Hidden Gem markets

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Hidden Gem markets

Member since 2023 · 82 posts · 46 votes

Anyone willing to share some hidden gem markets for STR, MTR, and LTR? Would love to hear where you have been investing in and how well its been going!

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Daniel Bourdeau

Real Estate Agent · Chicago, IL · Member since 2020 · 48 posts · 43 votes

I invest mainly in one of the smallest markets in Colorado - one that doesnt jump off the page from an 'averages' standpoint, but my unique luxury units crush it.

My general philosophy is that there is not a wide discrepancy in expected returns between different markets. Sure, there's some variation, but the average strategy produces about the same result across almost the whole US since there are so many investors hunting outperforming markets - they tend to revert to the mean.

That being said, there ARE strategies that outperform in almost any market. My formula is to build ground up unique structures with rare and interesting amenities (Geodomes, huge hot tubs, fire pits, outdoor chill areas ect) in small under the radar markets. I think this strategy works in almost any market.

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Joe HammelBusiness Member
Real Estate Agent · Metro Detroit, MI · Member since 2018 · 612 posts · 666 votes
2y
Another vote for Metro Detroit area…

I personally make over $100k/yr cash flow from 16 properties here. All of which, I've purchased only within the last 4 years, mostly off the MLS.

It just works.

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, double digit ROI, and yes the prices appreciate and you build equity.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s statistically the best market in the country for cash flow.

I cash flow $100k a year off 23 doors and have built a ton of equity in a short amount of time.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: 1%-1.4% rule deals

ROI: 10-14%

Cash flow: $150-$300/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has the the highest rent to price ratio in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio...
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JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
2y
Quote from @John McDonald:

Quote from @John Underwood:

Quote from @John McDonald:

Fort worth, TX has some great deals at the moment. Lots of gentrification in south Fort Worth. Properties can be purchased for $100K, fixed for $50K and rented for $1,800/month. Several other areas in Texas offer similar deals but, frankly, we're seeing this trend in most of the hottest markets, Tennessee, Florida and, as @John Underwood mentioned, South Carolina.
Find 'em, fix 'em, and today, hold 'em.
Good luck.

I'm big on holding more properties for mailbox money.

@John Underwood

"mailbox money". haha . I've never heard that before. Love it!

Mailbox money is a term appropriated from us musicians. If you're a songwriter (like me), you get paid royalties if anyone plays or records your songs. So in the old days we would get checks in the mail out of nowhere, hence the term "mailbox money". Today we don't get them in the mailbox, they just show up in bank accounts electronically. And we don't get as much of them as we used to because royalty rates from online music really suck. Still, every once in a while I'll be balancing an account and there will be a mystery $10 or $20 in there and it's my "mailbox money" from accumulated royalties.
If you want to give my mailbox money a boost [shameless plug to follow], just go to Pandora, Spotify, Apple Music, Amazon, or wherever the hell you listen to music and search for "the Rhythm Brewers" or "God, Guns, NASCAR", my biggest hit (such as it were 😅), give a listen or a purchase and you'll be contributing to my "mailbox money"

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Mackaylee BeachPro Member
Real Estate Agent · Kansas City, MO · Member since 2020 · 1k+ posts · 492 votes
2y
Over the past few years, Kansas City has experienced significant growth, making it an ideal location for investments. There are many lucrative options available that will generate great cash flow.
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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
What other Midwest city has as much investment planned as Detroit, yet offers such affordable real estate investments?

