Best States/Cities/Neighborhoods for rental properties?

Question

Hey There BP world~

I am newbie, female investor looking to learn, grow and seek out advice from experts to grow my empire! At the current moment, I am almost feeling overwhelmed with the abundance of resources and information out there available so thought I would turn to this community.

I am looking to invest in multi-family properties (duplex and fourplex) that will turn into rentals for cash flow. I am open to using BRRRR method. With that in mind, curious what everyone's top States/Cities/Neighborhoods are for rental properties?

Looking forward to hearing people's thoughts and feedback. Thank you!

Alyssa Dyer · Answer

@Chandler Jensik

Michael Ballard · Answer

@Chandler J

I am currently getting $300 and $500 or my two houses. That is after debt, 5% vacancy, 5% repair, 10% PM, insurance and taxes.

Both of my rentals are Section 8. I also Brrrr'd both my houses.I don't know if those numbers work on turn key properties or not.

Matt K. · Answer

You have to define what best means to you, anywhere can work...but anywhere isn't always best.

The easiest way for me was to start with a budget and then find a market that fit my needs but also my restraints (budget). From there I defined what type of tenant I was looking to provide service to and then from there properties that are the best for that specific role.

To give you a more specific example, I had a smaller budget (say 130/door max) and was looking to appeal towards a family with school aged children.  KC area fits the budget, then from there I picked an area of the suburbs with good schools. Then from there I found a duplex in a quiet neighborhood (cul-de-sac) that was on the bus line for a good local school.

Now the duplex is a 3/2 with 2 car garage. It doesn't have a yard, but does have a pool etc ...all exterior maintenance managed by HOA same with snow and garbage. The fee is small for that and I capture it in the rent.

is this the best deal? For me yes, someone else no... But I did get a long term family that wants to stay for the remainder of their kids schools years ...so it worked out well for me/them.

NaDean Bowles · Answer

@Sara Waters I'm in the Little Rock market and we have great numbers here.  I'm wholesaling a SFH that needs a rehab but is already structurally set up where it would make a very profitable duplex too.  Contact wholesalers in the markets you are interested in and you'll find some.

Alyssa Dyer · Answer

@Chandler J. happy to discuss OKC with you anytime!

Chandler J. · Answer

@Alyssa Dyer @Michael Ballard

Thank you both!  That helps a lot!  And I am glad to hear it is probably just low inventory driving prices and not so much appreciation.

If I could buy right, I was seeing ~$250 per door for the properties I was looking at, which are more turn key style investments with only minor updates needed. That is after debt, assuming 8% vacancy, 10% repairs and self-managing.

Alyssa, I'd love to get in touch or meet up to discuss further and hear about your experiences and other examples.  I am determined to jump in this year and getting some local, real-life examples would be so appreciated!

Dustin Turner · Answer

A lot of people come to Little Rock for cash flow as well. But I agree with @Alyssa Dyer, BRRRR isn't as easy as it sounds.

That being said, there are good deals here. We bought a house in June 2019 for $16,500. It rents for $800 a month. We just sold it to another investor for $48,000. Would have been a great BRRR for someone.

Chandler J. · Answer

Hi @Alyssa Dyer and @Michael Ballard

Would you mind sharing what you see for monthly cash flow from your OKC rentals?  I am a rookie looking to buy my first property this year and am curious to see if the numbers I see in my analysis are close to what you have gotten in reality.  I live in the OKC metro and am targetting the surrounding cities (Moore, Yukon). 3 months ago the numbers made a lot more sense than they do right now. Prices seem to have jumped up during the summer...is that typical or is the market actually appreciating that fast?  Thank you in advance!

Alyssa Dyer · Answer

@Sara Waters people often come to OKC for cash flow, but brrring is tough to pull off here while you're out of state! It can totally be done, it just that your numbers likely won't look like what most people think when they think BRRR. Happy to dig in deeper on what it looks like from a cash flow prospective though!

Michael Ballard · Answer

Phew this is a tough one. While I would not say I am an expert I will throw in my two cents. It really depends on your overall short term and long term goals. You can invest in the equity based markets like Seattle, but it can be difficult to cash flow there. Or you can invest in a more cash flow based market like Oklahoma and not see great returns on equity. Many investors have had success in both scenarios. I live in Seattle and own homes and invest in Oklahoma. Both have their pluses and minuses. I look for markets that have decent population growth, income growth, and lower crime. Good luck in your investing.

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