$250K to $300k-where would you buy?

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$250K to $300k-where would you buy?

Chilly Nathan
Rental Property Investor · Sacramento, CA · Member since 2021 · 13 posts · 12 votes

Hi All,

New here to the community but I do own 3 properties in California. I'm looking to purchase an investment property for $250-300k cash. For buy and hold/cash flow. Where would you buy and why?

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
From  LA I would look at Vegas  .. easy ( fairly) drive.. newer housing stock.  Desert landcape no major frost freeze issues
constant over flow from high tax states CA OR  .  And super LOW property tax's..  

300k cash for ease of investing will get you a very nice A to B location in a great area and a solid 6  to 7% COC every thing considered.

Now of course most on BP will say your crazy to pay cash.. or you should leverage and of course thats a personal decision but if you just going to buy one property .. I like that play for safety etc.. plus you have no need for a core 4.. And the quality of tenant you can self manage.
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  • Nicholas Gayton
    San Francisco, CA · Member since 2016 · 10 posts · 12 votes
    5y

    Hi @Chilly Nathan!

    Probably late to the party here, but just came across this thread. 

    I’m in a pretty similar boat to you, except looking to buy my partner and I’s first rental property out of state. We both live in San Francisco and just completed a quick market analysis of a lot of the markets I’ve seen recommended on BP and elsewhere across the web. 

    We made this market analysis based on a lot of key factors like population growth, price to rent ratio, income growth etc.

    Our next steps is making connections for a “Core 4” in multiple of these markets, analyzing properties, making offers and hopefully purchasing our first property in the next 1-2 months. 

    Including the Google Sheet Link Here: https://docs.google.com/spread...

    Hopefully this is helpful to you or others!

    Thanks!

    0Reply
  • Eric FernwoodBusiness Member
    Realtor · Las Vegas, NV · Member since 2014 · 1k+ posts · 1k+ votes
    5y

    Hello Chilly,

    Rather than tell you a "good" investment location, I will provide the criteria for a good investment location. I recommend selecting a location that best meets the following criteria.

    • Appreciation - The number one criteria in location selection is appreciation. Inflation is constantly eroding buying power; each year, it costs more to buy the same set of goods. If you buy in a location where prices and rents are rising faster than the inflation rate, you will be able to buy the same set of goods because you will have the additional dollars you need from increased rents. When you are evaluating appreciation, ignore the COVID period. During the last year+, locations with low appreciation rates suddenly started performing. This is a blip and not a long-term change. If you buy in a location where prices and rents are increasing below the inflation rate, the amount of goods you can buy will decline over time.
    • Population Size - Greater than 1 million. Small towns may rely too much on a single business or market segment.
    • Population Growth - If people are moving into a location, many things have to be right. I would not invest in any location where the population is stagnant or declining.
    • Crime - People and companies will not move to locations perceived as dangerous. One source of cities to avoid is Neighborhood Scout's 100 most dangerous cities. Avoid any city on this list.
    • Disaster Risk - Some parts of the country are more prone to natural disasters. The best indicator for natural disaster probability is homeowners insurance cost. I would avoid states with high insurance rates. Note, even if insurance pays for all the damage your property suffers, you still lose. When a significant disaster occurs, people and jobs move to locations where they can make money today. The location may take years to recover, or it may never recover. ValuePenguin is a good source for the relative cost of insurance by state.
    • Operational Costs - Costs like property taxes, insurance cost, state income taxes, regulatory costs (ex: time and cost to evict), inspections, rent control, etc., have a tremendous impact on your return. Select a location with relatively low operational costs. Operational costs are a direct hit on profitability.

    You also need a good local investment team.

    If you needed surgery, you would not start medical school. Also, not just any doctor will do. You want a surgeon that specializes in the kind of surgery you need, not a general practitioner. The same is true with real estate investing. You want to work with an investment team that already has the skills and contacts. Good investment teams are hard to find. The place to start is with an investment Realtor. Know that even in a large metro area, there is likely only one or at most two investment Realtors while there will be thousands of residential Realtors. While finding an investment Realtor may take time, the cost, risk, and time savings will be worth it. See the image below for the range of skills you need to be successful.

    If you chose a good investment location and find a local investment team, you should do well.

    ...Eric

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  • Beny Korotkin
    Member since 2023 · 3 posts · 1 vote
    3y
    Quote from @Chilly Nathan:

    Hi All,

    New here to the community but I do own 3 properties in California. I'm looking to purchase an investment property for $250-300k cash. For buy and hold/cash flow. Where would you buy and why?

    Hi Chilly. I wonder if you were able to buy a property eventually. Was it in Columbus or somewhere else ?
    0Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    3y
    Quote from @Chilly Nathan:

    Hi All,

    New here to the community but I do own 3 properties in California. I'm looking to purchase an investment property for $250-300k cash. For buy and hold/cash flow. Where would you buy and why?

    Hi Chilly, I'd recommend that you look into Columbus Ohio and as someone who works with a lot of out of state investors - there's so many catalysts for why you should invest here. Specifically, there's job growth (Intel, Honda, Amazon, Nationwide, etc) and the population is growing (unlike Cleveland or Cincy). I really see Columbus Ohio as an extremely safe bet for the next 10-20 years. Plus, there's still so many positive cash flowing and 1% deals here in Columbus Ohio. As a local investor and agent here in Columbus, let me know if you have any questions or want to connect!
    [email protected]614-300-7535
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  • Elijah Grindstaff
    Walnut Creek, CA · Member since 2017 · 3 posts · 1 vote
    3y

    Did you end up buying?  Where did you end up investing? 

    0Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    3y

    Columbus, OH can be a great buy and hold market but is very tough to cash flow in nice areas here. That being said if you are a long term investor you will do just fine here as the rents and prices appreciate. Finding good off market deals is key.

    [email protected]614-363-2787
    Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews
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