Best Cities to invest in under $100k

Investor · Los Angeles · Member since 2018 · 134 posts · 117 votes

Nooby question here! Does anyone know where I can find a list of or advise me on the best cities to look for investment opportunities (rental) under $100k? Ideally, I would like to start with $50k property but $50k-$100k is my threshold. I live in Los Angeles and you won't get anything in a safe area for $700k+.

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Janett Lewis

Investor · St. Louis, MO · Member since 2016 · 65 posts · 82 votes

@David Waddleton I moved from San Diego to St. Louis specifically for this reason. I have 7 houses here and purchased them all over the past year. I paid 22,000-34,000 and they are all rented from $895-1200. Cashflowing 50% at least after taxes and insurance and maintainence are paid. For $50,000 you can get a turnkey property that’s Cashflow positive! Just have boots on the ground or someone you trust in the area. You could develop a relationship with someone on BIgger Pockets!

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Robert EllisBusiness Member
Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
8y
Originally posted by @Angela Yan:

I love Columbus Ohio. Great cash flow. Good luck!
I second this but i'm also local lol
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Adam Slipher
Flipper/Rehabber · Milwaukee, WI · Member since 2013 · 42 posts · 13 votes
8y
Kenosha/Racine Wisconsin is strong. We're currently selling a turnkey in our portfolio if you're interested. A bit over $100k though at $140k. Rent at $1395/mo.
1 Reply
Donald G McCartney
Member since 2018 · 14 posts · 43 votes
8y
Originally posted by @Greg Gaudet:

Originally posted by @Tinley Jones:
Hi David,
I live in San Diego. I'm just starting out and I have been looking at Indiana. Indianapolis, Bloomington, and Evansville.
Hoping to close on my first duplex soon at around 60k
Good luck!
Which market are you finding duplexes for 60k? How much cash flow are you projecting after PITI and PM? Is it in a war zone? What class neighborhood?
I considered duplexes in the 40-50k range but decided I have no business investing an out of state war zone... but it might not be a bad strategy if you can find one in a C- neighborhood or better for under 100k....
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Donald G McCartney
Member since 2018 · 14 posts · 43 votes
8y
In some of these cities it's not all that hard to find excellent cash flow rentals, and many of them come from turnkey rental providers, and they do not have to be in "war zones" as you describe.
For example, I was looking at a turnkey duplex at recently in Toledo, Oh that could be bought for $44,000. It had been remodeled, each side was 2 bedroom, 1 bath , around 1000 sq ft, renting for $550/month. That's $1100 per month on a $44k investment. The units were separately metered, so no electric or gas bills. The turnkey seller was offering to manage the property for the first year at no charge, but 10% of the rents thereafter. Out of $1100 per month, I estimated about $595 net, which is $7140 per year.
The expenses break down as follows:
Management 10% $110/month, but free for first year
Vacancies 10% $110
Taxes $100
Insurance $75
Maintenance 10% $110
Total estimated monthly deductions: $505 Net average cash flow/month: $595.
$7140 divided by $44000. equals cash on cash yield of around 16% per year.
This property was not in a "war zone" as you describe, but is in the Old West End area of Toledo, which is not bad, probably a "C" neighborhood.
Unfortunately, this property was snapped up by another investor before I had a chance to do the due diligence.
Deals like this are fairly common in cities like this.
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Scott Houin
Flipper/Rehabber · Columbia, MO · Member since 2016 · 27 posts · 31 votes
8y
@David Waddleton I would suggest the Midwest. I personally live in Missouri and have bought homes under 40k. Also, with the west coast getting so expensive people and businesses are looking to move out of that area. I would expect the housing prices to appreciate in areas like MIssouri over the next 10 years.
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Suzy Truax
Investor · San Francisco, CA · Member since 2014 · 98 posts · 36 votes
8y
Shhhh....don't tell anyone....Philadelphia & burbs. Closing on a 2BR condo next week, $40k, rents for $1050.
Message me for more info.
1 Reply
Jean Claude
Investor · Atlanta, GA · Member since 2017 · 34 posts · 3 votes
8y
@David Waddleton Rochester NY is where I buy
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Greg GaudetPro Member
Investor · Pukalani, HI · Member since 2017 · 414 posts · 291 votes
8y
Originally posted by @Donald G McCartney:

