Where to invest in the Mid-West for multi family?

22 Replies

Hi,  I currently own 2 four-plex units in my market that have appreciated but aren't cash flowing very well.  They would sell for about 475K each.  I'd like to sell one of these units(possibly both) and buy somewhere in the mid-west that would would cash flow better.   


With the limited time I have to search, st Louis and Cleveland Ohio have caught my eye due to the available properties and the cash flow, however being near riots and a city that is slowly loosing population are giving me second thoughts.  I'd prefer to invest somewhere where there will be good growth(rents increasing) and where I can also get good cash-flow.   I know getting the best of both worlds could be very hard and I find myself turning in circles analyzing areas.   

Do you guys have any recommendations?  

@George Loveless - I actively invest in Memphis and Louisville and both are great.  If I had to pick one of them, no doubt about it, I'd go with Louisville.

That being said, I think most of the mid-major midwest cities will offer similar dynamics with the ability to lean more towards growth or cashflow depending on the citiy and/or neighborhood you invest in.

Feel free to PM me if you'd like to talk specifics of either market.

Updated about 1 month ago

Edit: I have a lot more experience in Louisville market which leads to the strong preference

Cleveland has a good bounce back story and I like to think there is a little more room from a market growth perspective in Cleveland vs. the other large ohio cities columbus/ cincy

Buying the right deal with a good story any value in any of those markets should offer good relative value vs. your home-town deals.  Agreed with @michael seeker

We have seen awesome cash flow in Dayton OH.

Mackaylee Beach, Real Estate Agent

Thanks for replies @Michael Seeker , @Josh E. and @Mackaylee Beach .  In your respective markets, have you seen rents increase or decrease over the last 5-7 years?

Thanks again. I'd like to eventually buy a 10 to 20 multi unit building... However single family homes seem to be fairly affordable and could spread out my risk. I may want to purchase some smaller units so I don't get caught with a 20 unit lemon.  still deciding...

St. Louis offers good cash flow, but you really have to be careful where you buy.  I've owned since 2015 and rents have increased from about $450 per unit to ~$500 since then.  There are some major gentrification going on right now in South City, which offers opportunity.  Though the population has been decreasing in the city overall, there are pockets that are beginning very trendy, especially with new development occurring.  Best of luck in your decision.  I focus mostly on four families.

@George Loveless - What are your investment goals? Are you looking for yield, appreciation, or some combination. 

If you are looking for yield, then Cleveland and Detroit and even Dayton Ohio are great options. In fact, if you are looking solely for yield, that is where you want to be investing.  You will get a great cash return in those cities. Now, the flip side is that I would not expect much price appreciation on the exit.

If you invest on the coasts, I am sure you will find that the yield sucks but if you hold on for a few years, hopefully you can make a return on the price appreciation. (personally not my cup of tea)

There are numerous cities in the Midwest that offer a mix of yield vs return. Louisville, Columbus, Cincinnati, Milwaukee you can get a good yield and some price appreciation.

@John Lenhart -  I'm looking for mostly yield(monthly cash flow) but I would also like a little appreciation,  I just don't want depreciation or even worse I wouldn't to be lowering my rents over time.  I would prefer to buy and hold.

@Sarah Wheeler -  Columbus look like it's growing and may be a good option.  It seems like property appreciation is directly linked to city population growth.

I agree with a lot of the comments made earlier. The only market I’m familiar with and invest in is the city I live in, Milwaukee. We have had pretty stagnant population, but rents vs purchase price and in turn cash flow is good. I can get 13-15% cash on cash return (after all expenses, cap ex, etc.) on a $35K cash deal. Leveraging can give you ROI that’s about double that.
With $450K you could easily purchase about 10 SFR here that would bring in at least $8,000/mo.
Like every major city, there are pockets of good in bad neighborhoods and vice versa, but navigating the waters isn’t too hard with the right people.

$8,000/mo in gross rent.....

@Mike Lowery - Yeah, if I lived in the mid west I'd be all over that.  Sounds like I need to buckle down and focus on one city.  From listening in on the BP podcast I need to just decide and build a team. and focus.  what do single family family rentals have over multi family( say 4 plex units).  do you prefer single family?

Updated about 1 month ago

I would think multi family would have greater returns for the money spent...at least that's the case here in Utah.

Originally posted by @George Loveless:

Hi,  I currently own 2 four-plex units in my market that have appreciated but aren't cash flowing very well.  They would sell for about 475K each.  I'd like to sell one of these units(possibly both) and buy somewhere in the mid-west that would would cash flow better.   


