Looking to hear strategies of people buying in mid-tier cities where rental rates are high, however real estate pricing is even higher, meaning the mortgage payments eat up a lot of the cash flow. I'm an Atlanta native and have a 5/3 single family property just inside the perimeter I was able to score for 250K in decent shape, only minor repairs needed. My basic strategy is to buy these houses using primary residence financing and rent out the bedrooms to offset all expenses, even swing a profit (house hacking), until a year passes, move to the next house and repeat, keeping the other houses as rentals.
However, if you move more towards downtown, prices for larger single family homes with a decent number of bed/bathrooms (4/3 is my target or higher) are very expensive and easily hit 500K to over a million. With those prices, my strategy can't be sustainable downtown, and with appreciating markets, I'm not sure it will remain feasible on the edges of the perimeter either.
What are some strategies for building up a cash-flowing portfolio in markets where housing prices are too high to purchase and rent out?
As a side note, I'm considering looking at multifamily (up to quads to keep financing non-commercial) which may fetch higher rents, however, these prices are quite high as well.
There are some duplexes available for decent prices in Suburban city centers of Charlotte (like Concord, NC and Mooresville, NC) that still have some feasibility for this strategy. The key with acquiring these properties though is to buy off-market. If they hit the market, it's too late. These investments are red-hot, and way overpriced if word gets out that they're for sale. I would say connect with someone who can pursue the owner locally and wholesale it to you.
Also, and I've mentioned this in other threads.. Corporate rentals are a VERY under-rated investment. Sounds like you're not afraid to rent by the room, so corporate rentals should be easy to you. It would require furnishing (more up front investment), but the leases are usually 3-6 months and pay 3-4 times more than a traditional lease. Bank of America, Wells Fargo, and Lowes Corporate here in the area are some of the big players that cannot find enough corporate rentals, and are currently paying absurd prices for decent homes on AirBnb and HomeAway that are not even suited to their needs. There's tons of options, you just gotta know where to look and what to look for. Hit me up if you want to discuss more about that particular strategy.
From what I've read, finding and analyzing distressed properties or vacant ones is going to be your best bet. Trying to find absentee owners or landlords (Craigslist) who are wanting to get out of the game and maybe will price their properties accordingly could be a feasible option as well. Either way simply relying on the MLS or some tech savvy real estate agent to bring you a great deal is probably not going to be enough in a hot market such as Atlanta. Get out and tell people what you want to do and how you plan to do it and you'll find people will want to help. Feel free to reach out if you need anything and best of luck to you!