Best cities to buy investment property

78 Replies

@Matt Ellis

Missing which major market? New York ? Chicago? The article was written May 31st, so relatively recent. Does look at past historical data, which is not indicative of future returns.

On the list, is Seattle, Las Vegas, and San Jose/Bay area, which are the #1, #2, and #3 ranked cities for appreciation of over double digit returns year over year. 

Terry

Best 25 cities to implement what strategy?

The Midwest is well known for having cheaper housing stock, has seen a lot of job growth recently and has been talked about a lot as a great place to invest... Indianapolis and Columbus come to mind.

Short term rentals are a completely different list of cities

Path of progress cities aren’t listed...think hq2 list... they are all on that list for a reason

I wouldn’t include Chicago or some of those cities as good investment cities because of tenant laws..

Originally posted by @Terry Lao :

What are the best cities to buy investment property? Here is a recent article that precisely answers that question. 

Agree or Disagree? For the newbies out there, this will narrow your choices and make things simple.

Terry

https://www.yahoo.com/news/best-cities-buy-investm...

 Yeah, this list doesn't seem to bring up emerging markets. For example, Cleveland has been providing some strong ROIs recently and many other websites list it at the "next big thing" but this one doesn't really have anything in the Midwest.

@Terry Lao thanks for posting this article and list. Speaking of lists, I posted another list the other day of people leaving SF and where they are looking to move to. See the thread below.

https://www.biggerpockets.com/forums/311/topics/575953-people-leaving-sf-where-are-they-headed?highlight_post=3474420&page=1#p3474420

Below are the top 10 places people are looking to move to.

10. Stockton, CA
9. Salt Lake City, Utah
8. Hawaii (my home state yah!)
7. Phoenix, Arizona
6. Las Vegas, Nevada
5. Austin, Texas
4. Denver, Colorado
3. Sacramento, CA
2. Portland, Oregon
1. Seattle, Washington

In bold are the cities that cross between the two lists. It's interesting to see who's invested in these areas or plan to invest and why.

The article regarding this list is below.

http://www.businessinsider.com/san-francisco-housing-so-expensive-people-leaving-2018-4

@Sherwin Gonzales

I'm sure there is correlation between the two lists. The funny thing about lists is that when they come out, it is old news. The key is to stay one step ahead before the news comes out. Like already purchased property before the market moves or before the article comes out. 

Also, it is not hard to figure where the migration is going towards. if you are from the bay area, then sacramento, stockton, might be a good choice.l

I'm in southern california, so Las Vegas is a logical choice.

Terry

@Alexander Felice

It guess i'll take that as a compliment. Fanboy is almost like the famous Bangkok lady boys.

I'll make a bold prediction before the GLVAR May's median year over year comes out.................... I predict 17.6% increase median home year over year, with median SFR price of $294,000.

Anyone wanna bet?

Terry 

Originally posted by @Terry Lao :

@Alexander Felice

It guess i'll take that as a compliment. Fanboy is almost like the famous Bangkok lady boys.

I'll make a bold prediction before the GLVAR May's median year over year comes out.................... I predict 17.6% increase median home year over year, with median SFR price of $294,000.

Anyone wanna bet?

Terry 

 yes compliment. I'm a super vegas fanboy, more than you actually, since I moved here ;)  My house is a bit under the 'median' group, but happy to still reap similar rewards.

I'll take your bet:

if you win, I make a ton of money on my house, awesome.

if you lose, you can come buy me a drink at cosmo

@Terry Lao I've never been a fan of these lists of "best investment markets" and if cash flow is the objective, I couldn't disagree with this one more. Not one of these markets would be on my radar. Some of them may be ok for flips or long term equity gain, but most of them are far too expensive to cash flow which is why you see so many people in many of these markets going out of state to more affordable areas, particularly in the midwest. 

@Alexander Felice

The preliminary numbers are out for median SFR for Las Vegas. May 2018 SFR median $295,000 and 18.0% year over year increase. My prediction was $294,000 and 17.6% year over year.

https://www.reviewjournal.com/business/housing/las...

Not bad on my estimate? within 1k?

So did I win?

Terry

Originally posted by @Mike D'Arrigo :

@Terry Lao I've never been a fan of these lists of "best investment markets" and if cash flow is the objective, I couldn't disagree with this one more. Not one of these markets would be on my radar. Some of them may be ok for flips or long term equity gain, but most of them are far too expensive to cash flow which is why you see so many people in many of these markets going out of state to more affordable areas, particularly in the midwest. 

 you think people are moving away from Las Vegas? quite the contrary

While this will hopefully be the one and only time I agree with @Jay Hinrichs on this topic, he's right that long term appreciation is the most profitable way to make money in real estate. Now, I don't buy with that strategy largely because I can't afford to so I buy cash flow and I prefer cash flow, but the real money is definitely in appreciation.

and for that reason, based on @Terry Lao and my bet, he wins....which means my home value is crushing it. LOL

I suppose I could pony up for a couple drinks next time you're in town ;)

Originally posted by @Terry Lao :

@Alexander Felice

Here's my forecast for the remainder of the year. Note that we are increasing close to pre-recession highs, Apr'08, of $315,000. Read article below. 

