Best City/State to invest in?
Member since 2020 · 20 posts · 8 votes
Best City/State to invest in?
Most Popular Reply
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
6yOriginally posted by @Dorothy Monette:
My head is spinning. I've spoken to several people and I just don't know which way to go. I need to put a property on the market next month and do a 1031 exchange. Once sold and after fees and expenses, I will need to reinvest somewhere around $230K
Welcome aboard Dorothy. Many markets available. Cleveland is the one I am most familiar with and it's also very popular with investors across the USA so I figured you'd get some value out of reading The Ultimate Guide to Grading Cleveland Neighborhoods. I also have similar guides that you may want to look over for Kansas City, Missouri. & Birmingham, Alabama.
In addition there are tons of other turnkey markets out there besides those listed above. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors
- Cincinnati, Ohio
- Dayton, Ohio
- Toledo, Ohio
- Youngstown, Ohio
- Cincinnati, Ohio
- Memphis, Tennessee
- Saint Louis, Missouri
- Indianapolis, Indiana
- Detroit, Michigan
- Erie, Pennsylvania
- Louisville, Kentucky
- Milwaukee, Wisconsin
- Jackson, Mississippi
Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.
One thing to note when looking at the individual markets, you can make or lose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.
- Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
- Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
- Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
- Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
- Make sure your property manager is a licensed real estate brokerage.
- Google Clayton Morris and/or Morris Invest for a cautionary tale of what not to do when buying turnkey real estate
- Understand you can not eliminate all risk, only mitigate it. If you are risk averse, real estate, (especially out of state) is not for you.
30 Replies
- 6yCurt DavisBusiness MemberFlipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votesThe best place to invest in is the place that you feel most comfortable investing in. Try to find something local and if not look long distance. There is no shortage of turnkey providers out there.
Good luck!
Curt Davis - KAIZEN Realty538 Reviews - Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes6y
Originally posted by @Dorothy Monette:
My head is spinning. I've spoken to several people and I just don't know which way to go. I need to put a property on the market next month and do a 1031 exchange. Once sold and after fees and expenses, I will need to reinvest somewhere around $230K
Welcome aboard Dorothy. Many markets available. Cleveland is the one I am most familiar with and it's also very popular with investors across the USA so I figured you'd get some value out of reading The Ultimate Guide to Grading Cleveland Neighborhoods. I also have similar guides that you may want to look over for Kansas City, Missouri. & Birmingham, Alabama.
In addition there are tons of other turnkey markets out there besides those listed above. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors
- Cincinnati, Ohio
- Dayton, Ohio
- Toledo, Ohio
- Youngstown, Ohio
- Cincinnati, Ohio
- Memphis, Tennessee
- Saint Louis, Missouri
- Indianapolis, Indiana
- Detroit, Michigan
- Erie, Pennsylvania
- Louisville, Kentucky
- Milwaukee, Wisconsin
- Jackson, Mississippi
Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.
One thing to note when looking at the individual markets, you can make or lose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.
- Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
- Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
- Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
- Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
- Make sure your property manager is a licensed real estate brokerage.
- Google Clayton Morris and/or Morris Invest for a cautionary tale of what not to do when buying turnkey real estate
- Understand you can not eliminate all risk, only mitigate it. If you are risk averse, real estate, (especially out of state) is not for you.
- Real Estate Agent · Dubai, UAE · Member since 2020 · 41 posts · 4 votes6y
The best and most promising location to invest In property is in Dubai.
- Member since 2020 · 20 posts · 8 votes6y
Hi James, Thanks for info. I appreciate your response. Much of what you recommended, I'm familiar with. I've been in Real Estate for 17 years. :-) I will definitely get a property inspector and while out shopping for property, I'll have my BF with me. He's a General Contractor and Civil Engineer. Finding a property is not so much my concern as ROI. I'm leaning towards Dallas area, but dang their property taxes are so high. That really cuts into my revenue. And, I've got to call some insurance agents to get pricing on premiums. I understand that might be high too. Thanks again for your wonderful response. Lots of great info!
- Member since 2020 · 20 posts · 8 votes6y
Anthony, Buying out of the country scares me!
