If you could start investing anywhere, where would you go and why

34 Replies

NOTE: not sure if this is the right category or not....

Not that I'll be moving anywhere other than my home town, but just interested to hear from some of the seasoned investors here. I'm sure there are a million different opinions and probably not a single "right" answer but I hope we can have a discussion about what makes a good market or what you look for in an area. 


What's the best market to invest in today and why?  

I like Pittsburgh because it is a great cash flow market with upside for some continued appreciation growth in the future. It has been redefining itself from a steel town to a medical/tech hub the past 5 or so years.  It has also historically held steady during market crashes, unlike a lot of other markets. 

@Graham Lutz I'm partial to Pittsburgh as well (live here and saw this pop up on Pittsburgh alerts from Jeremy's post).

TLDNR: RE investing works wherever as long as you pick the strategy that works there.  

I think the market to be in depends entirely on what you are looking for. If you are looking for cash flow then Pittsburgh is a great place to be because the gross rent multiplier is pretty low. If you want to make money in rentals I think looking for places where that number can be kept reasonably low is a good place to start looking. 

As far as appreciation is concerned historically you get pretty steady rates in Pittsburgh, but they aren't large rates by any stretch of the imagination. So if you are looking for the place that home value increases rapidly you might look at other cities (that being said the home value might also decline just as rapidly as it goes up). 

Also, depends if you are looking to flip, wholesale, value-add, etc. You'd want to look for markets where there are still a decent number of distressed homes in areas with otherwise good value. 

Lastly, I still think that at the beginning working in your own market can be weighed pretty heavily. It just makes some things easier until you have systems in place. On the other hand investing OOS or just far away from where you live forces you to build systems so that you can be completely hands off. 

All depends on what you want and there are lots of factors. 

Sorry for the book. 

Originally posted by @Jeremy Taggart :

I like Pittsburgh because it is a great cash flow market with upside for some continued appreciation growth in the future. It has been redefining itself from a steel town to a medical/tech hub the past 5 or so years.  It has also historically held steady during market crashes, unlike a lot of other markets. 

 Jeremy - medical/tech is going to be good for the market for sure!  Of course, I have no knowledge of Pittsburgh - Have some big tech companies come in recently?

Originally posted by @Anthony Angotti :

@Graham Lutz I'm partial to Pittsburgh as well (live here and saw this pop up on Pittsburgh alerts from Jeremy's post).

TLDNR: RE investing works wherever as long as you pick the strategy that works there.  

I think the market to be in depends entirely on what you are looking for. If you are looking for cash flow then Pittsburgh is a great place to be because the gross rent multiplier is pretty low. If you want to make money in rentals I think looking for places where that number can be kept reasonably low is a good place to start looking. 

As far as appreciation is concerned historically you get pretty steady rates in Pittsburgh, but they aren't large rates by any stretch of the imagination. So if you are looking for the place that home value increases rapidly you might look at other cities (that being said the home value might also decline just as rapidly as it goes up). 

Also, depends if you are looking to flip, wholesale, value-add, etc. You'd want to look for markets where there are still a decent number of distressed homes in areas with otherwise good value. 

Lastly, I still think that at the beginning working in your own market can be weighed pretty heavily. It just makes some things easier until you have systems in place. On the other hand investing OOS or just far away from where you live forces you to build systems so that you can be completely hands off. 

All depends on what you want and there are lots of factors. 

Sorry for the book. 

 Glad to hear a second for Pittsburgh!  I am leaning towards multifamily, with a focus on getting positive cash flow out of the gate.  I'm not especially worried about (or interested in) rapidly appreciating home values as it sounds like multifamily properties aren't valued based on comps.  I think a more important pieces is market stability.  Thanks for the reply!

Originally posted by @Graham Lutz :

 Glad to hear a second for Pittsburgh!  I am leaning towards multifamily, with a focus on getting positive cash flow out of the gate.  I'm not especially worried about (or interested in) rapidly appreciating home values as it sounds like multifamily properties aren't valued based on comps.  I think a more important pieces is market stability.  Thanks for the reply!

