What's the Best Cash Flow Market in the Country?

155 Replies

Which city/region offers the best chance at rental property cash flow in this country? Anybody have any guesses? 

Denver or Vegas. I'd guess something more mid-western, but I feel this is going to be a "wow, really!?" kind of answer. 

@Scott Trench It depends on how you determine "best." I've seen cash flowing deals be easily scooped up in the last two years in OKC, but the ease of transaction and access to deals.. as well as how good the deals are is hugely dependent on the provider you're with. I'm sure this is the same in other markets. If you're strictly talking where can you max out the max cash flow with all other factors aside, I'd assume Detroit as well!  

Originally posted by @Scott Trench :

Which city/region offers the best chance at rental property cash flow in this country? Anybody have any guesses? 


 

I went to the zoo and saw a piece of toast in a cage. 

The sign said “bread in captivity”

Originally posted by @Scott Trench :

@Kris H. Rental Properties - 1-4 unit buy and hold rentals. This is actually what 90%+ of our users in poll after poll state is their primary objective. Any price range. 

Wow 90%+ of members are targeting 1-4 units.  Telling.

 

Originally posted by @Kris H. :

@Matt Ward I interpreted that as 4plex or lower, not max 4 units in portfolio. Not sure I’m correct but that’s how I read it.

Yes, agreed, meaning 90%+ of people are not targeting true multifamily (5+ unit properties).  Seems odd.

 

I was thinking it would be really interesting to have a database for deals where people could share details on their details - cash flow, CoC, etc. Then you could answer this question simply by querying the database.

I know BP has a deals feature but it seems to be light on details much of the time. 


Detroit, with a median rent to price ratio of 1.22, is correct if we only consider markets over 100k in total population. 

At 25k and over in pop, the highest cash flow market would be Flint, Michigan with a rent to price of 1.81

If we don't filter for population at all, the answer is actually Benns Church, Virginia. The reason for this is this census designated place is almost fully comprised of mobile homes worth a median of 11k with contract rents being reported as $950.

That being said, the cash flow you actually would realize in these markets will likely be a lot less than what your pro-forma suggests due to the massive risk associated with these markets. 

Originally posted by @Matt Ward :
Originally posted by @Kris H.:

@Matt Ward I interpreted that as 4plex or lower, not max 4 units in portfolio. Not sure I’m correct but that’s how I read it.

Yes, agreed, meaning 90%+ of people are not targeting true multifamily (5+ unit properties).  Seems odd.

 

Loans for commercial (5+) compared to residental (4 or less) multifamily differ and even though you have agency loans and subsidies, a large downpayment is required and therefore you go into syndication or partnerships which are a bit of an unknown for many new to the game. 

 

Best market for net return after all expenses, including PM fees of 16% (8% tenant placement, 10% base)? The market you know best.

Best cash-flow to me is the wrong question. While $200-$300 per month per house sounds exciting (LOL) the money is made capturing equity at the buy and adding value.

I'll take 20% equity at the buy ($68k avg here) as the meat of my return in a strong appreciation market over chasing hundreds of dollars in monthly CF any day.

Buy where you know and get a deal.

If an agent or PM or TK provider says their market is best (shocking), ask yourself best for who and discount accordingly.

Any database you build will have these biases and they are the loudest.