Best states to buy SF homes in?

32 Replies

Generally speaking, I think the best places for buy and hold are the lower cost markets that aren't in economic disarray. These markets are generally in the southeast (i.e. Raleigh) and the midwest (i.e. Kansas City, Oklahoma City, etc.)

Hey @Shawn Phillips ,

The Oklahoma City market is a linear cash flow market, where we experience low appreciation but we've received less damage during recessions compared to other cities in the U.S.

BRRRR can be reasonable here, as we have a lot of older homes in need of rehab.

Other areas to look into would be, Little Rock, Memphis, Columbus, and Kansas City.

Good luck!

@Shawn Phillips

I'm in Columbus, OH, and we are a great market for buy and hold. While the market is getting more competitive, you can still find solid properties with value-add potential, that will cash flow and experience good appreciation. Especially in many of the neighborhoods surrounding downtown.

However, what market are you in? Unless you're in a super expensive market, I generally would suggest looking locally first - especially if it's your first property.  

@Mikael Winkler

I'm in south east PA. I really do see some spots, but I actually think the areas are getting progressively worse. Crime from the cities are spiking, pouring into the suburbs, and unfortunately really affecting life here. I don't feel like investing here for a multi-year investment would be a good idea. I'm looking for move and find a place where I can get both a job and start the BRRRR process. I will look into Ohio though since it keeps getting mentioned! Thank you

Originally posted by @Shawn Phillips :

@Mikael Winkler

I'm in south east PA. I really do see some spots, but I actually think the areas are getting progressively worse. Crime from the cities are spiking, pouring into the suburbs, and unfortunately really affecting life here. I don't feel like investing here for a multi-year investment would be a good idea. I'm looking for move and find a place where I can get both a job and start the BRRRR process. I will look into Ohio though since it keeps getting mentioned! Thank you

Absolutely. Yeah, if you're thinking of actually moving, I would definitely suggest Columbus. There's definitely plenty of BRRRR opportunities here, especially if you're open to house hacking and living in the place for a period of time. That will also allow you to utilize a lower down payment and get into a property for significantly cheaper than you could've otherwise. We did that in South Columbus and bought our first property with basically $3500 down. It's now probably worth about $225,000 haha

 

Originally posted by @Mikael Winkler :
Originally posted by @Shawn Phillips:

@Mikael Winkler

I'm in south east PA. I really do see some spots, but I actually think the areas are getting progressively worse. Crime from the cities are spiking, pouring into the suburbs, and unfortunately really affecting life here. I don't feel like investing here for a multi-year investment would be a good idea. I'm looking for move and find a place where I can get both a job and start the BRRRR process. I will look into Ohio though since it keeps getting mentioned! Thank you

Absolutely. Yeah, if you're thinking of actually moving, I would definitely suggest Columbus. There's definitely plenty of BRRRR opportunities here, especially if you're open to house hacking and living in the place for a period of time. That will also allow you to utilize a lower down payment and get into a property for significantly cheaper than you could've otherwise. We did that in South Columbus and bought our first property with basically $3500 down. It's now probably worth about $225,000 haha

 

where was your first purchase? must have been merion village 

 

Hello Everyone - Thanks for posting this message - i am a new real estate investor and looking to partner with someone who is experienced in the BRRRR method - i would like to partner up on one deal - i do have some money to invest but the process is something i want some experience in - if anyone would be open to partnering up on a deal please let me know - i am willing to do more of the work and also invest 1/2 the money - thanks

Originally posted by @Mikael Winkler :
Originally posted by @Shawn Phillips:

@Mikael Winkler

I'm in south east PA. I really do see some spots, but I actually think the areas are getting progressively worse. Crime from the cities are spiking, pouring into the suburbs, and unfortunately really affecting life here. I don't feel like investing here for a multi-year investment would be a good idea. I'm looking for move and find a place where I can get both a job and start the BRRRR process. I will look into Ohio though since it keeps getting mentioned! Thank you

Absolutely. Yeah, if you're thinking of actually moving, I would definitely suggest Columbus. There's definitely plenty of BRRRR opportunities here, especially if you're open to house hacking and living in the place for a period of time. That will also allow you to utilize a lower down payment and get into a property for significantly cheaper than you could've otherwise. We did that in South Columbus and bought our first property with basically $3500 down. It's now probably worth about $225,000 haha

 

Ya that's a good idea. I'm assuming you're talking about a FHA loan that let's you put down like 3.5% down payment, but your monthly payments include a high PMI per month? I've thought about doing that with a duplex, since the FHA would force me to live there for a month I could possibly live there, save more money for a year, then rent it out when the year is up. Those monthly payments would be pretty heavy though. Nonetheless I'm hearing a lot of good things about Columbus in general so I'm definitely looking to possibly move there in the coming years. Thanks for your reply! I appreciate it your knowledge.