Based on my forecast, will accomplish this within end of this year.

https://www.reviewjournal.com/business/housing/las...

Terry

 I bought my house in early 2017

 (just before this madness, and I'm writing an article about why I moved when I did to capture this mania)

house was 223 when I bought it, 2 identical houses next to me just sold for 270. not life changing, but not bad. Especially since I used FHA. I'll refi this summer to drop PMI and move to a VA loan. then take a heloc out on the equity to buy some more cheap rentals back east

thank you las vegas, all I had to do was show up

@Alexander Felice Where do I say anything about people moving away from Las Vegas? I'm very aware of the population growth that LV is experiencing but population growth doesn't translate to being a cash flow market. If it did, Dallas would be a great cash flow market and it's not. I don't know why you hope that this is the one and only time you agree with @Jay Hinrichs . Jay brings a seasoned and valuable perspective to all of his posts. 

Originally posted by @Mike D'Arrigo :

@Alexander Felice Where do I say anything about people moving away from Las Vegas? I'm very aware of the population growth that LV is experiencing but population growth doesn't translate to being a cash flow market. If it did, Dallas would be a great cash flow market and it's not. I don't know why you hope that this is the one and only time you agree with @Jay Hinrichs . Jay brings a seasoned and valuable perspective to all of his posts. 

 i reread your post in better context and I did misrepresent your statement. apologies!

you're right about cash flow here for sure. I moved here but I won't invest here because of that very reason.

also, just heckling about jay's position, though I'm sure he won't be offended ;)

Those all look like healthy growth markets. Individual results may vary but for total profits or long term flow + equity averages those look stronger than most probably. I just heard Sacramento was new leading destination for millennials if that matters. Good luck! 

@Terry Lao Without getting into too much here, the article starts off with talking about appreciation. Then goes on to discuss the specific cities, starting with Aurora, CO "Another sign for optimism in the Aurora real estate market is the rising home values. From 2012-2016, the value of the median home grew by over 43%." NEVER BUY FOR APPRECIATION. This article is setting people up for failure if they are suggesting to invest in these areas because of previous appreciation. That is how people lost their shirts in 2008. And the article mentions the appreciation being a main factor for being a top city to invest in with almost every city.

Now the article is stating facts, if the purpose is purely to say these were the best places to invest over the last 5 years, sure, okay.

But trying to use this data and apply to the future is pure speculation. Buy for cash flow, not appreciation.

The other major take-away is most newbies cannot afford property in any of these cities. The article doesn't seem to talk directly to newbies, but you did.

@Grant Rothenburger

The article is a starting point. I mentioned newbies as a starting point is because most newbies do not even have a starting point. Of course, they have to work the numbers and do their due diligence. I did mention that past results is not indicative of future returns. 

For the experienced investor, the list will just re-affirm or not re-affirm the investments that you already purchased. 

So better to not post any article? or give any list for fear of criticism or lose money?

Terry

Originally posted by @Grant Rothenburger :

@Terry Lao Without getting into too much here, the article starts off with talking about appreciation. Then goes on to discuss the specific cities, starting with Aurora, CO "Another sign for optimism in the Aurora real estate market is the rising home values. From 2012-2016, the value of the median home grew by over 43%." NEVER BUY FOR APPRECIATION. This article is setting people up for failure if they are suggesting to invest in these areas because of previous appreciation. That is how people lost their shirts in 2008. And the article mentions the appreciation being a main factor for being a top city to invest in with almost every city.

Now the article is stating facts, if the purpose is purely to say these were the best places to invest over the last 5 years, sure, okay.

But trying to use this data and apply to the future is pure speculation. Buy for cash flow, not appreciation.

The other major take-away is most newbies cannot afford property in any of these cities. The article doesn't seem to talk directly to newbies, but you did.

people will make far more money buying in high appreciating markets even with negative cash flow IF they only can buy one or two properties.. that is for certain.. Cash flow markets I get it but you need volume to make sense of buying non or very slow appreciating assets.. they become liabilities once they start to break down and need major repairs 10 to 15 years down the line.. that's why you can buy them so cheap today.. below replacement cost.. plus they are not as liquid as properties in high appreciating markets that can and are sold in a matter of days even in a bad market it may only take 60 to 90 days to sell.. in some markets if you needed to sell and without take a huge capital loss you could take a year or more to sell.. I know I have experienced it first hand owning the hundreds of cash flow homes I have owned over the years..  

And MF which you guys do is not the same its apples and oranges to talking about 1 to 4 units.