Best market to BRRRR for appreciation?

Question

Curious to know what everyone’s thoughts are on what the best markets are to try to find a BRRRR property that will appreciate quickest.

Hoping to be able to MTR after rehab to get at least some cashflow.

Thoughts?

Thanks!

Alfath Ahmed · Answer

Hi Travis, I would take a look at the Columbus market due to the growing economic bases, population growth, and strong appreciation. I just helped 3 clients in the last week close single-family's all within 70-75% ARV.

Remington Lyman · Answer

They are not that bad. I am from CT and the winters were way worse there

Jimmy Lieu · Answer

Hi Travis, I personally love 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!

Nicholas L. · Answer

@Travis Andres

good question!  I think very tough to answer.  if i knew where you could get guaranteed appreciation i'd be going there!

instead, I strongly believe that folks should invest in markets in which they can be hands-on and hold, rather than based on some formula that tells you to invest in Alabama when you're in California or in Ohio when you're in Maine.

but that's just me.

and I get that LA proper might be too expensive but there are lots of other markets 2-4 hours away.

Corby Goade · Answer

I've gotta disagree- in my experience, cash flow should be the cherry on top. This is very deal and market specific, but if you are trying to scale, the appreciation and equity is what will get you there. I'm not saying you should buy properties that are cash flow negative, but you can make WAY more money with forcing equity and riding the wave of appreciation than you will on cash flow if you know what you are doing and have excellent market comprehension.

Generally, the markets in the West appreciate pretty solidly, the challenge you will have is finding a market like that where tenants don't rule the roost.

I invest in Idaho- excellent appreciation, high quality tenant base and it's one of the most landlord friendly states in the country.

Best of luck!

Marcus Auerbach · Answer

You are looking at a bit of a conundrum: high potential for appreciation usually means very low inventory and a competitive market. Milwaukee used to be a great market to BRRRR with tons of old houses in need of rehab, strong cash flow, but only slow appreciation. Listings in bad shape would sit around, finally accepting an offer with a reasonable discount for condition. Perfect for BRRRR.

Now Milwaukee is dealing with a chronic housing shortage, extremely low inventory and with that even very dated houses will not get a meaningful discount. Some desperate first time home buyer will underestimate how much it costs to fix up a house, overestimate how much they can do on their own and pay close to full price. And without a discount, no BRRRR.

At this point I am BRRRRed out; we are buying move in ready properties and let appreciation (and inflation) do it's work.

Eliott Elias · Answer

Don’t invest in any market for appreciation. If your property cash flows with long-term rents, that is true cash flow. Appreciation should be a cherry on top.

Corby Goade · Answer

It's all good, we can agree to disagree. I would argue that cash flow is maybe less predictable than equity.

There will always be risk in any investment in a market regardless of what kind of due diligence you do. That being said, higher cash flow markets are typically much more volatile. Lower quality properties and lower quality tenants,l. Your proforma will fall apart the moment your tenant stops paying rent or you need a new roof.

Even when they perform well right out of the gates, Those higher cost lower cash flow properties Outperform the high casual properties in nearly every situation 5 to 10 years down the road. Much better cash flow plus equity over time.

If you are trying to start with very little cash, It's nearly impossible to scale without forcing equity or riding appreciation.

It's a really difficult concept For new investors, because it's much less scary to that on what your spreadsheet says today rather than 5 years down the road, But almost every time, you will do better if you spend more and focus on Equity and b or better areas.

Best market to BRRRR for appreciation?

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