What state or City offers the Best ROI?

Question

Hello, I live in New york and I have one multi family Investment property. I purchased it at the end of the housing crisis.  I would like to invest into more properties, however New york is very expensive and the laws are not landlord friendly. What state or City should I look into that would give me great or the best returns?

Dustin Street · Answer

I agree! However, also biased lol(born and raised here in KC)

Sam McCormack · Answer

@Jeffrey Sou

Hey Jeffrey, I recommend Cincinnati, OH. Landlord friendly city/state, lower price point to get into, good cash flow on the right property, etc. I sent you a message so we can get connected!

Mackaylee Beach · Answer

@Jeffrey Sou I am biased to Kansas City.  You'll find pretty low taxes and lower entry points!

Account Closed · Answer

That's going to vary widely based on many factors.

I am an analyst at a real estate investment advisory firm that is investing our capital and helping clients invest theirs, in two midwestern markets currently.

I'm happy to chat about our services and what markets we've picked and why.

Feel free to reach out.

John Williams · Answer

Check out Clarksville, TN - where cash flow meets appreciation! I connect with a lot of out of state investors who've got their eyes on our market - for good reason too!

James Wise · Answer

I saw Cleveland was one of the markets suggested to you. Lot's of money to be made and lost here in Cleveland. If you do look into this market further, read The Ultimate Guide to Grading Cleveland Neighborhoods before you drop a big amount of cash.

Steve Donovan · Answer

hello@Jeffrey Sou.  There are many cities and regions of the country where strong cashflows are still possible through quality properties in spite of the current interest rates.  Be very careful when comparing one city to another, one property manager to another or one property to another.  Run all of the numbers through YOUR analysis tool and don't be swayed by someone else's proforma.  Everyone accounts for expenses and incomes differently and there are some widely different scenarios for appreciation, inflation rates, etc.  All the best in your investing future!

Dan H. · Answer

I suspect where you are located is your best market.  Here are some things to consider:

RE markets are efficient.  Prices are representative of numerous parameters but 3 large ones are expected appreciation, expected rent growth, and risk. The LL unfriendly laws are represented in the market price

OOS investing has a risk beyond the risk associated with the local market.  Maintaining a trusted team is tough enough to do local, but much more challenging OOS

Local investing allows you to leverage your local knowledge.  OOS you are at a disadvantage versus the local investors in that knowledge.

Loca investing allows easier heroics if/when necessary.  I had OOS property hit by hurricanes in back to back years. We had to travel to the properties to get the damage worked versus the promises they were spewing.

At least 2 of the markets mentioned above have declining populations.  One has had population decline of over 50%.  Beware of market recommendations from anyone that benefits from people investing in that market.  Also recognize what a 50% population decline implies for appreciation and rent growth.

Typically tenant friendly laws are enacted because of crazy low vacancy numbers (I.e. housing shortage) and even with the tenant friendly laws the power is with the LL.  My market has very friendly tenant laws, but is has crazy low vacancy, one of the lowest eviction rates in the country, and one of the lowest delinquency rates in the country. A tenant who gets evicted will have real difficulty obtaining decent housing in my market (we will not rent to anyone who has been evicted and this is a common criteria in my market).

I suspect your best chance of success is to invest in your local market.

Good luck

Ricardo Hidalgo · Answer

Hi Jeffrey, what is your preferred cash on cash return and appreciation? Are you wanting LTR or STR? Would you consider renovating? How much capital would you like to invest in a property?

Steve Kontos · Answer

@Jeffrey Sou

Hello fellow NYer. Yes our state is terrible when it comes to property laws. If you are considering investing out of state, please speak to those who have done it successfully and really understand how it works because it is a relationship driven business. I have been investing out of state for 15 years now and having someone familiar with the area, specifically pockets of growth opportunities helps out tremendously versus just choosing an area because it looks good on paper.

What state or City offers the Best ROI?

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