Looking for the 1%+ rule in cities outside of where I live

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Looking for the 1%+ rule in cities outside of where I live

Joe Liu
Beaverton, OR · Member since 2013 · 56 posts · 9 votes

Hi guys, looking to start investing outside of my current city which is seeing about a 1/2% rule on the sales price. So a $400k house rents for $2,000 on average. Looking for other cities with decent size populations that are still seeing a 1-2% of the sales price in monthly rents. I know that is really broad but where are some areas that you guys are investing in out of state? Thanks!

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Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
6y

I would only buy if I got 3-5% rule but I’m in the Midwest and I don’t give a crap about appreciation 

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  • Aaron K.
    Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    6y

    pretty much anywhere East of the Mississippi river excluding some of the high cost of living cities 

    2Reply
  • Account Closed
    Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
    6y

    @Joe Liu

    Gosh, just throw a rock anywhere in the midwest and you'll probably hit a property that would meet the 1%/2% rule.

    5Reply
  • JIll Rieser
    Member since 2019 · 2 posts · 0 votes
    6y

    good question @Joe Liu I am in the same boat - wondering if anyone has experience in Boise?

    0Reply
  • Serena Bales
    Realtor · Kansas City · Member since 2019 · 15 posts · 22 votes
    6y

    There are several micro markets surrounding Kansas City that have 3 bedrooms, 1-2 bathrooms and 1-2 car garages on the MLS for $100-150k that have tenants in them paying $1000-1500 a month rents. They move quickly but what do you expect with great investments?

    1Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    6y

    I would only buy if I got 3-5% rule but I’m in the Midwest and I don’t give a crap about appreciation 

    8Reply
  • Sarah Brown
    Real Estate Agent · Nampa, ID · Member since 2017 · 439 posts · 361 votes
    6y
    Originally posted by @JIll Rieser:

    good question @Joe Liu I am in the same boat - wondering if anyone has experience in Boise?

     Hi Jill I am in Boise.  Boise itself is hard to get to the 1% rule, but you can find it in some of the outlying areas.  I bought one just last December in Nampa (about 25 miles from Boise city center.  30 min drive)

    4Reply
  • Sarah Brown
    Real Estate Agent · Nampa, ID · Member since 2017 · 439 posts · 361 votes
    6y
    Originally posted by @Joe Liu:

    Hi guys, looking to start investing outside of my current city which is seeing about a 1/2% rule on the sales price. So a $400k house rents for $2,000 on average. Looking for other cities with decent size populations that are still seeing a 1-2% of the sales price in monthly rents. I know that is really broad but where are some areas that you guys are investing in out of state? Thanks!

     You can find some in some of the outlying areas of Boise, ID.  Feel free to give me a shout for further discussion.

    1Reply
  • Account Closed
    Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
    6y

    @David Abbate

    Not where I live ;)

    1Reply
  • Sam Hickey
    Flipper/Rehabber · Joplin Missouri · Member since 2018 · 18 posts · 8 votes
    6y

    I live in SW Missouri,  Appreciation is harder to come by but I own property in Missouri and KS.    i only consider 1.5% or better.   low cost of entry and the brrrr is alive and well..    flipping margins are lower here too but i have turned a few.   I know some good agents and property managers in the area if interested..

    1Reply
  • Account Closed
    Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
    6y

    @David Abbate

    Thanks. Not really sure what your point is though.

    0Reply
  • JIll Rieser
    Member since 2019 · 2 posts · 0 votes
    6y

    @sarahbrown Thanks Sarah = appreciate the response. Is there value appreciation in Nampa? Is this considered a commutable location to jobs in Boise.

    0Reply
  • Account Closed
    Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
    6y

    @David Abbate

    When I said "throw a rock" it was a light-hearted comment. Relax buddy. But hey, you're the expert in my area so I'm not going to argue. Guess I'll take my $40-50K properties that rent for $1,000 and call it a loss.

    5Reply
  • Joe Liu
    OP
    Beaverton, OR · Member since 2013 · 56 posts · 9 votes
    6y
    You nailed it. Looking for an area with 1%~ but still a lot of room to grow in appreciation. We have well exceeded 2005 market numbers in my area but I don't need the highest 3-5% return. I am looking for an area that others are also migrating to like most parts of Texas. Do you have any other links to reports that show population and job increases?

    Thanks!

    Originally posted by @Account Closed:
    Originally posted by @Account Closed:

    @David Abbate

    Thanks. Not really sure what your point is though.

    My point is, mainly for the OP to consider, that many of these areas you can "throw a rock" at still haven't recovered from their peak real dollar value back in 2005- despite the tailwind of a massive bull market in the last 8 years. The best Canton zip code I can see is 44718, which is only down about 7.6% where as 44710 is down 42%, since 2005, in real dollars. 

    A person putting their money in a mattress would have 42% more buying power with it today than someone who bought a median house in 44710 in 2005.

    I understand they've been collecting rent, but the OP needs to see the whole picture, including the appreciation loss, which is why many of these areas are priced the way they are regarding the 1% rule, which is what he was asking about. 

