Best Cities for High Cash Flow Multi-Family?

Question

Hi all,

I'm actively looking for multi-family investment opportunities with strong cash flow. Currently exploring Birmingham and Cleveland — would love to hear your thoughts or experiences with these markets.

Are there any other cities you'd recommend for high cash flow potential (especially for remote investors)?

Thanks in advance!

Nicholas L. · Answer

@Angela Davis

so there really isn't cash flow anywhere right now, even in lower cost markets, with interest rates so high. and, chasing "cash flow" can have negative consequences:

https://www.biggerpockets.com/forums/48/topics/1242392-rough...

https://www.biggerpockets.com/forums/48/topics/1137397-balti...

https://www.biggerpockets.com/forums/432/topics/1231840-sell...

https://www.biggerpockets.com/forums/311/topics/840134-memph...

https://www.biggerpockets.com/forums/963/topics/1195280-expe...

I know New York is a tough market, but can you pick a place within an hour or two of you, if where you live is too expensive? this lets you be hands on - you're not thousands of miles away if something goes wrong, or someone is not responding. that way you can build a network in person, see properties in person, manage your team in person, etc.

hope this helps

Drew Sygit · Answer

@Angela Davis

Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location/neighborhoods to invest in.

Why is Property Class so important for investors to understand and apply in their investing strategies?

Because the Property Class dictates the Class of the tenant pool that the property will attract.

The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.

Both Property Class and Tenant Class affect what type of contractors, handymen and property management companies will work on a property.

If you buy & renovate a property in Class D area to Class A standards, what Tenant Class will rent it?

Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?

So, if you fail to apply the correct assumptions to a property, your expectations won’t be met and it may even be a financial disaster.

We use the following to rank Property Classes, in order of importance:

• Property Tenant Pool: closely linked to location, but not always.
• Property Location: closely linked to tenant pool, but not always.
• Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”

Key metrics for each Property Class:

Class A Properties: Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years. Tenant Default: 0-5% probability of eviction or early lease termination. Section 8: Class A rents are too high and won’t be approved. Vacancies: 5-10%, depending on market conditions. Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.

Class B Properties: Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years. Tenant Default: 5-10% probability of eviction or early lease termination. Vacancies: 10-15%, depending on market conditions. Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation. Section 8: Class B rents are usually too high for the Section 8 program.

Class C Properties: Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability. Tenant Default: 10-20% probability of eviction or early lease termination. Section 8: Class C rents usually meet program requirements, proper screening still recommended. Vacancies: 10-20%, depending on market conditions and tenant screening. Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation. Class D Properties: Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”. Tenant Default: 20-30% probability of eviction or early lease termination.

Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection. Vacancies: 20%+, depending on market conditions and tenant screening. Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.

Where did we get our FICO credit score information from?

Check out this chart:

FICO Score

Pct of Population

Default Probability

800 or more

13.00%

1.00%

750-799

27.00%

1.00%

700-749

18.00%

4.40%

650-699

15.00%

8.90%

600-649

12.00%

15.80%

550-599

8.00%

22.50%

500-549

5.00%

28.40%

Less than 499

2.00%

41.00%

Source: Fair Isaac Company

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

Metro Detroit has 132 cities, the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying. Check out the map on our website where we’ve made this all easy to follow.

We can also share numerous examples of properties & portfolios we’ve assisted investors with!

DM us if you’d like to discuss this logical approach in greater detail!

Evan Hopple · Answer

@Angela DavisCleveland has a healthy duplex market but fewer 4+ unit multi-family. Dayton, OH is another good cashflow market that has more 4-12 unit inventory and is landlord friendly.

Joe Hammel · Answer

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I personally make well over $100k/yr cash flow from my portfolio here, which includes some multifamily. All of which, I’ve purchased within the last 5 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the “sweet spot” in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.

Kerlous Tadres · Answer

Hey Angela, Cleveland offers good cash flow potential, especially in areas like East Cleveland. However, property management can be tricky for remote investors. Birmingham has potential, too, but is smaller and less saturated. If you're open to other cities, I’d recommend Columbus, Ohio. It's growing, has a stable rental market, and is great for remote investors looking for strong cash flow.

Charles Clark · Answer

@Angela Davis

Hi there! Great markets to be exploring—both Birmingham and Cleveland have solid cash flow potential, especially for out-of-state investors.

A few others you might want to look into:

🔹 Milwaukee, WI – Strong rents vs. home prices, growing investor interest, and a variety of C/B-class multifamily options. 🔹 Kansas City, MO – Landlord-friendly, stable job market, and solid returns in working-class neighborhoods. 🔹 Indianapolis, IN – Consistently ranks as a top remote investor market due to affordability and strong rental demand. 🔹 Dayton & Cincinnati, OH – Still under the radar but offer great cap rates with proper management.

Let me know if you'd like broker contacts or boots-on-the-ground recommendations in any of these cities!

Charles Clark · Answer

@Angela Davis

Great markets to be looking into — both Birmingham and Cleveland offer solid cash flow potential, especially with the right property management in place.

I'd also recommend looking into Milwaukee, Indianapolis, and Kansas City. These cities tend to offer strong rent-to-price ratios, relatively stable tenant bases, and are friendly to out-of-state investors.

Make sure to factor in local landlord-tenant laws, property taxes, and job market trends when evaluating deals. Happy to connect if you want to swap notes or talk strategy!

Best of luck in your search!

Jeff Roth · Answer

Hi Angela-

You asked about multifamily markets with strong cashflow especially for out-of-state investors.

Great question!

We help investors, from around the country, invest in high cashflow multifamily properties in Michigan.

Specifically, we like the Lansing market for several reasons. It is the state capital. There is a lot of economic development going on driving jobs which drives housing demand. The cost of living is lower so your labor costs on repairs are lower. It is generally a landlord friendly place to do business. You can buy a duplex for around $135K that rents for $2,000 a month/gross rents plus or minus for example.

We have a strong team in place there to handle property management, repairs, and property inspection.

There are other markets in Michigan too but we like Lansing.

To Your Success

Max Feinberg · Answer

@Angela Davis Pittsburgh is still a great market for cash flow. You can pretty much name your cap rate here depending on your risk tolerance.

There is plenty of opportunity for crazy high cash flow in D type areas, as well as tons of properties that are in B-C type areas that don’t cash flow quite as well, but are in more desirable areas.

Pittsburgh also offers some cool submarkets that are about 45-50 min away from downtown that are their own self sustaining areas (universities, hospitals, etc) that offer the best of both worlds. You can find properties here that are slightly cheaper, have solid cash flow, and generally strong tenant bases. Being that they are a little outside of the city, they also often have lower taxes and more landlord friendly governments too.

James McGovern · Answer

I recommend Hartford Connecticut and Pittsburgh

Best Cities for High Cash Flow Multi-Family?

Best Cities for High Cash Flow Multi-Family?

Most Popular Reply

18 Replies

FICO Score	Pct of Population	Default Probability
800 or more	13.00%	1.00%
750-799	27.00%	1.00%
700-749	18.00%	4.40%
650-699	15.00%	8.90%
600-649	12.00%	15.80%
550-599	8.00%	22.50%
500-549	5.00%	28.40%
Less than 499	2.00%	41.00%