Looking for best city for MF investment.

24 Replies

I would like to choose best market for MF investment (5-20 units) and I am down to Atlanta, Orlando and Jacksonville. But I am also considering Tampa, Chicago, Indianapolis and Cleveland. These would be my secondary choices due to less potential for appreciation and rental growth in my opinion. Any thoughts are appreciated. My first goal is to choose the market and than I would like to focus on finding deals.

Are you a cash buyer or do you need financing. Do you need on site management? Do you need a local team to manage the property and tenants? I see you are in Mass and want to invest out of state.

Prior to investing in any other state we always suggest 1st step is to make sure State is Landlord Friendly. You can find on google. I hope you find this helpful!! 

Top Landlord Friendly States

TX, IN, CO, AZ, FL, KY, GA, MS

Hi @Account Closed I will need to use financing. I am out of state so I need to find local team to find deals, possibly renovate and manage.

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I find that it is easier to find tenants in Atlanta than in Kissimmee which is close to Orlando.  I really did not have to advertise for the Atlanta properties.  When people saw contractors working on the property they asked.  I have no experience or contacts in Jacksonville but I know its a good market.  As for secondary market I know more people investing in Indianapolis who are doing good, but like you said appreciation is not as good.  Prices and taxes are cheaper there than Chicago though.  Chicago appreciation is pretty good so I am not sure who told you it was bad.   

When you consider whether your chosen markets are landlord-friendly or tenant-friendly, Chicago stands out like a sore thumb. I believe the others are in landlord-friendly states though. 

Atlanta is a solid market to be in but has been greatly overbuilt with Class A properties in the last 3-5 years. I'm a little concerned that this heavy supply will trickle down to lowered Class B rents.

If I were getting into Atlanta multifamily, I would narrow my scope to Class C+ buildings with the potential to add value and force appreciation through building improvements.

Atlanta. Definitely Atlanta. No, wait, Tampa. For sure Tampa.
Hmmm... maybe Orlando?

Sorry about that but your question is sooooo wide open any answer I would give you would be a pure guess.

Since you can't possibly be living in all these locations I'm going to assume you already decided that long distance investment is something you are comfortable with.

So with that in mind, why not look at all these areas and find the best possible deal that fits your criteria?

I keep saying to anyone willing to listen, your Exit strategy is MORE important than your Purchase strategy.

Some cities will be better for long term investments vs. some cities are better for short term value add play.

Good luck.

@Lelith Walker I should have been more clear. What I don't like about Chicago is decreasing population.

@Joseph Gozlan Is hard to follow many markets. I like to focus on 1 only and learn it well. At this point I am in comfortable position to choose one with best perspectives. There are many considerations like population and job growth, salary growth, costs of doing business, median home prices, housing affordability, rent vs ownership ratio, vacancy, rent growth, etc. Maybe my question was general but there are for sure places with better perspectives than others so I appreciate feedback/experience with these markets. Not sure what else you are looking for. I am looking for good cash-flow ( 10 or more cap rate) and appreciation perspective in next at least 5 years. I should have made more research myself but I haven't, partially as it needs figuring out all the data. Local perspective is great addition. And yes if I find right team I would be ok to invest remotely. 

@Tomasz S. I like using CitiData for this kind of research. 

Not only that you can get the macro level stats per city you also get to drill down to the area/neighborhood level and see on the map the demographics, economic conditions, etc.

Orlando does not have a good multi family market. We have wayyyyyyyy more SFH's than we do anything MF4<

Originally posted by @Bonnie Staples :

Top Landlord Friendly States

TX, IN, CO, AZ, FL, KY, GA, MS

Hi Bonnie, I was wondering about your comment. What was the criteria for narrowing down the landlord friendly states? Is it the time it takes to evict a tenant or more laws protecting the landlord? I will appreciate any insight you might have.

Hi Kaz, Tenants still have rights in these states and landlords must always fulfill their obligation to provide safe housing, but these top 8 states give landlords more tools to use to rectify problematic tenant relationships. Each State has different reasons they are chosen as "Landlord Friendly". You may find some helpful insight on http://www.landlordstation.com/blog/top-landlord-friendly-states/

Thanks for the explanation Bonnie. Good to know which states are landlord friendly. I didn't see CA on the list but I heard we are tenant friendly but not sure exactly where we stand relative to other states.

@Kaz M. other BP members have reported that blue Democrat states are more tenant-friendly and red Republican states are more landlord-friendly, and CA ranks as one of the most tenant-friendly blue states. It's also an interesting correlation that blue states seem to have more expensive markets - CA, OR, WA, NY, CO vs. TX, TN, FL, MI, NC, etc.

Two areas that I have been interested in are Round Rock, TX (Just north of Austin) and Chattanooga, TN. 

Atlanta pretty consistently finds itself making an appearance on "Best Places To invest In Real Estate" type stories.

Good Luck,

R

@Tomasz S. If you are ever in Atlanta, i would love to meet up with you. Atlanta is a HOT market right now.

Yes, I agree with Robert that Round Rock has a lot of appreciation potential.  All of the Austin suburbs have had incredible growth over the past few years.  As with many hot markets, good deals tend to go quickly so it's best to have a financing partnership/plan in place ahead of time.

Originally posted by @Lance Adams :

Yes, I agree with Robert that Round Rock has a lot of appreciation potential.  All of the Austin suburbs have had incredible growth over the past few years.  As with many hot markets, good deals tend to go quickly so it's best to have a financing partnership/plan in place ahead of time.

 The goal for those of us trying to invest wisely is to anticipate rather than follow on. As I mentioned to someone else, I just wish I had invested in Round Rock back when I was suggesting it 2.5 years ago!

I am currently trying to milk two different "Fortune Telling" strategies to spot early opportunities. First, look for the places where the artists are moving to. One way to do this is to find areas that are already super artist communities where the fancy coffee houses have moved in along with higher end shops. I am talking hard core gentrification in progress. Then start looking at areas nearby because those artists that made the area hot to start with and who are now complaining about the gentrification will move on to another area. If you can spot it, you can jump in early.

The other is to find areas that look like they have peaked or are about to, then look for surrounding areas. A good example is what happened in San Francisco where prices got high enough that folks decided to look elsewhere and Oakland and other ares benefited from that trend.

R

I will echo what others are saying about the potential in Round Rock. The cities/towns north of Austin are all seeing great growth. RR, Cedar Park, and Pflugerville are more favorable for renters and proximity to Austin, but do not forget south. Buda, Kyle, and San Marcos are also seeing expansion. Follow the highways north and south of Austin and you will see the potential is not limited to just one place. Look into the Austin Business Journal, its a big help to learn of expansion plans in the areas mentioned. 

Mike Ross 

Curious what you guys think of the Pittsburgh market for rentals; any reason why it was not on the list? Prices and returns here are amazing.....happy to try to sell you on the idea of coming here if you are interested in talking to me about it. My company does everything from helping to identify properties and secure financing, to renovations, then the property management of them. Its also a great place to flip properties. 

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