    0Reply
  • Luke Dilorenzo
    Lender · Portland, OR · Member since 2019 · 28 posts · 19 votes
    6y

    @Joe Liu

    I am in your same boat. I live in Yamhill county Oregon and just got under contract for a 4 plex just south of me. Purchase 3.5% down 460k, 2900$ PITI. Rents 950/ unit (3800/mo). I searched high and low and offered on a lot and now I'm almost to close with this one. It's not the best deal since it's fha and I have to occupy it for a year, however in 2 years I should be close to refi equity range and be close to a 1% rule.

    3Reply
  • Ryan Hall
    Rental Property Investor · Tampa, FL · Member since 2019 · 74 posts · 27 votes
    6y

    @Sarah Brown

    I agree with Sarah. Boise Idaho is currently over priced but a couple of the suburbs (Nampa, Caldwell) still meet REI financial sense.

    2Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    Forget the 1% rule just run the full numbers on each property. Some deals aren't good at 1% and need to be 1.5% due to low rents or bad tenant population and other deals can work well below 1% when they have strong tenants and higher rents. 

    High rents make cap/ex take up a lower percent. Also be sure to add a column for rent loss in C neighborhoods and below meaning for tenants who don't pay you/evictions. 

    8Reply
  • Shawn Foster
    Investor/Wholesaler/RE Agent · Kansas City, MO · Member since 2015 · 69 posts · 8 votes
    6y

    @Joe Liu How's it going? I'm here in Kansas City, MO and we can still get you the 1% rule. Feel free to reach out if you would like to chat more!

    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y

    @Joe Liu I would check out Columbus, Ohio. All of my investments meet the 1% rule

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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    4Reply
  • David Adams
    Rental Property Investor · Lafayette, LA · Member since 2019 · 40 posts · 42 votes
    6y

    @CJ M.

    I buy C class SFH in my area for $35-40K and rent for $750-$850/month all day long . Would never touch a 1% deal in my market

    0Reply
  • Marc Winter
    Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 3k+ votes
    6y

    2X in Scranton PA? YUP!

    You may have heard about real estate in Northeast Pennsylvania (NEPA). The greater Scranton area, and the dozen or so smaller towns around it have great investment and cash-flow potential. The market ranges from A to C- areas and is comprised of mostly single-family to four-plex properties.

    Price points are much lower than on the east or west coasts, however, rents are proportionally much higher, leading to positive cash-flow. Example: in NYC, say in Queens, an average 2-family brick house in a C+ neighborhood will cost $800K to $1M. However, the rent for a 3-bedroom apartment is about $2K to $2,500.That’s $5k/mo income total.

    In and around Scranton, 2-family houses in a C+ area are in the $80--$100K range. Rents for a 3-bedroom apartment are $800--$900.That’s $1,600/mo+. To make the same rate of return, the NYC property would have to generate $16k/month. Keep in mind, however, here it’s not an ‘appreciation’ play like in NYC or LA—it’s a cash-flow, income-producing play.

    2Reply
  • David Adams
    Rental Property Investor · Lafayette, LA · Member since 2019 · 40 posts · 42 votes
    6y

    @Marc Winter

    I would take cash flow over appreciation any day of the week

    1Reply
  • Michael Veloso
    Pittsburgh, PA · Member since 2019 · 27 posts · 7 votes
    6y

    I would also agree about the Northeast Pa area. I have a colleague who has invested there for years and generally finds units in developments so that the HOA fees cover a lot of the day to day for the property. He was a contractor by trade so he found units where value could be added and has done well. I am not familiar with the area but I know that some of the areas require owner residency, so make sure you do your research. Happy Hunting.

    0Reply
  • Terry Clothier
    Cordova, TN · Member since 2015 · 12 posts · 3 votes
    6y

    Memphis and Dallas are both good investments.

    0Reply
  • Irina Belkofer
    Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    6y
    Originally posted by @Account Closed:
    Originally posted by @Account Closed:

    @David Abbate

     many of these areas you can "throw a rock" at still haven't recovered from their peak real dollar value back in 2005- despite the tailwind of a massive bull market in the last 8 years. The best Canton zip code I can see is 44718, which is only down about 7.6% where as 44710 is down 42%, since 2005, in real dollars. 

    A person putting their money in a mattress would have 42% more buying power with it today than someone who bought a median house in 44710 in 2005 

    It means that zip 44710 has 42% of potential appreciation to reach the level of 2005.....plus great cash flow for these years as well.

    Recently, I've see a listing at MLS with triple the price it was 4-5 years ago, when the investor bought it. So, the house was rented at 3% of the purchase price for these years (36% gross income) and now it's gonna be sold to triple the invested money.

    Area is very decent and the price is on the low end of the today’s market. I bet it’s better return than put these money under a mattress 

    0Reply
  • Bob Prisco
    Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes
    6y

    @Joe Liu  Cleveland without a doubt,. Typical PP all in 64kish, rent 950- 1200  vs 5 years ago PP 40kish, 

    Good luck 

    0Reply
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