 

@Shawn Phillips  

Yeah, that 3.5% down is through FHA. There was PMI on that, but depending on the price point you're buying at, PMI isn't necessarily terrible. We were able to buy low in what would be considered an "up and coming" area, so our PMI was maybe like $50/month on top of PITI. And, once we refinanced after 6 months into a conventional mortgage, that PMI went away and we moved out of the property.

Now the continual property tax increases that stem from an appreciating area are the thing that's raising our mortgage every year haha

@Mikael Winkler

Haha that sounds like an even better route! I didn't know you could refinance a FHA loan and move out under that year time frame to rent it out. I appreciate the additional information about that. You think you made an excellent decision and are now reaping the benefits! Hope your future investments are just as good 😁

@Shawn Phillips

Yep! We were able to add value through some renovations and force that appreciation to refinance. Unless the stipulation changed, you are able to move out in under a year if you can refinance into a conventional mortgage. You will most likely have to wait at least six months, though. Most lenders won't refinance for at least six months after a mortgage was originated. They call it seasoning. However, there are some smaller institutions and and portfolio lenders that service their own loans that will forgo that seasoning period. Would just have to do some digging to find them. 

@Shawn Phillips I'm currently doing an FHA Duplex house hack in Columbus OH. We are in South Of Main, bought it completely flipped and redone for $318K, we get $1250 rent for the other side, so my "share", if you want to call it that, of the mortgage is $650 a month, even with a $200 a month PMI, this still made my cost of living way less than the $1350 mortgage I was paying out in the burbs. So my point is, don't be put off by the PMI, if the numbers work for your situation go for it. You can always refi out to conventional later on.

We got an appraisal of $340K a year later, which was November 2019. So roughly a 7% appreciation in a year...seemed pretty decent to me.   

And another huge plus for Cbus at the moment is that most areas just outside of downtown that are "up and coming" are coming with 10 year full tax abatements...so we are talking like $900, maybe less, a year in property taxes.  So for me that again was a huge selling point as I was paying almost $4K a year in Dublin.    

@Michael K Gallagher

That's extremely impressive! The PMI was really worrying for me, but I think you've convinced me that's a relatively good route to go for house hacking duplexes. As for the tax abatements I didn't know they could save you so much money, so I very much appreciate you pointing that out to me. Columbus Ohio is very much looking like a serious place for me to attempt to invest into in the coming years. Additionally, your appreciation value of 7% is great, do you happen to know the average/common appreciate rates of housing near your area? Thank you for your reply!

Hey @Shawn Phillips , I don't have a statistically calculated number, my agent @Rene Lanthron who found the duplex for me probably could be more helpful in that area if you are looking for actual data points, comps and statistical trends.

However, we watch the market pretty closely, and we are seeing some properties listed currently that are pushing the price per square foot way up!  Now if they sell for the list price or not we are yet to see... but just as an example, my duplex works out to just about $131/sf and their are several houses in the area that are trying to push the $165-$190 per sf mark.  Now these are single family's, so the appraisal is a bit different as I understand it.  But it does give some pretty substantial data and ammunition when going through an appraisal.

My speculation is because areas like Olde Town East, Bexley, and Franklin Park that immediately boarder the South of Main area are also appreciating quite rapidly, so we are getting that "trendy/hipster adjacent" push.  But it isn't so high yet that its unattainable price wise.  So its a pretty sweet little section of the east side of Columbus. 

1 random though regarding FHA... just be upfront with your lender about doing FHA and wanting to do a multi family, there were some pretty crazy hick-ups we came across with the underwriting and the zoning from the city and how its changed in these areas since the houses were built. So just know that FHA is a couple more hoops to jump through but if you stay on top of things and keep open communication with your lender they shouldn't derail things too much. And obviously every underwriter is different...so you might also just get a better more reasonable underwriter than I had...which I hope you do. but feel free to reach out if you want to talk more specifics or have any specific questions about the area/process.

Cheers!
  

I Love the Dayton area there is plenty to chose from you can find any price point you want and do well there. We have been in Dayton for over two years and am just as happy today with what we are finding as i was then. More then willing to share what we have discovered with anyone who wants to chat

Originally posted by @Shawn Phillips :

@Michael K Gallagher

That's extremely impressive! The PMI was really worrying for me, but I think you've convinced me that's a relatively good route to go for house hacking duplexes. As for the tax abatements I didn't know they could save you so much money, so I very much appreciate you pointing that out to me. Columbus Ohio is very much looking like a serious place for me to attempt to invest into in the coming years. Additionally, your appreciation value of 7% is great, do you happen to know the average/common appreciate rates of housing near your area? Thank you for your reply!

 I did my first double house hack in Columbus, Ohio. Definitely a great place to get started.