With the limited time I have to search, st Louis and Cleveland Ohio have caught my eye due to the available properties and the cash flow, however being near riots and a city that is slowly loosing population are giving me second thoughts.  I'd prefer to invest somewhere where there will be good growth(rents increasing) and where I can also get good cash-flow.   I know getting the best of both worlds could be very hard and I find myself turning in circles analyzing areas.   


Do you guys have any recommendations?  If your an agent trying to get me to buy in your area your opinion,will be appreciated but will be taken with grain of salt ;)

Hi George, 

Have you taken a look at Columbus, Ohio?  With OSU graduating 6000+ students a year and the tax incentives offered to attract big business, the huge federal grant that Microsoft contributed to in order to make Columbus a "smart city" (think self driving cars) over the next several years as well as the huge amount of infrastructure growth, development and affordable housing and as the state capitol, there are very few cities that top the lists of many of the multifamily investment gurus the way that Columbus does.  Good luck with all! 

Robert Ellis, Real Estate Agent in OH (#2014002724)
(614) 943-9520

@Matt Motil Having just moved back to Cleveland after being gone for the better part of 15 years, I’m curious how you are seeing things...are your properties faring well? I’m looking for a personal house now (in temporary living until I find one) and after that, I’m looking to get started investing. Thanks.

@George Loveless

That is all you can do George, just research the heck out of a few places and go with it. 

My only piece of advice would be to truly build your own team...a Turnkey company is not a team. I would avoid them like the plague. 

Good Luck!

@Adam Widdicombe - Good advise.  We don't really have any turnkey companies where I live so it's kind of a new concept for me.  Duly noted!

Originally posted by @George Loveless:

Hi,  I currently own 2 four-plex units in my market that have appreciated but aren't cash flowing very well.  They would sell for about 475K each.  I'd like to sell one of these units(possibly both) and buy somewhere in the mid-west that would would cash flow better.   


With the limited time I have to search, st Louis and Cleveland Ohio have caught my eye due to the available properties and the cash flow, however being near riots and a city that is slowly loosing population are giving me second thoughts.  I'd prefer to invest somewhere where there will be good growth(rents increasing) and where I can also get good cash-flow.   I know getting the best of both worlds could be very hard and I find myself turning in circles analyzing areas.   

Do you guys have any recommendations?  If your an agent trying to get me to buy in your area your opinion,will be appreciated but will be taken with grain of salt ;)

George your concerns about Cleveland are valid as Ohio has been decreasing in population historically as are most rust belt states. However it's still a pretty hopping area for investment. If you want to delve into this market further check out The Ultimate Guide to Grading Cleveland Neighborhoods.

James Wise, Real Estate Agent in OH (#2015001161)
216-661-6633

Hey George, the Milwaukee market has many positive aspects to it; however, it is essential that you have great boots on the ground if you would like to set up shop here.

@George Loveless Oklahoma is a great market.  Property prices are lower to get into, but increase in value, and our property taxes are very low here.  You can find deals in the 1.5-2.0% rental to price ratios.

The median home price in Oklahoma is $113K with 4% growth rates the past year and a lot of areas are easy to rent for 1-2% rates or more. The best markets are: Edmond, Norman, Moore, Jenks, Bixby, Broken Arrow, Owasso and other parts of Tulsa & OKC. Also, our property taxes are very low in Oklahoma compared to other states.

Rented.com ranks the best — and worst — markets to buy a second home based on potential return on investment, and recently listed Tulsa as No. 4 nationally. 

Realtor.com "When it comes to home sales growth, bet on Southern Cities to beat the national average in 2018. We’re especially looking at you, Tulsa, OK, Little Rock, AR, Dallas, and Charlotte, NC. Those markets are expected to see 6% growth or more, compared with 2.5% nationally."

MarketWatch's report 5 Worst & Best Markets for First-Time Home Buyers had Oklahoma City ranked No. 1 and Tulsa right behind at No. 2 best Market in the Nation for First-Time Home Buyers. The 5 worst markets were all in California (Anaheim, Riverside, Stockton, Long Beach, and Oakland).

CNBC reported in their recent report The 15 Cities Where You Can Live Really Well on $60,000, Oklahoma City was No. 13

WalletHub's 2017 Best Cities For Jobs, has No. 40 Tulsa, and No. 75 Oklahoma City

Kc market is on fire....if you 1031 both or better yet did a reverse, you have significant capital to put down and can probably get a good deal. People able to get good discounts on higher dollar stuff, lower dollar (100k+ sfr) and duplexs selling like hot cakes and multiple bids usually over list.

@George Loveless Dayton has seen an increase in rents. The great thing also is that renters stay for longer I've seen (from experience).

Mackaylee Beach, Real Estate Agent

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