Rental Property Investor · Long Beach, CA · Member since 2018 · 28 posts · 6 votes
Hi BP,
My name is Brandon and I am about to invest in the mid west from LA. If you don't mind sharing, I would love to get your advice on where I should invest in. Maybe some spots on good schools, malls, big companies, etc. I plan to invest with around 100k so maybe that can help show me the way. If you know if any multi family (2-4 units) areas that would be a great help to me. I have been struggling to find places to invest in because there are so many opportunities and I want to choose a good market. Maybe some insight on what markets you already are investing in. Thinking about Kansas City.
PS, I would love some city recommendations in any states if you don't mind. Maybe places you are currently investing and maybe want to invest in. Looking for Low-150k multifamily areas with high rent vs buy ratios.
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
7y
There are a lot of good markets to consider. The most important thing in my opinion is making sure you can find good property management. That will make or break your deal. Here are a few articles on top performing markets and research on how to pick a market
Investor · Atlanta, GA · Member since 2016 · 335 posts · 144 votes
7y
@Brandon McLendon Hello Brandon. Have you done your market research on Marcus & Millichap, or IRR? I would sugest you look into the book Best Ever Apartment Syndication Book by Joe Fairless and Theo Hicks. You can also check out the podcast series Best Ever Real Estate Investing Advice. This will walk you through how to determine which markets to invest in.
Investor · Atlanta, GA · Member since 2016 · 335 posts · 144 votes
7y
@Brandon McLendon Yes sir. Time is so valuable. There is a formula to use to navigate your way to find a good area to invest in, the kinds of retuns your looking for.
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
7y
@Brandon McLendon Try Birmingham, Atlanta, Indianapolis, Kansas City, Memphis, Little Rock, Jacksonville, Ohio, or other secondary or tertiary markets.
Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
7y
Lots of great markets out there where you can get more income for the dollar. You have to be careful however as some cheap markets are cheap for a reason.
Look for upward trends in jobs, income, population and rents. Try to find areas where rental housing is in demand and vacancies are Low.
Instead of spreading yourself too thin, decide first whether you can/want to be active or passive investor. Here's an article that will give you guidance in that direction:
Once you determined whether you want to be active or passive, you should look at the markets. So if you're active, a good way to identify a market is to look at:
Multi-Family Syndicator · Abington, MA · Member since 2017 · 603 posts · 347 votes
7y
Picking a market is something you have to research and decide on for yourself. Even if someone recommends an area for you to select, you still have to go and do your homework. Look for trends and indicators such as jobs, population, and rents. Just have to get clear on what market you want to be in.
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
7y
There are a lot of good markets to consider. The most important thing in my opinion is making sure you can find good property management. That will make or break your deal. Here are a few articles on top performing markets and research on how to pick a market
Rental Property Investor · Long Beach, CA · Member since 2018 · 28 posts · 6 votes
7y
@Lane KawaokaThank you very much Lane, is this where you invest? I'm thinking about Kansas City. @Greg Dickerson Thats really smart. This has become my understanding and I will continue to pay attention so Thank you! @Alina Trigub Thank you Alina I will check out this blog. thats very true I dont want to spread myself thin. @John Fortes I know what you mean, I will be studying for while before making my decision. The problem I have is I'm not able to make a decision. @Todd Dexheimer I will look into these blogs. I am very concerned about a good property management company.
Rental Property Investor · Long Beach, CA · Member since 2018 · 28 posts · 6 votes
7y
@Todd Dexheimer Great articles! I will definitely be following your advice. I can tell this is very valuable! I took many notes and will be looking for trends and job growth signs instead of "following the herd". TY
@Todd Dexheimer. Investing out of state is all about property management. I'd start there. Pick a few cities for the obvious reasons (jobs, population, diverse economy, etc.) and then start calling managers to interview them. Search for them here on BP - each city has threads on recommended property managers. And start reaching out to investors in those cities and ask for recommendations.
You can also search BP to find lists of questions to ask property managers.
Talk to a bunch and the cream will rise to the top. Also doesn't hurt to pick a city with more than one management option, in case your first choice doesn't work out.
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
7y
@Brandon McLendon there are a lot of good markets and @Lane Kawaoka mentioned many of them. I like Indianapolis and Kansas City in particular. We've been active in both since 2012. I'd be happy to share my insights and help if I can.
@Todd Dexheimer Great articles! I will definitely be following your advice. I can tell this is very valuable! I took many notes and will be looking for trends and job growth signs instead of "following the herd". TY
Thank you. Also, consider other ways to invest in real estate passively. You are buying small properties out of state, which in my experience is a hard way to make money. I have 5 duplexes out of state and they don't produce much cash flow after you consider management fees and maintenance costs. My 100+ unit multifamily deals on the other had are able to operate much more efficiently.
@Brandon McLendon there are a lot of good markets and @Lane Kawaoka mentioned many of them. I like Indianapolis and Kansas City in particular. We've been active in both since 2012. I'd be happy to share my insights and help if I can.