 What size multifamily? The more units you get the more they are valued on income, but 2-4 unit buildings are still evaluated by appraisers with comparative sales. That being said your purpose for the building is how you should evaluate it with some weight given to your exit strategy. So if you want to make cash flow then value the building based on how much you want to make. 

@Anthony Angotti - Hoping to start with a 5-plus, partly for that reason.  And yeah, cashflow is probably #1 as I don't want to be one of the people who gets eaten up by everything that can go wrong. I'm 33, so not in a huge hurry to make tons of money and mostly want to get some experience that I can parlay into bigger deals in the future. 

Originally posted by @Graham Lutz :

@Anthony Angotti - Hoping to start with a 5-plus, partly for that reason.  And yeah, cashflow is probably #1 as I don't want to be one of the people who gets eaten up by everything that can go wrong. I'm 33, so not in a huge hurry to make tons of money and mostly want to get some experience that I can parlay into bigger deals in the future. 

 5+ is sold mostly in line with cap rates which will vary from city to city and type of area (as I'm sure you gathered). The bigger the building the more that rings true. Larger multifamily is hot right now so expect to pay a bit of a premium and in a competitive situation often. 

So maybe just evaluate the places that hit the returns that you want. The more cash flow that you want the bigger the "headache" usually. By headache I mean lower grade area, tenant issues, renovation needed, etc. I put it in quotations because the level of headache depends on your ability to handle it. 

Also, if you buy in high cash flow areas (D+/C Class) you can offset tenant issues with good screening. You still get bad tenants in A class areas....it's just less likely that a large number of bad tenants even qualify. 

@Graham Lutz I'd approach things differently from looking at where a factory is opening or what markets are hot.

I'd start with the list of Metropolitan Statistical Areas on wikipedia, which you can sort by growth rate:  https://en.wikipedia.org/wiki/List_of_metropolitan...

Even though there are growth rate variations within MSAs (i.e., declining areas within growing MSAs and vice-versa), to make things simple, I would avoid any MSA that is declining in population, period.  I'd be skeptical about MSAs growing slower than the US average, but wouldn't write them off completely if they are nearby to you and have something attractive about them, like state capitols or mega universities - these never go anywhere.

I'd then start getting a bit granular on the MSAs, trying to identify the areas within them that are growing or not growing.  You can get more granular, down to the city or zip code level on Hometown Locator https://www.hometownlocator.com, which uses Census Bureau stats.

Once you identify areas with strong growth within growing MSAs, look for anchors like government or big universities that are never going anywhere and are immune to fluctuations in the economy.

You should also look for the strongest school districts.  Demand is always high in these areas, and good schools always attract the best tenants - the tenants who are going to come up with the rent no matter what because they are determined to keep their kids in the good schools.

Once you've identified the areas of growth within the growing MSAs with the best schools, preferably near some major anchor, start looking for deals.

Originally posted by @Jonathan Twombly :

@Graham Lutz I'd approach things differently from looking at where a factory is opening or what markets are hot.

I'd start with the list of Metropolitan Statistical Areas on wikipedia, which you can sort by growth rate:  https://en.wikipedia.org/wiki/List_of_metropolitan...

Even though there are growth rate variations within MSAs (i.e., declining areas within growing MSAs and vice-versa), to make things simple, I would avoid any MSA that is declining in population, period.  I'd be skeptical about MSAs growing slower than the US average, but wouldn't write them off completely if they are nearby to you and have something attractive about them, like state capitols or mega universities - these never go anywhere.

I'd then start getting a bit granular on the MSAs, trying to identify the areas within them that are growing or not growing.  You can get more granular, down to the city or zip code level on Hometown Locator https://www.hometownlocator.com, which uses Census Bureau stats.

