Investing in areas with low rent to price ratios

[Travis Nachman]

I am looking at properties around the St. Pete area to invest in, but the prices are way to high compared to what they can rent for. Ideally I would like to brrrr but even the good flips will lose a lot of money on the rent side of it. What are some ways to make this work? I've considered the possibility of finding properties I can ad an ADU or even just leaving extra money in the deal so the debt payment isn't so high. The videos I see online of people using the brrrr strategy are in markets unlike mine, so any advice on how to make a market like St. Pete work would be greatly appreciated!

[Raymond J. Rodrigues]

@Josh Green would you like to share your thoughts on this with @Travis Nachman? 

[Nick Velez]

@Travis Nachman

Saint Pete is an awesome place that has some great development in the near future. If I am not mistaken, there are a few big hospitals there so the MTR model might be a good fit.  I will second talking to @Josh Green. 

[Josh Green]

@Travis Nachman

Most metros that are desirable and showing long term, high appreciation rates are going to experience this at one point. Gone are the days here where you can just buy any multifamily or single family and just rent it out for good cash flow. While the barrier to entry has increased, there absolutely is still opportunity here and many people all over the country know that and are actively looking here.

I wouldn't mind hopping on a call next week to discuss your situation and see what can be done 👍🏼

[Drew C Grossman]

Quote from @Josh Green:

@Travis Nachman

Most metros that are desirable and showing long term, high appreciation rates are going to experience this at one point. Gone are the days here where you can just buy any multifamily or single family and just rent it out for good cash flow. While the barrier to entry has increased, there absolutely is still opportunity here and many people all over the country know that and are actively looking here.

I wouldn't mind hopping on a call next week to discuss your situation and see what can be done 👍🏼

@Josh Green what are you seeing in your market with returns/ strategies? Do you think the St Pete  market is more susceptible to further downsize with high interest rate environment since it doesn’t cash flow great? How much would prices have to come down in this market for the investment deals to work again? Obviously the market is different at different price points so I guess this is more of entry level/investment home specific. 

@Griffin Pratt curious to hear your thoughts as well 

[Josh Green]

@Drew C Grossman

St Pete has a variety of areas and cash flow metrics. Like most high appreciation metro markets, it's no longer very easy to just buy a relatively turnkey small multifamily and buy it will minimum down and expect to cash flow as an LTR.

Luckily, there are ways to cash flow outside of an LTR but this is definitely an appreciation market. As far as numbers needing to correct - I doubt that St Pete and most metros like this will drop in prices enough to offset interest rates to suddenly cash flow more. Good news is the rents here have been keeping up quite well with housing - we saw a 20-30% increase in rent the past year.