- 6yMike D'ArrigoPro MemberTurn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
@Dorothy Monette Since you're in CA, you'll really have no choice but to go out of state if cash flow is your primary objective. If that's the case, choose the market that has the best combination of cash flow and strong economic and demographic trends. Look for market with healthy population growth, job growth and modern, diverse economies. There are a lot of market that cash flow but have stagnant or declining populations and jobs. The light cash flow well in the short term because prices are low, but it doesn't bode well for the long term value of the asset. Personally, I like Indianapolis and Kansas City. We've been active in both markets for about 10 years. DM me or give me a call if you'd like some insight on either.
- Member since 2020 · 20 posts · 8 votes6y
@Mike D'Arrigo (I hope you get this message, because I'm not sure how to tag you. I did the @ and your name, but it doesn't highlight. I'm still trying to learn this site. Being from San Jose, you are correct. I want to sell my properties before the pass the prop 13 repeal disguised as an Education bill. My tenant gave notice, so the time I thought I had to do research has been shortened and I need to act sooner than later. I found some great info on the Dallas area today and like you mentioned as being important, lots of jobs there, rentals are in demand in the areas north of Dallas. They say Millenials are not interested in owning properties, so they are renting. I'm really starting to think this maybe the area for me. I'm also thinking of moving there permanently. Thanks for your reply. :-)
- Real Estate Agent · Dubai, UAE · Member since 2020 · 41 posts · 4 votes6y@Dorothy Monette
You have nothing to be worried about investing in Dubai. There are free-hold properties where foreign investors own the property for a lifetime. And The UAE is a tax-free community.
The real estate sector in the United States is crowded with too many investors already, this makes it very competitive and leads to higher prices.
You should consider investing in real estate in Dubai
There is a guaranteed 25% ROI yearly on investing in short holiday rental properties in Dubai
Let’s discuss
- Rental Property Investor · Sandefjord, Norway · Member since 2015 · 202 posts · 87 votes6y
@Anthony Saheed
There is no such thing as a guaranteed 25%. Please don’t make false statements.
Originally posted by @Dorothy Monette:
@Mike D'Arrigo (I hope you get this message, because I'm not sure how to tag you. I did the @ and your name, but it doesn't highlight. I'm still trying to learn this site. Being from San Jose, you are correct. I want to sell my properties before the pass the prop 13 repeal disguised as an Education bill. My tenant gave notice, so the time I thought I had to do research has been shortened and I need to act sooner than later. I found some great info on the Dallas area today and like you mentioned as being important, lots of jobs there, rentals are in demand in the areas north of Dallas. They say Millenials are not interested in owning properties, so they are renting. I'm really starting to think this maybe the area for me. I'm also thinking of moving there permanently. Thanks for your reply. :-)
I cant image prop 13 being repealed. They have tried for years but it always fails.... i would wait and see what happens IMO.
As for investing out of state.. IMO this is a bad idea, unless you are moving to the new area.
And by the way... looks like the whole prop 13 repeal thing is only focused on commercial buildings with carve outs for small businesses. https://www.oag.ca.gov/system/...
Do your research before making a decision :)
The easiest way to stop your head from spinning is to just look at each component one-by-one, and let that help you get into a property. So like first--what kind of property do you want to buy? Do you want to put work into something or buy turnkey? After that, what's your goal with the property--do you care more about cash flow or appreciation potential, etc.? Then, any preferences on SFR vs MFR or any other preferences? Just answering those in order will make the picture more clear. Happy to help you widdle it down if you want!
- Member since 2020 · 7 posts · 4 votes6yDenver, Colorado has sustained rising prices for multiple decades. It is currently one of the top destinations for retired workers with pensions that want an active outdoor lifestyle.
Also for business owners escaping their State's new higher taxes. We call them Tax Refugees. They often liquidate a business of 10 to 100 employees and relocate. Any State in debt likely has intentions of raising taxes. State Tax increases are negative on real-estate.
Colorado has taxes on oil/gas that have revitalized rural schools, roads, and other infrastructure. It also has a solid farming community, actually farming brings in more revenue than tourism. The new interstate and federal roads to increase trucking are well underway.
Colorado is the only state where all water flows out of the state. the water supply is the mountain range. Nature and long-term management of tort laws protect the water supply. Water quality and rights will be a huge deal in the US beginning in 2020 over the next decade.
Colorado also has hooves on the ground. The National Bison Association is HQ here. I enjoy the opportunity to buy many products and produce from the network of local farmers. And then, there is the discounts too.
Trends in Denver: the mass transit system runs from Denver, Boulder, Golden, and East and South. The airport is centrally located. Amazon facilities enjoy the airport, the well established continental E/W Rail systems, major Semi-Truck routing.