Once you identify areas with strong growth within growing MSAs, look for anchors like government or big universities that are never going anywhere and are immune to fluctuations in the economy.

You should also look for the strongest school districts.  Demand is always high in these areas, and good schools always attract the best tenants - the tenants who are going to come up with the rent no matter what because they are determined to keep their kids in the good schools.

Once you've identified the areas of growth within the growing MSAs with the best schools, preferably near some major anchor, start looking for deals.

 Ah!  This is exactly the kind of thing I was hoping to hear! I am a scientist at my core so I love when there are numbers to light up a path!  Thanks so much. 

No reason to leave were you live GA is on the up swing especially ATL... grass is not greener.

but most of the post will be those that live in a certain area touting their areas..

I work in many areas let me give you a list of what I learned in the last 3 or 4 years.

Markets I think merit consideration

1. Charleston SC  not that its number one on my list just came to mind first.  but we have done quite well there and I live in Oregon LOL.

   but this is for new construction.. not sure about buy and hold.. rough areas in the past turning around is what we see there in Charleston its quite the thing really.

2. I really like what I saw happening in the urban core of Philly.. BRRRR strategy is alive and well there price points for what it is could see some pretty nice upward movement and its self evident the re gentrification of what were hoody or war zone areas.. that's were money is made..

3. Certain pockets of Indy have some really nice revitalization going on.. Now keep in mind my personal thought process is future value / balanced with cash flow that will debt service .. money Is made when the value sky rocket.

4. Vegas.. I really like what I see In Vegas as well its rebounding.. and with SALT I think the over flow from CA and OR will be real.. I know I just bought a home there to transfer my state of residency for tax purposes only have to be there in the winter..

5. I think KC is a nice town with some really solid blue collar stuff.

6. I was impressed with again the suburbs of Cleveland but need to be careful on tax's there.

However I am back in ATL starting in March  there is plenty of money to be made in that huge metro area.. so not sure you need to go anywhere frankly.  but I just point those out for discussion and areas I personally work in currently..

Where I from Oregon  now half time.. its uber hot for construction and if your ok with 5 caps its one of the most solid MFH markets in the country as well.  next to zero vacancy.. NO section 8 and extremely solid rental tenants ..

Originally posted by @Jay Hinrichs :

No reason to leave were you live GA is on the up swing especially ATL... grass is not greener.

but most of the post will be those that live in a certain area touting their areas..

I work in many areas let me give you a list of what I learned in the last 3 or 4 years.

Markets I think merit consideration

1. Charleston SC  not that its number one on my list just came to mind first.  but we have done quite well there and I live in Oregon LOL.

   but this is for new construction.. not sure about buy and hold.. rough areas in the past turning around is what we see there in Charleston its quite the thing really.

2. I really like what I saw happening in the urban core of Philly.. BRRRR strategy is alive and well there price points for what it is could see some pretty nice upward movement and its self evident the re gentrification of what were hoody or war zone areas.. that's were money is made..

3. Certain pockets of Indy have some really nice revitalization going on.. Now keep in mind my personal thought process is future value / balanced with cash flow that will debt service .. money Is made when the value sky rocket.

4. Vegas.. I really like what I see In Vegas as well its rebounding.. and with SALT I think the over flow from CA and OR will be real.. I know I just bought a home there to transfer my state of residency for tax purposes only have to be there in the winter..

5. I think KC is a nice town with some really solid blue collar stuff.

6. I was impressed with again the suburbs of Cleveland but need to be careful on tax's there.

However I am back in ATL starting in March  there is plenty of money to be made in that huge metro area.. so not sure you need to go anywhere frankly.  but I just point those out for discussion and areas I personally work in currently..

Where I from Oregon  now half time.. its uber hot for construction and if your ok with 5 caps its one of the most solid MFH markets in the country as well.  next to zero vacancy.. NO section 8 and extremely solid rental tenants ..

