Are there areas that offer the best price-to-rent ratios?
Hello,
Am looking to purchase a four unit but where I live those are going for $700k + and it is out of my price range, nor would it make financial sense because it wouldnt cashflow at all. That said, where Im originally from, four plexes are much cheaper and cashflow much better, but I would like to continue to head West, not back East. Anyone have any ideas for finding specific areas where the price-to-rent ratio tend to be better for cashflow? Is it generally the midwest? Best deal ive found are about 125:1 out West whereas in the midwest, Im seeing 95:1 and better. I am somewhat mobile and am considering relocating. Tia.
#2 All Forums Contributor
- Investor
- Austin, TX
Killeen Texas has fourplexes for 350k that make 4k in income
Going west from Colorado is generally not going to get you better price to rent ratios. Much of the investor returns further west are for appreciation, not cash flow. That's not a blanket rule, as there are pockets that do have higher price to rent, however they're usually in less desirable areas.
While rent to price ratio is a useful metric, I’m not certain it should be the primary criteria.
In my experience, higher rent to price ratios are found in “slower” less dynamic markets - higher rent to price ratios are found in lower quality properties with financially weaker tenants which generally increases vacancy & credit losses and higher repair and maintenance expenses. So often numbers that look good on paper are not met in real life.
I would suggest you consider your financial goals and overall financial situation.
Should growth of your capital and equity be the primary focus at this time?
Will the cash flow generated from a fourplex have a major impact on your overall income?
Just asking the questions…….
Quote from @Marc Roberson:
Hello,
Am looking to purchase a four unit but where I live those are going for $700k + and it is out of my price range, nor would it make financial sense because it wouldnt cashflow at all. That said, where Im originally from, four plexes are much cheaper and cashflow much better, but I would like to continue to head West, not back East. Anyone have any ideas for finding specific areas where the price-to-rent ratio tend to be better for cashflow? Is it generally the midwest? Best deal ive found are about 125:1 out West whereas in the midwest, Im seeing 95:1 and better. I am somewhat mobile and am considering relocating. Tia.
I had thought about investing in Fort Coliins about 10 years ago, loved it there, regret not doing so. But as one of the neighbors there, Greeley, said "go west young man". In other words, go where the peopl are going. It's more important than the price/rent ratio. Of course it would be noce to get both.
Since you're mobile, that's great. I find myself mobile these days, but I've settled for the NY/TN/FL triangle. Otherwise, I would've loved Texas, AZ, CO if I were going west.
My advice is, don't go west, but find your triangle in strong, vibrant and growing areas. Good luck.
Quote from @Marc Roberson:
Hello,
Am looking to purchase a four unit but where I live those are going for $700k + and it is out of my price range, nor would it make financial sense because it wouldnt cashflow at all. That said, where Im originally from, four plexes are much cheaper and cashflow much better, but I would like to continue to head West, not back East. Anyone have any ideas for finding specific areas where the price-to-rent ratio tend to be better for cashflow? Is it generally the midwest? Best deal ive found are about 125:1 out West whereas in the midwest, Im seeing 95:1 and better. I am somewhat mobile and am considering relocating. Tia.
Best rent to price ratio I'm seeing in central OH are in the tertiary markets. They are smaller towns and villages but are within a 35-45 minute drive of a major metropolitan area, so the population and rental demand is there, but the pricing in general is still relatively low. I did a 4plex deal in Delaware OH last year that was a purchase price of $340K, and grosses about $4100 a month.