Home Trends: From Downtown Denver South to Denver Tech Center (DTC) lots from 8,500 sq ft and up are being scraped and rebuilt into $1.1$ to $2.2M. Many of those relocating from DC area to California area enjoy this sweet spot. Buying a $600K house of 1,200 sqft to scrape and build a 3,000 sqft house more set up for rentals or sharing is common. One such house down the block from me is subletting 4 people at $1,200 a month each, most do not want cars. That house was not listed and sold for $550K very quickly. A couple of the renters walk past my security camera each morning to catch mass transit 3 blocks away. I talk to everyone. They love the area and tell me they are saving from renting downtown where the wages are not as high for their kind of employment.
A very successful investor once told me to look for the P's. Political (first!), Placement (location), Psynancing (Financing), Price, and Profit history.
Look at Taxes, location to multiple resources and cross-roads, banks willingness to finance, price stability, and profit history.
Was talking to my real-estate friend about the Federal Reserve testimony to Congress - how we can absolutely expect a significant decrease in interest rates. She was listing a house in North Denver at $250K. Very small lot, 2 bed, one covered car port. Still, not bad as the population continues to grow. In my opinion, the sweet-spot is in homes $550K to $650K where the lot size and zoning encourage scrape or expansion in square footage. Lots size really matters - 9,000 sqft or larger
Best of luck to you!
- Member since 2020 · 20 posts · 8 votes6y
Mary, I have done my research. It is NOT just towards commercial buildings. I am moving out of this state.
- Member since 2020 · 20 posts · 8 votes6y
Thanks Ali, That is how I started tackling it. I want turnkey. I don't have time to fuss with repairs, nor do I want the headache. I'm going to buy either new construction or something within a few years of being built. I figure that will limit the number of repairs that will come up.
- Member since 2020 · 20 posts · 8 votes6y
Wow Rob! Lots of info. Thanks for all the details. I will review and research.
Originally posted by @Dorothy Monette:
Mary, I have done my research. It is NOT just towards commercial buildings. I am moving out of this state.
Any chance you have a link? There is a lot of chatter about this on Facebook, but it has since been shown to be false (not surprisingly).
- Rental Property Investor · Boulder, CO · Member since 2015 · 3 posts · 2 votes6y
James - thanks for the Cleveland report. We recently invested there (Gordon square). We are also in Vandalia, OH. Wasn’t so sure about the rest of cleveland (but open to it). The guide should help that cause. Thanks.
Originally posted by @Dorothy Monette:
Mary, I have done my research. It is NOT just towards commercial buildings. I am moving out of this state.
I linked the actual text of the proposition above - did you read it?
I also did some research and it looks like there is a meme going around saying prop 13 will be repealed and that they are doing a bait and switch.
I highly suggest you understand what the legal landscape is before making a decision that may be based on incorrect information.
As a Californian who moved out of state i understand the reasons why that is a good idea - however if you are basing a move solely on the fear of a prop 13 repeal? Not sure about that
- Investor · Member since 2019 · 17 posts · 11 votes6y
Nashville is about the best place I have found. Growing, not enough property. 230K will probably get you a condo. A lot of AirBNB in Nashville also.
- Rental Property Investor · Augusta, GA · Member since 2019 · 129 posts · 112 votes6y
Crazy to think that Augusta, GA is still not as widely talked about as it should be. @Dorothy Monette we have military, cyber command, NSA, industry, medical, university, manufacturing, etc. It's a smaller market, getting more competitive, but still one of the best markets in the country and low barriers to entry. The pricing of homes is still one of the most competitive in the country. During the last real estate dip, we were buffered well and only experienced about a 6% dip compared to the rest of the country. I never count on it, but the appreciation has been tremendous in the last few years.
- 6yCory LucasPro MemberRental Property Investor · Brighton, IL · Member since 2019 · 431 posts · 139 votes
@Dorothy Monette sounds like a good problem to have. Best of luck, good looking RV storage facility close to where I live for a pretty good price if you’d want to entertain something like that? ;)
@Mary Mitchell the prop 13 on the ballot is NOT a repeal of the 1978 law. It’s a brand new one read more here: https://www.dailybreeze.com/2020/02/16/the-many-flaws-of-prop-13-the-2020-impostor/amp/.
Read up before you talk smack to others.
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