is self serving, but really if you don't have a good team in place you will not succeed in any market, no matter how good it is.  The market at this point is too competitive to make a ton of mistakes and still stay profitable.  If you have a good operation in Tampa, FL, I think the hardest part about investing out of state is something you've already done.  If you got good results the first time, then I would assume it could be repeatable so why not continue the run.  The more local market knowledge you get the better the result.  

I'm biased toward the south east, particularly Mississippi.  Many Cities in Alabama/Mississippi/TN are experiencing growth and their house cost has yet to meet the increase in population.  More jobs are coming to the area and rents are going up.  Specific areas I would look at are Birmingham, AL Hattiesburg, Jackson and Oxford all in Mississippi

Well I’m from the Midwest and now live in Raleigh. Raleigh is always considered the best market in these types of articles due To the job growth and appreciation, but cash flow here currently can be difficult.

If you can buy heavily distressed properties and rehab them, you can do well, but otherwise cash flow is going to be difficult. Great for flipping though

If you're looking for cash flow, the midwest and south would be the best IMO. Cities like Oklahoma city, Indianapolis, Raleigh, Kansas City, Des Moines and Memphis would be good to consider.

@Jason Fleming I invest where I have a connection, visited a ton, etc. that gave me some "neighborhood specific" details around right vs. wrong side of the track.  Things of that nature.  So it's hard for me to say that where I invest would be right for you because you don't have those 20 years of periodic visits.  Consequently, I'd say:

1.) Why not keep operating in Tampa?  You know the market, you have experience, probably names of contractors, etc.  Even if the flip operations is winding down your market knowledge isn't.

2.) If you don't like Tampa then I'd say that you have a solid starter-list of cities from @Andrew Syrios .  Look at the macro data for each (heck, start with Wikipedia) and narrow it down to 1-3 markets you're serious about before worrying about neighborhood insights.

That's just my two cents...

We invest in multiple markets and will always start by researching markets with strong economic and demographic trends. The research sparks our interest in an area but it really comes down to the connections we have. Our deal finder is crucial along with the GC and everyone on our team. All team members must be up to par or it's just not something we will continue with until the right team is in place. 

Personally, I would say to get your feelers out there and determine where you will be the most successful from there. 

@Andrew Johnson you're in my neck of the woods. Appreciate your feedback. Tampa is an attractive market and one we may consider staying in. We're passive investors in the current flip gig....So the knowledge we've gleaned is somewhat limited. Unfortunately, the experience partnering with the group on the ground there has been underwhelming. We'll likely transition to rentals. Also looking into non-performing loans/notes...that has my interest for sure. All the best man!

@Jason Fleming just as others above stated, start with research. We recently found a nice cash flowing property in a small rural town. It has some deferred maintenance but it is fully occupied and the taxes are incredibly low. I never heard of the place before the owner called me about it.

I would have never looked in this area. It was just not on my radar. A fellow investor recently told me he is done passing on leads/ deals in places he is unfamiliar with. After experiencing this for myself, I agree. Good luck!

@Jason Fleming - Much like @Casity Kao I'm also biased to the Grand Rapids / West MI region. Strong economy / low vacancy / relative low cost of entry / etc... I also agree with Casity that this is a competitive market, like many areas of the country right now, and you'll need a network in place to ensure you're goals can be met. One area I often suggest to the investors we work with is to double check the property taxes for each subject property. You may know this already; however, many investors will use the current owners "homestead" tax rate when running their numbers. Overall, our labor and material cost are similar to other midwest area cost; however, here in MI we have "Michigan Basements", which you'll want to be aware of when inspections, etc. Congrats on the Tampa project. Hopefully you've had some good success. Jacques 

@Jason Fleming Ah, well that makes sense.  So, in your shoes, I'd probably spend 30 days going down the rabbit hole of non-performing loans/notes, etc.  Learn as much as you can along with markers for success or failure.  Why?  The last thing you want to do is go through an exercise to come up with a short-list of cities with that in the back of your mind.  Personally, I find it hard to laser-focus on multiple objectives when they are new.  I can't look at apartment investing at the same time as STRs in vacation markets and divide my limited brain capacity equally.  I pretty much have to do a stop-and-start.  If I'm looking at an apartment building it's a little easier because I'm already in the space.  When I've looked at vacation rentals I need to understand so many other (different) aspects that it's hard for me to bifurcate.  30 days isn't going to kill you so I'd go "all-in" on trying to figure out if the note investing is the right thing for you.  If it is, great.  If it isn't, you can refocus on metro-markets then.  Or maybe your noggin' has a higher capacity than mine for multitasking and you can do both.

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