Cash flow properties, need advice on what cities to look

Buying & Selling Real Estate Discussion 33 Replies

Can someone give me advice on what are some of the cities that are worth looking into for relatively low cost properties that cash flow?

There is nothing in my local area that cash flow unless you put 50% or more down. So now I am considering looking for out of town properties that cash flow.

Objective: I am conservative, looking for stable cash flow long term, prefer areas that are not too shady and tenants who don't mind paying rent by direct deposit.

Any advice on where to look would be appreciated.

Thanks
MJ

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Atlanta has some good yield if you buy in the right locations for multifamily.

Medium allworldrealtyJoel Owens, All World Realty | [email protected] | 678‑779‑2798 | http://www.AWcommercial.com

You know what they say, "Everything is bigger in Texas!"

"Low cost" means different things to different people. Please be more specific.

There is also the issue of initial vs ongoing cost. We worked with an agent in Atlanta who was selling $11,000 and lower houses to one buyer, but I'll bet he has to almost completely re-do them between tenants, and has high turnover.

It is best to put 100% down, then you do not have to worry about loans in these dangerous economic times, with government run amok.

Some properties have appreciation potential, while others may be lucky to keep up with inflation.

Joel, all of that exterior wood on those quads looks like a big maintenance headache, and the numerous other buildings in the complex will tend to lock rents to whatever the others are charging.

How about Rochester,NY . I know it's not too close to NYC where you are but it should be pretty easy to cashflow there.

Originally posted by @Joel Owens :
Atlanta has some good yield if you buy in the right locations for multifamily.

Joel Owens hey Joel how are you? Yeah we would like to know if you have any good recommendations for Atlanta.

Originally posted by Joseph M:
How about Rochester,NY . I know it's not too close to NYC where you are but it should be pretty easy to cashflow there.

Good idea, I haven't thought about that, I think both Rochester and Buffalo are worth looking into, thanks Joseph

Some parts of Ohio are good relative to CF.

Medium logo 03Ben Leybovich, JustAskBenWhy.com | [email protected] | 1.888.508.9643 | http://www.JustAskBenWhy.com | Podcast Guest on Show #61

Yes Buffalo has many low priced properties as well. I've had family that did pretty well in the Buffalo and Rochester area. I have done some deals in the Buffalo area but they were wholesale deals versus buy and holds. You might also want to look into Niagara Falls as well.. Haven't look at the properties there for a while, but should be similar to Buffalo/Rochester prices..

I think Atlanta and parts of Ohio as other mentioned are good suggestions too.

I do envy people that live in an area where properties can be bought cheaply.

I'm considering moving because of the cost of properties in SoCAL.

Our market in Buffalo is very similar to Rochester, right down to the point of the market changing street by street, let alone blocks. Many areas that have great value for rehabs, others that are buy hold for cash flow.

Originally posted by Joseph M:

I do envy people that live in an area where properties can be bought cheaply.

I'm considering moving because of the cost of properties in SoCAL.

I dont envy you guys trying to work deals in your markets, cant buy a box with no land for what you can buy a decent house here for, NYS though our taxes suck.

I am not working in or endorsing the falls yet as it just doesnt seem to be ready for the bounce back, way too many boarded up homes of no value and the rental market is tough too. I would probably look a little deeper if I had too but theres more than enough still working in my current areas with no end in sight.

Stephen,

Those buildings are from years ago and no longer available. That website is an old Joomla site I have that I keep because it has page 1 rankings.

I am having 2 new Wordpress websites completed with line by line custom code so that I can do anything with the sites I want to. They are truly one of a kind. One is for triple net properties nationwide and the other is for apartment investing nationwide. Those are my 2 areas of focus and I do not do anything else. Yes on those quads that is original cedar wood siding. You simply take off and put hardi-plank on and repaint.

I do not mess around with duplex's, tri-plex's , or quads anymore. I do large scale listing and sales in the commercial space. What you mentioned about 11,000 houses in Atlanta isn't worth my time. A big headache for an ultra low, low payout.

Hi Mary,

I have been doing very well and also talking with your brother. I will send some things and projections his way and you can discuss them related to multifamily.

Atlanta has great yields but you have to buy in the right spots just like other places.

Texas is good but some commercial research I have read lately points to a possible bubble in a few years with all the building and permitting going on for apartments. That could lead to occupancy drops and rent reductions or staying flat with an overbuilding bubble when supply catches up with and passes demand. The research analyzed how much permitting had picked up and expected units coming online within the next few years versus population levels etc.

Medium allworldrealtyJoel Owens, All World Realty | [email protected] | 678‑779‑2798 | http://www.AWcommercial.com

Texas is good but some commercial research I have read lately points to a possible bubble in a few years with all the building and permitting going on for apartments. That could lead to occupancy drops and rent reductions or staying flat with an overbuilding bubble when supply catches up with and passes demand. The research analyzed how much permitting had picked up and expected units coming online within the next few years versus population levels etc.

Joel, do you have links to the research? Apartment overbuilding has happened in TX before, but demand is in the lead for right now.

[email protected] | 214‑929‑6545

Originally posted by Joseph M:
How about Rochester,NY . I know it's not too close to NYC where you are but it should be pretty easy to cashflow there.
I was in Rochestder and drove around NY through Watkings Glen, the southwest corner, Niagara Falls, and back to Rochester a few years ago for the AWA convention. People everywhere complain about crushingly high property taxes. They do not have the Proposition 13 which we enjoy in California.