In some of these cities it's not all that hard to find excellent cash flow rentals, and many of them come from turnkey rental providers, and they do not have to be in "war zones" as you describe.
For example, I was looking at a turnkey duplex at recently in Toledo, Oh that could be bought for $44,000. It had been remodeled, each side was 2 bedroom, 1 bath , around 1000 sq ft, renting for $550/month. That's $1100 per month on a $44k investment. The units were separately metered, so no electric or gas bills. The turnkey seller was offering to manage the property for the first year at no charge, but 10% of the rents thereafter. Out of $1100 per month, I estimated about $595 net, which is $7140 per year.
The expenses break down as follows:
Management 10% $110/month, but free for first year
Vacancies 10% $110
Taxes $100
Insurance $75
Maintenance 10% $110
Total estimated monthly deductions: $505 Net average cash flow/month: $595.
$7140 divided by $44000. equals cash on cash yield of around 16% per year.
This property was not in a "war zone" as you describe, but is in the Old West End area of Toledo, which is not bad, probably a "C" neighborhood.
Unfortunately, this property was snapped up by another investor before I had a chance to do the due diligence.
Deals like this are fairly common in cities like this.
I'll take that deal!!! lol
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Erik Schneider
Flipper/Rehabber · Henderson, NV · Member since 2018 · 76 posts · 27 votes
8y
@Craig Boutte can you send me pics and prices of both properties please!??
1 Reply
Tim BergstromPro Member
Investor · Nashville, TN · Member since 2016 · 127 posts · 71 votes
8y
@David Waddleton I grew up in Indianapolis. I actually spent some time in LA myself for almost 4 years so I get it! I currently live in Nashville but am looking into Indy for similar reasons to you. I have recently been investigating Indy more and more and starting to develop relationships there. I also have some things happening in Memphis. DM me if you’d like to chat more and I’d be happy to share my experience with you!
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Tim BergstromPro Member
Investor · Nashville, TN · Member since 2016 · 127 posts · 71 votes
8y
@Brian Garlington Lol! Awesome
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Annie Levan
Member since 2018 · 13 posts · 6 votes
8y
Hi @Colleen Prescott, if you haven't already read it, I recommend checking out the book Long Distance Real Estate Investing by David Greene. I'm just getting started with my real estate journey but investing local is out of the question. This book has helped calm a lot of my nerves regarding out of state investing and I feel more confident that I can figure it out as I go. Hope this is helpful.
Sincerely,
Annie Levan
1 Reply
Ryan Alacon
San Diego, CA · Member since 2018 · 30 posts · 12 votes
8y
Hi @David Waddleton. I’ve been searching around myself. This is going to be my first purchase. But the areas I found attractive are Indiana and Tennessee. I’m from San Diego so I feel your pain. I hope you keep us updated or at least let me know how your search is going. Nice to hear from a fellow noobie. Cheers!
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David W.
OP
Investor · Los Angeles · Member since 2018 · 134 posts · 117 votes
8y
Originally posted by @Spencer Cantrell:
@Tinley Jones Hi, I live in Wyoming and I'm new on Bigger Pockets. My wife and I have a 4-plex out of state that we have never seen and are finishing up our second flip property. I am looking for another multifamily property and really like the Indianapolis area. I've heard good things about it, but have no idea who to contact as a realtor or property manager. Do you have any recommendations?
I am starting to see Indiana over and over again as a top 10 place to invest in rental. Orlando was ranked number 1 in some article I read. I see Florida multiple locations. Just need to do research and hone in =)
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David W.
OP
Investor · Los Angeles · Member since 2018 · 134 posts · 117 votes
8y
Originally posted by @Ali Boone:

What kind of property are you wanting to buy? Something you want to put work into or more turnkey?
Hello Ali,
Well I want to start simple and build up speed. Not take too much of an investment when I still have my training wheels on. Ideally apartment complexes but I think starting with a house, then 4 plex then who knows. So house seems to be ideal about $100k max and need to get a solid cap rate 10% +. Here in LA you are lucky if you get 3%!
So far honing in on Orlando, Phoenix, Indiana (not sure where but keep hearing it) and gonna pick a few more. What are your thoughts?
0 Reply
David Baier
Rental Property Investor · Orlando, FL · Member since 2018 · 545 posts · 386 votes
8y
@David Waddleton David if you are considering Orlando, Tampa or anywhere in central FL I can absolutely help. I’m a local investor and agent. Orlando is ranked #1 by Forbes and #3 by yahoo as the top place to invest in. As far as other cheaper markets, I saw in an early reply you mentioned Pittsburgh. Pittsburgh has the largest volume of properties available for under 100k. You can find some decent cash flowing properties there but they will be older properties. I’ve seen Cleveland and Indy come up multiple time in several articles about cheap properties as well. The biggest benefits of the FL market, especially central FL and Orlando is the appreciation we are seeing which isn’t slowing down any time soon.
1 Reply
Adam Steele
Investor · Ventura, CA · Member since 2017 · 5 posts · 3 votes
8y
@Jean Claude I've been looking at the Rochester area for a couple of years now. Haven't pulled the trigger because of the "war zone" fear. Most of the stuff I'm seeing has incredible cap rates and the entry price is super low, but the buildings look pretty beat, the crime is high in the area, and I've read that it can be really tough to find decent tenants. What's your experience there been like?
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Jean Claude
Investor · Atlanta, GA · Member since 2017 · 34 posts · 3 votes
8y
Originally posted by @Adam Steele:

