Cities to buy rental properties - Newbie

11 Replies

Hi All,

I am from Seattle area and totally new to real estate investing. As a newbie investor, I have a few questions and hope to get the answers from the experienced here.

1. Which cities I should be looking for to buy first rental properties? The prices near the place I live are high and I don’t have a lot of capital?

I was thinking of Phoenix, Orlando, Jacksonville, Charlotte etc.

2. Where to search for rental properties? I usually check Zillow, Redfin. Are these the right places to check? Are there better options? Or do people talk to specific agents who help them find rental properties?

3. Is there anyone in Seattle area who is willing to mentor me? 😊

Thanks,

Sharath

Hi @Sharath Chandra Pilli welcome to BiggerPockets. We were all "newbie" investors at one point or another. I personally have received some great advice from savvy investors so happy to pay it forward. I'm in the Raleigh area which has become a bit too hot for good cash flow so I'm in the same predicament. 

I've invested in Huntsville, Little Rock, Fayetteville (NC), Cleveland, and Cape Coral. Of those, right now I'm most bullish on Cape Coral. 

You can check out Zillow or Redfin, but often the best deals are found off-market. If you have the bandwidth to identify a market and establish good contacts, you might be able to work with a wholesaler. For myself, I'm just too busy these days with little kids so I've chosen to work with a turnkey company - Rent to Retirement - and have been very happy. Message me offline if I can answer any further questions and good luck!

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Hey there Sharath. Wow what a challenge to be looking at the entire map and trying to focus on one place to invest. I was in a similar situation back around 2009 when I started. I researched so much Truthfully, it did not matter. Anything I would have bought back then after enough time would have been a great investment. Don't get me wrong you can make mistakes so I would focus on who you work with less than where. There are endless opportunities across the country.  But finding partners/ boots on the ground/ great agents ,/ consultants to guide you / contractors ... Is what will make the investment a good one. Good luck!!

@Sharath Chandra Pilli

I'm sure those markets have some value, huge fan of the affordability in mine. Happy to discuss what I've been doing to help people with OOS REI even if it points you further towards someone else's market. Best wishes.

@Sharath Chandra Pilli

IMO the best place to start is the place that you currently live, chances are you know the area the best and you're close enough to drive and be hands on and get experience doing the whole bit.

If for some reason you cannot start where you live then I would suggest increasing the radius bit by bit until you find a market somewhat near you that you can dig into.

Some people have done it, but it's not that likely that as your first go you'd be successful and pleased with jumping into long distance investing right off the bat and still fully green.

Huntsville is a great place to invest in...if you can actually find a deal.  They are very few and far between right now if you want to be in Huntsville or Madison proper.  

We're getting a group of OOS investors together to discuss the Huntsville market on Zoom this Thursday, 11 Nov.  Info is below if you're interested:

"What's Happening in Huntsville, AL | An OOS Real Estate Investor Discussion"

When: Nov 11, 2021 05:00 PM Central Time (US and Canada)

Register in advance for this meeting:

https://us02web.zoom.us/meeting/register/tZYsfu2uqzwjGtzDUVJj6GOrBSB0bGEemTxm

After registering, you will receive a confirmation email containing information about joining the meeting.

Well all I know is I'd be careful with Pheonix. I think it's the market with the 3rd most appreciation out of any city and I think it was #1 in 08' and also fell the most in the subsequent crash.

@Trevor Fleck what do you like about Cape Coral? As an STR vacation market or long term rentals?

@Ryan Garant right now I see two strategic plays in Cape Coral if you get connected with the right developer who can produce a quality product timely and at a decent price (hint, there aren't many): 

1. Build to rent. I can build a brand new 4/2, 1750 sq ft home on a canal lot for around $285k all in including the cost of the lot. These are renting for anywhere between $2,300-$2,500/month as rental prices have soared in Cape Coral and supply is limited.

2. Build to sell (i.e., flip). Here the play is to build a slightly larger home around $1950 sq ft with finishes that are a bit more higher end for a quick resale. All in around $325k and after sale prices around $450-$460k. 

Admittedly, in both cases a decent amount of liquidity or creative financing will be necessary. Happy to talk about options I've explored if you're interested. Just send me a PM. 

I've focused more on the former for a nice combination of cash flow and instant built-in equity when complete. Looking on Airdna.co it looks like the Cape Coral area sees roughly 71% occupancy at an average of $214/night so the short-term vacation rental is there. Personally - if I were to go that route I'd build a 3/2 with a pool. The cost of a pool is steep at roughly $70k but if you put yourself in the mindset of an Airbnb guest, I think having a pool (and a hot tub) is both a nice perk and opens up the hot summers for rentals as well. 

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