Are there any markets with both appreciation potential and good cashflow?

3 Replies

As near as I can tell, the general trend for the past few decades is for locations in the Midwest and South to have better cashflow but poorer appreciation potential than coastal locations.  

Are there any places in the U.S. that defy this rule, with consistent job and population growth, rising prices, and solid cashflow for rental properties?  

I can find great 10% cap rate properties in markets all over the country in bad neighborhoods, but does anyone know where  A-quality multifamily properties (duplexes, etc) can be found that beat the 1% rule?  

If you do, please post here or PM me. 

I would say yes.  One example is ATL.  Another are several cities in Texas (though the recent energy "crisis" surrounding the drop in oil prices may have a negative impact there).

IMHO, you can probably find cashflowing properties in any market.  They are just much harder to find and generally require direct marketing.  I am looking to go down that path myself. 

In general I do think you are right.  Markets in appreciating locations after often speculative, and rents don't keep up.  In markets where cash flow is great, appreciation is lackluster.

@Jack Gray I have found that the states of Michigan and Ohio to be what you're looking for. I see it every day, in many cities, but the northern Ohio and SE Michigan seem to be the best. Which is great for me since it fits in perfectly with my REI strategy, or maybe (actually) my strategy was developed based on taking advantage of the market.

I buy all cash, refi (mostly with Cash Out), and still CF at least 300/month with a PM in place (higher is some cities). In order to do this, I need the properties to appreciate so I can get my cash all out when I refi...at 70-75% of the ARV.

Now, not every market in every city  will do this, but most will...and I don't need all of them to do it.

Hey @Jack Gray  

I am seeing both great cash flow and appreciation potential here in Central Florida.  @Frankie Woods  nailed it on Texas.  A growing population is a great indicator of appreciation potential.  In cities/states with population growth, neighborhoods/sections that have been stagnant in appreciation tend to increase in value.

For example:  I grew up in Portland, OR and for years the eastside of the city was considered a place to avoid.  Over the last 15 years, the area has completely gentrified and homes have appreciated like crazy.  Had you purchased at the right time, you would have seen both great cash flow and huge appreciation.

Obviously that is hindsight, but I know there are areas that are currently experiencing similar growth.

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