Investing in the Midwest

10 Replies

Hello everyone,

So being from the Washington DC Northern Virginia area everything within my local market is so high. I've heard from a few investors that the Mid-West is a good place to buy real estate, especially doing buy and holds.  

Listening to the Bigerpockets podcast show 257 was very help. However, I would like to hear what states and cities in the Mid West do you guys recommend ? I'm looking for a Duplex up to a Quadplex.

@Douglas Harris I invest in my local sub market of Chicago in the Berwyn/Oak Park area, and have been very pleased with my investment returns. I also have invested out of state (also in the Midwest) in South Bend, IN. Both Chicago and South Bend have been good to me, and they both are interesting markets. 

Being a realtor, I know my local market very, very well, and I can tell you that the Midwest is very competitive right now just like every other market! The near southwest Chicago suburbs have very little inventory, and there are multiple offers on almost everything.  As an out of state investor, I would think long and hard about your criteria for investing. Do you want to buy in A, B, C or D areas? What type of money can you deploy? Most importantly, who will manage the asset for you?! 

I would look in markets that are drive able for you as you begin. Have you checked all the areas within a two hour drive? It makes it a lot easier if you can drive instead of fly to see your investment 

Originally posted by @Douglas Harris :

Hello everyone,

So being from the Washington DC Northern Virginia area everything within my local market is so high. I've heard from a few investors that the Mid-West is a good place to buy real estate, especially doing buy and holds.  

Listening to the Bigerpockets podcast show 257 was very help. However, I would like to hear what states and cities in the Mid West do you guys recommend ? I'm looking for a Duplex up to a Quadplex.

The Midwest is an amazing place to find a decent ROI compared to high markets like D.C. Try looking into Cleveland or a few others around here. They are bouncing back and rentals are in demand!

Indianapolis/Marion county is a fantastic market as far as Indiana goes. Some are dubbing it the second silicon valley because of the tech jobs pouring in. In any case there are multiple areas all over the city that you can still find good properties at reasonable prices that will give great returns. Look for properties in between the streets Oriental and Rural for west/east boundaries and 10th and Michigan for north/south boundaries. The area is called Woodruff Place. There is a non-profit called renew Indy rehabbing homes there to sell to teachers and public servants like police, firefighters, etc. The activity there is relatively new, a few years now, but accelerating quickly. The place was a complete war zone before so be sure to do your due diligence. The closer to 10th street the better. Fountain Square, Bates-Hendricks, Garfield Park, and Irvington are some other really good neighborhoods there. 

@Michael Lewis Thanks!  Those are very good areas.  Indianapolis has alot of rehabs going on.  Every year two or three of these old neighborhoods takes off, begins to transform and appreciates.

@Douglas Harris I like the markets of Memphis, Little Rock, Kansas City and Indianapolis.

I have done a ton of research and interviewed 20+ turnkey providers/RE agents/and local investors and narrowing it down to a handful of people I wanted to work with. I am flying out to Indy/KC mid-Feb to check out their operations and hopefully do another trip to memphis/little rock in the summer. 

I have a duplex in Indy under contract expected to close late feb and I am pretty stoked. 1.3% RTV with a really good PM. I hear investors say all the time you live and die by the PM/you buy a property once, but deal with the PM forever (or until you sell).

Happy investing!

Douglas,

Take a hard look at Northwest, Indiana. NW Indiana is NOT Indianapolis. It's basically suburbs of Chicago. Generally speaking, the commute time to downtown Chicago is about 30 minutes. There are a tremendous amount of people that have moved from Illinois, over to NW Indiana. Why? Because the taxes are much lower, cost of living is lower, quality of life is great and home acquisition prices are lower than Illinois. However, the rental rates aren't much lower than Illinois. So your cash on cash return is very good. Plus the area is growing, due to the exodus out of Illinois. That can only help home prices rise. Take a look at cities such as: Crown Point, Merrillville, Hobart, Griffith, Highland, Hammond and many others. Crown Point is mostly for flipping, but can also be a great rental area. It's mostly upper income. The other cities are good for rentals and some are also good for flips as well. Best of luck to you. 

@Bo Kim hope your Indy investment is doing great! I’m doing some research there as well, I will pm you and maybe we can have a quick chat. Thanks man!

I like NW Indiana, Indianapolis, southwestern Ohio and Kansas City most right now.

@Douglas Harris I would caution against the two to four plex since the exit strategy is poor in selling to a retail buyer. I’m trying to sell my turnkey rentals and it’s really hard still. You will have a nightmare selling your duplex or quad.

The midwest is definitely good for cash flow properties, although the appreciation potential isn't going to be as high as the coasts generally speaking

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