Newbie interested in best markets for multifamily properties

Newbie interested in best markets for multifamily properties

Investor · Baltimore, MD · Member since 2015 · 18 posts · 5 votes

Hello. I’m excited to meet others on this site. Financial freedom is my goal, and my primary interest is buying a multifamily or possibly house hacking.

I've leased, managed, and sold one single-family home in Baltimore County, Maryland. When I sold in 2014, I did not do a 1031, because I'd inherited the property right before the 2007 crash, so the capital gains were small.

Can you recommend good markets for multifamily properties? I grew up near Baltimore, Maryland, lived in San Francisco for 14 years and New York City for 12 years. I'm sure there are bargains in these cities, but I’m primarily considering other markets, like Detroit or Austin, TX.

I'm also interested in learning about unconventional financing. I'm self-employed and just spent 9 months traveling n South Asia, which makes it harder to get loans, even though my credit score fluctuates between 787 and 812. If I paid cash, this might limit me to less than $300,000, and I’d rather avoid buying real estate through a Roth.

Any advice on hot real estate markets or alternative financing is much appreciated. Thanks in advance!

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Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
10y

Welcome to BP, Lisa.  I'd consider Detroit as more of a cash flow market, and Austin more appreciation with its strong job and population growth.  Personally, I'd be more comfortable with strong long term economics in place and give up some cash flow to get it.  We're glad you've joined us!

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  • Business Owner/Investor · Baltimore, MD · Member since 2015 · 14 posts · 0 votes
    10y

    Welcome! 

  • Investor · Cleveland, OH · Member since 2014 · 10 posts · 0 votes
    10y

    Good afternoon! Cleveland Ohio is a great area to buy in. More house for your money. Please let me know if you need assistance with your search. I live in Cleveland Ohio.

    -Lela

  • Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    10y

    Welcome to BP, Lisa.  I'd consider Detroit as more of a cash flow market, and Austin more appreciation with its strong job and population growth.  Personally, I'd be more comfortable with strong long term economics in place and give up some cash flow to get it.  We're glad you've joined us!

  • Rental Property Investor · Mineola, NY · Member since 2014 · 838 posts · 212 votes
    10y

    @Lisa Montanawelcome to BiggerPockets!! 

  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    10y

    Welcome to BP @Lisa Montana Personally I  believe in investing within a drive-able distance. If you invest out of your area you increase both your cost and your risk. 

    My belief in most areas of the country - even expensive areas, have affordable rental properties within about 1 to 1 1/2 houses drive.

    However once you get to a certain size it becomes more practical. It is not very practical to fly out several times a year to inspect a SFH but it becomes a lot more cost efficient to do for a 300 unit complex.

    As @Jon Klaus said some areas are better for cash flow some are better for appreciation. If you are talking larger multi properties, then look for the areas that are growing and have policies that are pro growth. Texas is a great example. If you are talking more modest size properties I believe the quality of the deal is more important than the location. 

  • Professional · Glenview, IL · Member since 2015 · 114 posts · 65 votes
    10y

    Lisa... You may want to entertain chicago ... 

  • Edgewood, MD · Member since 2014 · 283 posts · 59 votes
    10y

    @Lisa Montana Welcome to BP neighbor. 

  • Residential Real Estate Broker · San Mateo, CA · Member since 2013 · 585 posts · 264 votes
    10y

    Welcome @Lisa Montana! Like @Ned Carey mentioned, you can find properties within a drive of San Francisco. If you are looking for bigger properties (more units) the economics of the flight/travel can make more sense.

    Have you taken a look at the other posts regarding out of state investing? I am not sure how active you want to be with the investment, but that is something to consider (i.e. if you are going to try and self-manage vs. hire a property manager/leasing agent, etc.).

  • Investor · Rochester, WA · Member since 2013 · 221 posts · 30 votes
    10y

    I also agree buying within driving distance starting out. I am an hour south of Seattle and find plenty of deals, single family and multi's. I am hands on and usually do a lot of my own work so that does limit my area.

  • Investor · Baltimore, MD · Member since 2015 · 18 posts · 5 votes
    10y

    Thanks to all of you for the hearty welcome!

    @Account Closed Thanks for referring me to other posts on out of state investing. I could hire a property manager and/or temporarily relocate.

  • Investor · Detroit, MI · Member since 2014 · 755 posts · 462 votes
    10y
    Originally posted by @Jon Klaus:

    Welcome to BP, Lisa.  I'd consider Detroit as more of a cash flow market, and Austin more appreciation with its strong job and population growth.  Personally, I'd be more comfortable with strong long term economics in place and give up some cash flow to get it.  We're glad you've joined us!