Thanks Mike, I would be grateful to pick your brain on a few things. I am leaning towards Kansas City, MO at the moment but am very flexible. Ofcourse I want to do duplexes for the cash flow but I hear doing a couple of SF might be more ideal. I’m curious to see what @Todd means on not staring so small. He is correct, it would be a shame starting out with so little reward. I am here to ask as many Q’s as I can before jumping in.. which will be very soon BTW. Finalizing lenders and agents. You have been giving my wife Karen Quintero some great advice too and we highly appreciate that! As you can see we are trying to learn as much as possible so we avoid mistakes on our first investment property.
@Todd Dexheimer Great articles! I will definitely be following your advice. I can tell this is very valuable! I took many notes and will be looking for trends and job growth signs instead of "following the herd". TY
Thank you. Also, consider other ways to invest in real estate passively. You are buying small properties out of state, which in my experience is a hard way to make money. I have 5 duplexes out of state and they don't produce much cash flow after you consider management fees and maintenance costs. My 100+ unit multifamily deals on the other had are able to operate much more efficiently.
Thanks Todd, If you have any suggestions I am all ears believe me, I am open to ideas. If you were starting out all over again, what would you do? I dream of doing a 100+ unit, my first deal. I agree it will eat up my cash flow, I just figured I would get started with 2-6 unit and try every year to double, then triple, and so on.
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
7y
@Brandon McLendon Sometimes you can do as well with a higher class of SFR with high rents as you can with a lower class MF that has more challenges. I'd be happy to chat with you. Feel free to contact me.
Los Angeles · Member since 2019 · 11 posts · 2 votes
7y
Hi @Brandon McLendon , I'm also based in SoCal and, and in a few weeks I'm heading to the Tampa/St. Pete area (where I grew up vacationing as a kid from GA) because of how quickly that area has been developing and moving beyond just a retirement community. I've got a similar amount of money to invest in a rental property, and can't do it in California because of the cost. Have you checked out the SouthWest FL area?
Denver, CO · Member since 2016 · 22 posts · 5 votes
7y
I have also been looking into investing out of state. I am currently in the Denver area and having a hard time finding deals. I've been house hacking my current property, and am looking for my second. The numbers work because I put 5% down, but I do not have the cash to be consistently putting 20% down in my area. The numbers also do not nearly look as good. I want somewhere I can deploy my cash consistently with a mixture of cash flow + appreciation potential.
@Todd Dexheimer, @Mike D'Arrigo What kind of cash on cash numbers are you looking for when investing out of state? I have a hard time swallowing putting all this effort into getting a property out of state for it to be cash flowing $200-300/month, <15%CoC.
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
7y
@Cameron Belknap COC is not the only metric to be looking at, although a 14-15% return is very strong. Where else would you get that kind of return? Keep in mind that cash flow is only one component of real estate returns. When evaluating a real estate investment, you need to look at the total equity return from cash flow, appreciation, principal reduction and don't forget depreciation tax deduction. When you look at the total picture, it's not unusual to see total returns of upwards of 30%
I have also been looking into investing out of state. I am currently in the Denver area and having a hard time finding deals. I've been house hacking my current property, and am looking for my second. The numbers work because I put 5% down, but I do not have the cash to be consistently putting 20% down in my area. The numbers also do not nearly look as good. I want somewhere I can deploy my cash consistently with a mixture of cash flow + appreciation potential.
@Todd Dexheimer, @Mike D'Arrigo What kind of cash on cash numbers are you looking for when investing out of state? I have a hard time swallowing putting all this effort into getting a property out of state for it to be cash flowing $200-300/month, <15%CoC.
Thanks,
Cameron
I purchased a few duplexes out of state and found that the numbers just don't make a lot of sense. They may look good on paper but in reality they just don't make much money. Right now all my deals are out of state but I am syndicating large apartment complexes, so the numbers are quite a bit different. I do look at cash on cash as part of my criteria but I'm also looking at other factors such as IRR, cap rate, overall cash Flow, etc
Rental Property Investor · Long Beach, CA · Member since 2018 · 28 posts · 6 votes
7y
@Danny Randazzo I am trying to go at it alone. But I may try to go with an experienced group. That will prob be my best bet. Is that what you would do?
Rental Property Investor · Long Beach, CA · Member since 2018 · 28 posts · 6 votes
7y
@Jack Glazer I grew up in NO and we visited a lot through my childhood so I def can't rule out FL. They are in my top 5 places to consider. From all of my data research, I have found Kansas City,MO and Indianapolis to be quite charming.
Denver, CO · Member since 2016 · 22 posts · 5 votes
7y
@Todd Dexheimer When you say they look good on paper but in reality they do not make much money, is that a factor of not enough margin in your calculations, or unforeseen expenses? I am person to really sweat the numbers and I want to have confidence in my calculations if I do find a deal that looks promising.