Out of State Investors: Where to Find the Best Value in Price Per Square Foot

[Reese Brown]

The disparity between home costs and rent costs are not even across the U.S. For example the Average price per square foot to rent in Milwaukee, WI is $1.42. The median buying price is $119 PSF. While in Austin, TX the Average PPSF is very similar at $1.46, but the median buying price is $305. (source below)

I ran these numbers on my own portfolio (of 9 units, 4 properties, mostly updated with Low CapX) in Green Bay, WI and my tenants are paying on average $1.08 per SQFT and moy cost is $103 PSF. 

Based on this information alone, I couldn't imagine investing in Dallas. It's obvious that more data is needed to truly compare different cities accross the US. So out of state investors: what other data points/research do you use to determine where to invest? 

(I know this source is a few years old, it less about the exact numbers and more about the concept of Rent vs Purchsing PPSF)

https://www.rent.com/research/price-per-square-foot-rental-h...

[Bill B.]

Assuming rents are increasing at or above inflation. You want DECREASING rent to price ratios. That means your property is appreciating even faster than the rent. And if you have it leveraged with 20% down, you’re actually making 5 times that in your money. 

My exit buyer is always a homeowner, not another investor. I want the home to be too darn expensive for an investor to even look at it. That means I made a killing on the appreciation and I can exchange it in to something else. 

If your rent to price ratio is good, or god forbid, getting better. That’s NOT GOOD.