@Jean Claude I've been looking at the Rochester area for a couple of years now. Haven't pulled the trigger because of the "war zone" fear. Most of the stuff I'm seeing has incredible cap rates and the entry price is super low, but the buildings look pretty beat, the crime is high in the area, and I've read that it can be really tough to find decent tenants. What's your experience there been like?
Ive had pretty good experience since I am familiar with the areas. Rochester has some of the most attractive cap rates in the nation. The rental market is thriving and the market is shifting upward. I typically buy in low crime areas and havent really had much trouble with tenants.
I say lets go for it. I am looking to scale up to something commercial in that area.
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Colleen Prescott
Concord, CA · Member since 2018 · 56 posts · 37 votes
8y
I lived in Oakland for 20 years so I actually still consider Oakland my home!
0 Reply
Colleen Prescott
Concord, CA · Member since 2018 · 56 posts · 37 votes
8y
@Annie Levan
Thank you! I just bought it!
0 Reply
Paulina Chase
Member since 2018 · 17 posts · 7 votes
8y
Best wishes that you can find the right property for you.
I believe in investing in other areas. I have 3 properties in 3 different states.
You can do this if you want to . We make our path.
1 Reply
Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
8y
Originally posted by @David W.:

Hello Ali,
Well I want to start simple and build up speed. Not take too much of an investment when I still have my training wheels on. Ideally apartment complexes but I think starting with a house, then 4 plex then who knows. So house seems to be ideal about $100k max and need to get a solid cap rate 10% +. Here in LA you are lucky if you get 3%!
So far honing in on Orlando, Phoenix, Indiana (not sure where but keep hearing it) and gonna pick a few more. What are your thoughts?
You won't find cap rates in Orlando or Phoenix at 10%. Phoenix used to have good returns but investors drove the prices up and the cash flow disappeared. That was back in ~2011ish? Orlando has never been high on cash flow. Indy has been a big market for folks but 10% caps will be hard right now. They will be hard anywhere, to be honest. It will depend if you want to put work into a property or buy more turnkey. The turnkeys I work with are ranging ~7-9% caps, depending on the market. I'm working with them in Chicago, St. Louis, Philly, Cleveland...places like those. Of those, Cleveland will probably show you the highest caps. A lot of where you invest though will depend on your preferences for markets.
Not sure if that helps...
1 Reply
Naveen Desai
Real Estate Professional · San Francisco-East bay, CA · Member since 2013 · 340 posts · 50 votes
8y
@David W., How about if there are options right here in CA, for under 100K? Would you do it? What kind of returns are you looking for?
0 Reply
Sebastien Hitier
Rental Property Investor · Hong Kong, Hong Kong Island · Member since 2014 · 188 posts · 114 votes
8y
Here are the affluent zip code gross yield, for the nation's most demographically dynamic MSA:
- Indianapolis IN pop cum growth 30% , gross rental yield 10.6%
- Houston TX pop cum growth 41% , gross rental yield 8.6%
- Dallas Fort Worth pop cum growth 38%, gross rental yield 8.4%
- Atlanta GA pop cum growth 34% , gross rental yield 7.8%
- Orlando FL pop cum growth 45% , gross rental yield 7.7%
- Des Moines IA pop cum growth 29% , gross rental yield 7.6%
- Charlotte NC pop cum growth 40% , gross rental yield 7.4%
- Jacksonville FL pop cum growth 29%, gross rental yield 7.4%
- Phoenix AZ pop cum growth 41% , gross rental yield 7.0%
- Raleigh Cary NC pop cum growth 60%, gross rental yield 6.7%
- San Antonio TX pop cum growth 39%, gross rental yield
- Nashville TN 40% 6.7%
- Colorado Springs CO 30% 6.5%
- Denver CO 29% 6.4%
- Charleston SC 36%, 6.4%
- Greenville SC 56% 6.4%
- Provo Orem UT 55% 6.2%
- Austin TX, 60% 5.6%
You should note that local tax and insurance is much higher in Florida than other states so that 3% to 5% more needs to be deducted from gross yield to compare to other states such as Georgia or North Carolina.
Be careful that properties that have no appreciation potential should have proper capex baked into the numbers. Single-family houses require the same capex whether they sell for 75k or 150k. Two articles that circulated on BP estimate the capex cost. One at $182 per month, another at $250. This means that 1/3 of a 750$ rent needs to be put as capex reserve and explains why houses with such rent often are undermaintained and sell below their replacement value.
6 Reply
H W Beckley
Pittsboro, IN · Member since 2018 · 16 posts · 3 votes
8y
Sebastian. Where did you get that data?
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