Originally posted by David Niles:
I am not working in or endorsing the falls yet as it just doesnt seem to be ready for the bounce back, way too many boarded up homes of no value and the rental market is tough too.
The US side was a downright disgrace compared to the Canadian side when we visited in2008. We were shocked.

Originally posted by Dean Letfus:
Memphis has some of the best yields in the USA, look here!
We've got two houses there, but would like to find a better property manager. Any suggestions? We're also shopping for more properties, so what areas do you like? We prefer newer and nicer, such as the brick 3/2 in Cordova we got for $85,000.

Yeah that is true , some of the taxes are definitely insane in NY...but it does seem that despite that people are able to cashflow on properties in Rochester,Buffalo, and other areas around there.

True Prop 13 does help a lot if you have owned your house a long time.

I heard there was some talk about getting rid of Prop 13 or overturning it...but I doubt that would happen.

I imagine home prices would go down a LOT in CA if that happened..especially in the more expensive areas.

But now because of the whole housing crisis there seem to be a lot of markets with good cash flow and probably lower property taxes than NY. Lot's of Florida markets look good.

Originally posted by Stephen Masek:
Originally posted by @Dean Letfus :
Memphis has some of the best yields in the USA, look here!
We've got two houses there, but would like to find a better property manager. Any suggestions? We're also shopping for more properties, so what areas do you like? We prefer newer and nicer, such as the brick 3/2 in Cordova we got for $85,000.

Hi Stephen, may I ask how much does your $85K property in Memphis cash flow per month?

Thanks Dean, will check out Memphis also.

BTW, what cities do you guys think offer the "sweet spot" for cash flow properties?

It seems that low end properties (eg: around $50K) do cash flow very well but I am worried about the caliber of tenants these properties attract. On the other hand, while properties that are about $100K or higher may attract better quality tenants, the cash flow is very unattractive.

In Memphis the 60 to 90K market is very solid. Rents at the price will be from $875 to $1350 a month

Dean Letfus, Memphisinvestment.com | 901 264 8674 | http://memphisinvestment.com/

Originally posted by Dean Letfus:
In Memphis the 60 to 90K market is very solid. Rents at the price will be from $875 to $1350 a month

Thanks Dean, what neighborhood in Memphis should I look at?

@Mary Joe - I really like the Memphis market, the Dallas/Ft. Worth market for long-term buy/hold markets. I am also starting to invest in Nashville in Tennessee and researching Austin and Houston over in Texas.

Your question about Cash Flow has a lot of other detail that you should consider and maybe share before really knowing a market that fits your goals. Are you talking Cash Flow as a creation of using leverage? If so, you can find cash flow just about anywhere. It all depends on what price point you are looking at, what your risk tolerance is and how much you are willing to put down. I have been researching markets for a long time and thru my success and failure I have come to learn that the properties themselves and finding someone to help you if you are investing out of area are really secondary to researching a good market that fits your long term goals.

Every market is going to offer something a little different whether it is good opportunity in SFR or multifamily or good opportunity for short term investing while others are good for long term investing. You really have to know what your expectations from investing are and then find a market and/or strategy that fits those goals.

Good luck with your investing - Chris

Medium memphis invest logo 2015Chris Clothier, Memphis Invest, GP | 901‑751‑7191 | http://www.memphisinvest.com

Pittsburgh is a very great place to invest

I have a few properties.....

Last year i bought a property for 13k + 3K repair 4 br brick house that i rent it for $750 a month.Yes the area is not one of the best but hey look at the numbers........I still do not have any problems with my section 8 tenants:)

Originally posted by Joseph M:
Yeah that is true , some of the taxes are definitely insane in NY...but it does seem that despite that people are able to cashflow on properties in Rochester,Buffalo, and other areas around there.

The city taxes are a fraction of the suburbs and why lower income city rentals cash flow nicely.

Originally posted by Stephen Masek:
The US side was a downright disgrace compared to the Canadian side when we visited in 2008. We were shocked.

Still not much better now Stephen, the casino was supposed to help but hasnt done much besides help itself, commercial and residential throughout that area are still boarded up.

The US side had gone the quick cash industrial route many many years ago and now pays the price, the Canadians took the slow growth tourism way and are a real sparkling gem.

We do doubles in the city all day long for $35-$45k, average is $500-$600 per unit depending on area and quality of units, so $1000-$1200 monthly.

Thanks all for the feedback.

With these low cost ($20K-$30K range) properties that CF, it seems that most landlords are not concerned whether the tenant has any savings in the bank as long as they have income verification and pass the credit and background check, am I correct?

I am very new to this type of investment, the ones I currently rent out I always require that besides the typical income/background/credit check, the applicant must also provide bank statement for the past 3 months showing a savings of at least 9 times the monthly rent. Based on me and my brother's research, it seems that most landlords for these type of ppty are not concerned that the tenant is living from paycheck to paycheck, am I correct?

Do you guys see very high turnover with tenants who live paycheck to paycheck?

I am taking notes of all the different areas you guys suggested, will get myself organized and get in touch with you all for further details shortly.

Thanks
MJ