Newbie Investor deciding between Indianapolis and Cleveland

New York City, NY · Member since 2018 · 15 posts · 4 votes

Hi all,

I am currently working in tech and looking to diversify some of my income while working on building up some passive income. I am currently living in NYC which is definitely not a market I am interested in. I have done some research and I am looking to purchase buy and hold properties in markets with good cash flow which is the reason I am looking at Cleveland and Indianapolis. Looking to connect to other investors and build an all-star team in the market I decide to buy in. If everything goes well, I definitely plan on getting more investment properties. Hope to chat with some of you soon!

-Colin

1 Reply

137 views

Most Popular Reply

Mike D'ArrigoPro Member

Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes

@Colin Smith Both are cash flow markets but in my opinion, Indianapolis has much stronger economic and demographics. Cleveland has a shrinking population which is a real negative for me. The table below might help you compare. (click on the image to enlarge it)

6 Reply

See this reply in the discussion

32 Replies

Jump to latestLatest

Sort by

Colin Smith
OP
New York City, NY · Member since 2018 · 15 posts · 4 votes
8y
Originally posted by @Michael Swan:

@Colin Smith
To get a great team, only ask other investors that have lots of front doors and have already learned the hard way, so you don't have to do so. Send colleague requests, reach or and message them. After a conversation on the phone with them, ask for q little residential agent contact and maybe they will throw yo u there Property Manager too. I get sooooooo many people contacting me about the lack of attention they receive from their property manager.
Swanny
That's all great advice. Thanks for the tips! Being an out of state investor, finding a good property manager will make or break my investments. Finding a good property manager is the first order of business for me.
0 Reply
Tim Cronin
Woodside, NY · Member since 2018 · 17 posts · 11 votes
8y
Hey Colin -
I also live in NYC and the idea of owning in this city seems daunting to say the least. I recently just closed my first rental property deal through Roofstock. It felt like a pretty big risky scary step, but the fact that I had a team to kind of hold my hand through the process and complete my first deal with "training wheels" was really helpful for me. Its scary to take that plunge, but having a team to lean on got me to jump in. I'm only a couple months in so far. I think as a newbie, I was okay with exchanging a little bit of my return for a bit of hand holding and security. At least for my first deal.
Good luck and welcome to BP
2 Reply

Jennifer WardPro Member

Investor · Denver, CO · Member since 2017 · 94 posts · 42 votes

Originally posted by @Mike D'Arrigo:

I also put together a small chart (below) to compare cities I am interested in, @Mike D'Arrigo chart has fantastic data points.

City	rent to value (higher is better)	rent to income (lower is better)	taxes to value (lower is better)	insurance to value (lower is better)	Avg Annual Appreciation (higher is better)	unemployment (lower is better)	Crime/US Avg: 280 (lower is better)	population growth (higher is better)
Atlanta	0.41	2	1.1	0.41	2.29%	6.1	591	1.98
Cleveland	1	2.42	2.2	1.19	-1%	6.3	847	-0.52
Memphis	0.88	2.2	1.84	1.17	0.82	7.3	802	-0.27
Kansas City	0.58	1.67	1.36	0.81	1.85	5.2	707	0.22
Indianapolis	0.65	1.87	1.08	0.73	1%	4.4	649	0.33
Minneapolis	0.39	1.65	1.28	0.51	2.82	5.8	559	0.86
Albuquerque	0.42	1.6	1.06	0.48	2.17	4.3	680	0.33

I converted the data I found into the above ratios, below are the sites I used to find the data:

http://www.city-data.com/city/Atlanta-Georgia.html

https://www.neighborhoodscout.com/ga/atlanta/real-estate

https://www.valuepenguin.com/average-cost-of-homeowners-insurance#nogo

http://worldpopulationreview.com

4 Reply

Colin Smith
OP
New York City, NY · Member since 2018 · 15 posts · 4 votes
8y
@Jennifer Ward, great analysis. Thanks for the information.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@Jennifer Ward this is a great chart....
as i look at it though since all of those markets have next to zero appreciation.. its all about consistent rents and quality of tenant.. to me all those markets are interchangeable to the average investor buying one or two SFR rentals..
And it will all boil down to as @Michael Swan alludes to .... in my mind after 2 decades of working with these assets and frankly in all the cities listed except NM.
1. you need solid seller giving you a solid property in a better than average location.
2. then its about PM and then when you think about it think Harder about PM and then once you have done that it all comes down to PM..
think about it these areas historically do not go up in value.. ( although there has been some push up in values last 3 years due to investor demand but no orgainically).. so your success 100% relies on PM.. end of story.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
1 Reply
Jennifer WardPro Member
Investor · Denver, CO · Member since 2017 · 94 posts · 42 votes
8y
Originally posted by @Jay Hinrichs:

@Jennifer Ward this is a great chart....
as i look at it though since all of those markets have next to zero appreciation.. its all about consistent rents and quality of tenant.. to me all those markets are interchangeable to the average investor buying one or two SFR rentals..
And it will all boil down to as @Michael Swan alludes to .... in my mind after 2 decades of working with these assets and frankly in all the cities listed except NM.
1. you need solid seller giving you a solid property in a better than average location.
2. then its about PM and then when you think about it think Harder about PM and then once you have done that it all comes down to PM..
think about it these areas historically do not go up in value.. ( although there has been some push up in values last 3 years due to investor demand but no orgainically).. so your success 100% relies on PM.. end of story.
I absolutely agree the PM is the VIP for any REI team in my opinion. My strategy after analyzing a few cities that offer inventory within my price range is to locate a rock star PM. I find the rock star PMs have great referrals for realtors, wholesalers, and contractors.
As an investor looking out of state intentionally for the first time and not having many existing contacts, I like to use data to help me decide where to put the pin. Some folks decide to place the pin where they have existing contacts, despite the city data. I also think this is a good strategy because you can find deals anywhere…and a deal is a deal. However for me, since I don't have long standing REI relationships, I need to start with the data. Based on this analysis and networking on BP, I am leaning towards Indianapolis. Now, I am trying to develop the contacts needed to pursue the BRRRR strategy.
I will say for most of these cities, it is very neighborhood specific and you still need to do in depth research on the neighborhoods before investing.
If anyone knows a rock star PM in Indianapolis please send them my way :)
1 Reply
Fernando E.
Rental Property Investor · SF Bay Area · Member since 2016 · 234 posts · 103 votes
8y
Thanks @Jennifer Ward, awesome data!
1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.