What are some good cities for cashflow?

General Real Estate Investing
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What are some good cities for cashflow?

Derek Faller
Rental Property Investor · Bend, OR · Member since 2013 · 81 posts · 24 votes

So I live in Bend, Oregon and have been doing flipping and rehabbing up here, but getting properties to cashflow up here is really hard. I do have a rental house here that cashflows, along with one in San Antonio that cost me less and brings me more money then my Oregon one. I am looking to pick up a few more rental houses or multi-family units in the near future and am looking to find my best option for location. I was originally planning on getting a few more in San Antonio, but would like to see if there are better options out there.

Anyone have any recommendations on other cities I should look at?

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Jeremiah B.
Investor · Portland, OR · Member since 2012 · 266 posts · 128 votes
13y

We're about 1 month from making our first out of state purchase, and have been considering it for around 10 months.

The above list certainly lists several cities with cash flow potential, but keep in mind that cashflow will probably not be your only concern. Or, at least it wasn't our only concern.

Each investor and situation is unique, but some things to consider include:

  1. Historic/Recent Growth
  2. Future Growth
  3. Affluence
  4. Cost of Living
  5. Economic stability and structure
  6. Appreciation
  7. Vacancy Rates
  8. Crime Rates
  9. Current trends with hedge funds and other investors
  10. Availability of house-type that you're targeting (I'm looking for 3+/2+, newer)
  11. Climate (yes - weather)
  12. Schools

I'm actually going through this process myself - you're welcome to read more in my blog post here. But to save you the 50,000 word post, we are looking in:

  1. Atlanta
  2. Charlotte
  3. Columbus
  4. Memphis
  5. Nashville
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  • Stephen Masek
    Investor · Mission Viejo, CA · Member since 2012 · 627 posts · 204 votes
    13y
    Originally posted by Curt Smith:
    @Dustin H.

    Our company's secret sauce to managing capex and expenses are:

    1. never buy in an area where the local high school is great schools 4 or lower. IE buy 5 or better. You Memphis folks, do a spot check to see if this rule holds for your areas. Google: great schools <high school name>.

    2. Select tenants who have young kids and say they need your rental (and only your rental) to keep their kids in the same schools.

    3. Tenant screening:

    a. look in their car. It has to be spotless. They will keep your property like how they keep the insides of their car. Dented and old is ok. In fact I don;'t like renting to someone with a new expensive car. It shows poor financial sense. I drive old cars and invest my cash well, I want renters who will pay their rent, not waste it on senseless crap.

    b. Make a showing appointment on 1:15 on Sat or Sunday. (any odd time will do). Tell everyone the same time and that you'll only be there 1/2 hour. Those who don't show can't manage their time and probably won't manage to pay their rent on time either. I like no-shows!!!! Saves me alot of time on more invasive checking.

    c. Drive by their current address if it's a house. You'll not get reliable info from their current landlord and corporate apartments won't tell you anything for privacy laws anyway.

    d. I use citi tenant check. ctcredit.net. Low fico is ok, lots of debt is typical, but their ontime payment table has to be mostly green (on time).

    e. The last check is, I ask this: why do you want to rent this house? If I hear that they like it, it's cheapest, etc any answer that is not "sticky" will last for years, I don't rent to them. They have to give an answer that means: my house is the only house within miles that works for them. IE to stay in a school district, or their hobby fits in the garage or basement and no other rental house worked etc. Some permanent and sticky reason why they are the perfect match for your house.

    f. eat another month empty than violate any of the above rules.

    You post was so good that I quoted it. Good managers also know there things. The problem is that they get a big fee for finding new tenants, but that is offset by the fact that finding new tenants is work...

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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    13y

    Your tenant screening system is very unpractical and a property management company could not follow that system. Maybe if you were self managing yourself you could.

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
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  • Curt Smith
    Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
    13y

    @Curt Davis

    I see your point Curt. But Stephan hits the main reason why a management company is not motivated to put problem free tenants into properties, in my view. Some day I'll poke around BP for tips on how to write a better property management contract that incentivizes zero turn over and few problems. IE the maytag PM contract. :)

    Yes we do self manage 10 properties and it's little effort because of our property locations and tenant screening adds up to few problems. Plus we are moving to owner financed properties instead of renting which really does mean zero turn over and no problems. But read the BP threads on the Safe Act!!

    Also we use erentpayment.com to electronically collect rent and have it deposited into our bank account. 2 renters send money orders but our bank does check scanning deposit which is easy and fast.

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