2024-01-03: Major Detroit Developments for 2024

https://michiganchronicle.com/2024/01/03/major-developments-that-will-define-detroit-in-2024/

2023-12-13: Volkswagen Scout Brand investing $11M in Detroit, 200 new jobs

https://www.teslarati.com/volkswagen-scout-11-million-detroit-investment/

2023-11-02: Hotel Added to Hudson Site, total over $1.4B

https://www.detroitnews.com/story/business/2023/11/02/hudsons-site-hotel-plans-move-ahead-as-city-issues-permit/71426631007/

2023-11-01: Detroit west side Dexter Neighborhood Receives $21.5M

https://www.clickondetroit.com/news/local/2023/11/01/neighborhood-on-detroits-west-side-receives-more-than-215m-in-investments/

2023-09-27: Norway’s Nel Hydron investing $400M, 517 new jobs

https://businessfacilities.com/nel-hydrogen-will-build-400m-gigafactory-in-southeast-michigan#:~:text=In%20Southeast%20Michigan-,Nel%20Hydrogen%20Will%20Build%20%24400M%20Gigafactory%20In%20Southeast%20Michigan,green%20hydrogen%20using%20electrolyzer%20technology.

2023-09-08: Chase invests $200M in Detroit

https://www.axios.com/2023/09/28/detroit-rebound-jp-morgan-investment

2023-09-06: Gilbert Foundation invests $439M in Detroit

https://www.henryfordmsu.org/news/september-2023/gilbert-family-foundation-announces-nick-gilbert-neurofibromatosis-research-institute

2023-07-26: Bollinger Motors investing $44M, 237 new jobs

https://michauto.org/bollinger-motors-plans-44m-metro-detroit-investment/

2023-03-30: 15 New Detroit Developments to Be Excited About

https://www.metrotimes.com/detroit/15-new-detroit-developments-to-be-excited-about-photos/Slideshow/32734721/32735392

2023-03-28: BorgWarner Investing $20.6M, 186 new jobs

https://www.crainsdetroit.com/auto-suppliers/borgwarner-invest-206-million-create-186-jobs

2023-03-28: 3 International Companies Choose Detroit

https://www.detroitregionalpartnership.com/international-investment-comes-to-detroit-region/

2023-03-06: District Detroit $1.5B Development, 12,000 temp jobs, 6,000 new jobs

2023-02-09: 6 New Residential Developments in Detroit

https://detroitisit.com/6-new-residential-developments-in-detroit-to-know-about/

2023-02-08: $2.5B New Center by Henry Ford Health, Pistons owner and Michigan State University
https://www.clickondetroit.com/news/local/2023/02/08/incredible-investment-in-our-city-25b-detroit-neighborhood-redevelopment-to-begin-in-2024/

2023-01-31: $300M Huntington Place Renovations & New Detroit Hotel

https://www.crainsdetroit.com/real-estate/huntington-place-renovations-new-hotel-deal-reached

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Jeff ChisumPro Member
Lender · All 50 States · Member since 2020 · 248 posts · 142 votes
2y
I get this question on a fairly regular basis. I specialize in 10% down vacation home/STR financing so most of my clients are looking to buy the cabin, the lake house, getaway…first I tell them that's not really my lane but the first question to ask is "where does your family like to go and why"…my response is "I bet there are a lot of families just like yours, that like do what your family likes to do. Find a property in that area and make it a place your family loves to go. Others will follow". Of course finding an area that is close to four season as possible is helpful. I have found with my STR's that it helps that they facilitate multigenerational stays. Adult kids with limited funds vacationing with Grandma and Granoa who are footing the bills. One of our properties sleeps 12 and the other sleeps 14.
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Ryan Osborne
Property Manager · Tampa, FL · Member since 2020 · 20 posts · 15 votes
2y
@Alex Ng - A couple hot markets that I have been eyeing up has been Luray, VA and Hot Springs, AR!
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Ricardo Hidalgo
Real Estate Agent · Member since 2019 · 569 posts · 257 votes
2y
Quote from @Alex Ng:

Anyone willing to share some hidden gem markets for STR, MTR, and LTR? Would love to hear where you have been investing in and how well its been going!

30A to Panama City beach has been one of the best equity and cashflow markets to arise in the last 5 years with a 10 year build period in the horizon. Major infrastructure is coming into town and we are still moving inventory in the current marketplace.
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