 Thanks, Jay!  Yeah I'm not really looking to go outside the area I know (Atlanta), but more hoping to get discussion going and I've found that when I can get experienced people talking, I inevitably learn something gold!  Thanks for the reply! 

@Graham Lutz   pretty much any topic that is   Hey were is the best cash flow or what market is best.

you get those who live there touting their area.. and I get that.. we are all proud of our area.

my point is there are just so many great areas right now. that the one closest to home is usually the best to work in.. why go 5 states away for a 1% difference in cash flow LOL..

Originally posted by @Jay Hinrichs :

@Graham Lutz  pretty much any topic that is   Hey were is the best cash flow or what market is best.

you get those who live there touting their area.. and I get that.. we are all proud of our area.

my point is there are just so many great areas right now. that the one closest to home is usually the best to work in.. why go 5 states away for a 1% difference in cash flow LOL..

 Very good point!  I'm definitely focusing on Atlanta as thats what I know.

@Jay Hinrichs has always offered solid advice to me. I also think Atlanta is a great area right now. I'm in Denver, so I have no choice but to look elsewhere.

@Graham Lutz what are you looking for? Cash flow? Or are you trying to generate revenue quickly?

If you're looking to buy and hold I like nonvolatile markets anchored by major cities in the midwest and south/southeast. Nonvolatile meaning they don't go up a lot, they don't go down a lot... because I'm trying to avoid the future "downturn" which i believe is impending. That's it. There isn't ONE best market. Try to maximize upside... but I don't think 


Other key factors: your ability to find a competent property manager, property taxes, landlord-favoring laws. 

I LOVEEEEE Indiana. Expanding into Michigan soon. Ohio, North Carolina, Georgia are on my radar as well. Pick one and go buy a property where the numbers make too much sense. Set a hard deadline where you commit to end your market research and begin the buying process.

Originally posted by @Jay Hinrichs :

@Graham Lutz   pretty much any topic that is   Hey were is the best cash flow or what market is best.

you get those who live there touting their area.. and I get that.. we are all proud of our area.

my point is there are just so many great areas right now. that the one closest to home is usually the best to work in.. why go 5 states away for a 1% difference in cash flow LOL..

 Agree entirely with this. Back Yard is best if you can make it work. It's just easier to keep track of things. That and if you live there you just inherently know where to go and what to do. You can get a better feel for an area than anyone can just describe it to you. Instead of hearing that this place is undergoing revitalization you can actually go there and see it. You can find nice streets in not as nice areas and you can really learn the submarkets a lot better. 

So many advantages to investing locally that I'd almost always look locally first before branching out. 

Originally posted by @Elliott Elkhoury :

@Graham Lutz what are you looking for? Cash flow? Or are you trying to generate revenue quickly?

If you're looking to buy and hold I like nonvolatile markets anchored by major cities in the midwest and south/southeast. Nonvolatile meaning they don't go up a lot, they don't go down a lot... because I'm trying to avoid the future "downturn" which i believe is impending. That's it. There isn't ONE best market. Try to maximize upside... but I don't think 


Other key factors: your ability to find a competent property manager, property taxes, landlord-favoring laws. 

I LOVEEEEE Indiana. Expanding into Michigan soon. Ohio, North Carolina, Georgia are on my radar as well. Pick one and go buy a property where the numbers make too much sense. Set a hard deadline where you commit to end your market research and begin the buying process.

 Yeah cash flow is definitely #1 for me, at least to begin with as I have no interested in pouring money into something every month just to *hope* it goes up in value at some point, especially with the market as it is today.   Part of my wants to do something long-distance as I will be forced to set up process and team and all, b/c I can see myself trying to do it all myself and getting burnt out.  On the other hand, I have some worries about long distance due to things like competent PM, etc. I definitely plan to start in Atlanta as that's what I know, but don't want to rule out anything!

 Thanks for the input!

In your own neighborhood. No need to look further.