    Detroit has Cash Flow true, But it also has incredible Appreciation.

    (HINT Don't buy from a TK for 4 times the actual available market)

    See this Thread Where I'm asked my opinion of a $45,000 potential purchase. The seller had purchased it for $500.

  • Lender · Faulkner, MD · Member since 2015 · 118 posts · 28 votes
    10y

    If I were looking for a multi-family, I'd stay on the east coast.  More properties were originally built as multi family to accommodate the larger population in the cities out here so there's no need to retro-fit a building to make it multi family.

    Baltimore, Philly, New York and Boston.  That's where I'd go, in that order.

    Also, Ned Carey has a great point about living within driving distance to your property.  There is no substitute for being there.  I had a property in Baltimore and I moved to Southern Maryland (about 80 miles) and was gone for a few months.  When a fuse blew and I went up to check it out, I found my tenants breeding German Shepherd puppies in a wood shavings pen next to the furnace.  

  • Investor · Arlington, TX · Member since 2015 · 14 posts · 4 votes
    10y

    Hey Lisa...welcome to BP! Looks like you've received numerous "sound" recommendations. I just would suggest you ask yourself a few questions... 1-What "specifically" is your main goal(s) for investing in real estate? 2- How much time can you dedicate to learning and growing your business? 3- What are some potential obstacles/hurtles you could face? BP is the "Bill Gates" of REI information and networking...so you have endless amounts of resources at your disposal. Sounds like you have some cash/assets you've built up, along with great credit, and being a fellow "New Yorker", you're "used to" higher dollar amounts for rents/properties. That's why laying out your main goals and doing your homework is critical. I wholeheartedly agree to start off searching within a driving distance of where ever you plan to settle down. (I've tried the "out-of-state" landlord...it can be brutal!!) And also, check out Brandon's book (as recommended) along with several other pod-casts and webinars filled with GOLD nuggets!! Give yourself some time to get going...best wishes to you!!

  • Mortgage Note Investor & Multi-Family Property Investor · San Diego, CA · Member since 2010 · 177 posts · 51 votes
    10y

    Hi Lisa,

    Welcome to Bigger Pockets. I discovered BP a while ago but didn't really get involved until recently. I'm sorry I waited so long to "plug in". BP is an awesome resource.

    I am a cash flow investor. I have been a landlord since 1982 and I have also flipped a fair numbers of homes over the years.

    A couple of years ago I discovered the "paper" side of the real estate investment world. I purchased my first Mortgage Note. I have been actively acquiring Notes for passive cash flow since that time.

    I like the the passive nature, the safety and the cash flow that I receive from Performing Mortgage Notes. I still own "brick & mortar" real estate but my end game is to be 100% in paper at some point.

    I upgraded to BP Pro & upgraded my profile. Check it out.

  • Houston, TX · Member since 2013 · 1k+ posts · 114 votes
    10y

    Hi 

    @Lisa Montana! Welcome to Biggerpockets!

  • West Sand Lake, NY · Member since 2015 · 17 posts · 2 votes
    10y

    @Lisa Montana

    Welcome! I'm glad you asked this as I was wondering the same. Everyone's been making great points you guys are awesome. 

  • Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
    10y

    @Lisa Montana

    Welcome to Bigger Pockets community. Be sure to check out “Learn” for all kinds of useful resources and free how to guides.

  • Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    10y

    Hey Lisa. Oh man, if $300k is your cash limit....I know of tons of MFRs that barely even hit $200k. But cash purchase aside, there are private financing options a lot of times (I've done it when I quit my job and didn't qualify for a mortgage anymore) and that at least gives you some kind of leverage.

    For awesomeness of city, price point, property type, and returns....I'd vote Chicago.

  • Investor · Upper Marlboro, MD · Member since 2014 · 42 posts · 11 votes
    10y

    Welcome to BP! I actually grew up in Baltimore, and still think this is an excellent Multifamily market... (as opposed to DC, where I now live).  Also good are Pittsburgh and Nashville where I also do a ton of marketing. I find good deals all the time, and am always looking for partners.  If interested, please feel free to contact me.

  • 1031 Exchange Qualified Intermediary · Bend, OR · Member since 2015 · 44 posts · 10 votes
    10y

    Hi Lisa!

    You might consider some passive investments in Alternative Real Estate investments that are securities.  There are many different types in equally diverse locations.  I can give you a few tips that you can follow up on a call if you want.

    Welcome to BP and best of luck!

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