Originally posted by @Graham Lutz :

 Ah!  This is exactly the kind of thing I was hoping to hear! I am a scientist at my core so I love when there are numbers to light up a path!  Thanks so much. 

I'm on a mission on BP to bring analysis and systematic thinking to real estate investment.  The successful people on this site really get it, but there are so many people chasing what's hot, trying to make an easy killing.  The irony is that real estate is not hard, but it requires discipline and execution, as any investment strategy does.

@Graham Lutz my 2c- you'll probably find a good property manager before you learn to become a good property manager. Use referrals, that's what BP is for! Set up process for sure- I was literally a scientist by trade, so we have that in common! Don't overbuild procedure so early, but build it in parallel with the growth of your portfolio and put your process-oriented nature to use!

Just go find a fourplex somewhere for 100k that rents for 2500 bucks to C tenants, make sure the mechanicals work, and buy that sucker! Then go buy another 60 days later. Then 10 more. BP provides great information, but it's very easy to slip into the category of "thinkers" rather than "doers" if you delve into every forum post about virtual investing here. 

Originally posted by @Jonathan Twombly :
Originally posted by @Graham Lutz:

 Ah!  This is exactly the kind of thing I was hoping to hear! I am a scientist at my core so I love when there are numbers to light up a path!  Thanks so much. 

I'm on a mission on BP to bring analysis and systematic thinking to real estate investment.  The successful people on this site really get it, but there are so many people chasing what's hot, trying to make an easy killing.  The irony is that real estate is not hard, but it requires discipline and execution, as any investment strategy does.

 Well you've got a supporter here!  Any suggestions on good resources to learn more along these lines?  I've gotten through about as much "ra-ra" as I can take and ready for some actual education in this arena.

Originally posted by @Elliott Elkhoury :

@Graham Lutz my 2c- you'll probably find a good property manager before you learn to become a good property manager. Use referrals, that's what BP is for! Set up process for sure- I was literally a scientist by trade, so we have that in common! Don't overbuild procedure so early, but build it in parallel with the growth of your portfolio and put your process-oriented nature to use!

Just go find a fourplex somewhere for 100k that rents for 2500 bucks to C tenants, make sure the mechanicals work, and buy that sucker! Then go buy another 60 days later. Then 10 more. BP provides great information, but it's very easy to slip into the category of "thinkers" rather than "doers" if you delve into every forum post about virtual investing here. 

 Good point, Elliot!  Of course it doesn't make sense to try to be a property manager when I've never managed property.  I should focus on what I'm good at - networking, analytics, processes, etc.  Thanks for the input. 

Originally posted by @Graham Lutz :
Originally posted by @Jonathan Twombly:
Originally posted by @Graham Lutz:

 Ah!  This is exactly the kind of thing I was hoping to hear! I am a scientist at my core so I love when there are numbers to light up a path!  Thanks so much. 

I'm on a mission on BP to bring analysis and systematic thinking to real estate investment.  The successful people on this site really get it, but there are so many people chasing what's hot, trying to make an easy killing.  The irony is that real estate is not hard, but it requires discipline and execution, as any investment strategy does.

 Well you've got a supporter here!  Any suggestions on good resources to learn more along these lines?  I've gotten through about as much "ra-ra" as I can take and ready for some actual education in this arena.

I'd be willing to bet that there is a business school near you that offers classes on financial analysis for real estate, perhaps even online.  There are a ton of books out there, but you can only get so far with books, without someone forcing you to do some analysis.  

As for market analysis, I have not seen much on this, but I have not looked, to be honest.  I just developed my own methodology based on what seemed logical to me, and wanting to ground it in some hard statistics.  I am not capable of doing the kind of econometric analysis that an institutional investor would do, but I don't need to justify my analysis to a boss or worry about CYA when things blow up, the way that an institutional analyst would do.  But I do want it to be grounded in something real, and population growth is about as real as you can get.

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