Picking a location for investment property
Whitewater, WI · Member since 2025 · 6 posts · 18 votes
Picking a location for investment property
Most Popular Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votesHow much do you know about Property Classes?
Recommend you spend some time learning about them, so you don’t mistakenly buy a property that will NEVER meet your expectations!
Why is Property Class so important for investors to understand and apply in their investing strategies?
Because the Property Class dictates the Class of the tenant pool that the property will attract.
The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.
Both Property Class and Tenant Class will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually rent it?
Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?
So, if you fail to apply the correct assumptions to a property, your expectations won’t be met, and it may even be a financial disaster.
We use the following to rank Property Classes, in order of importance:
- Property Tenant Pool: closely linked to location, but not always.
- Property Location: closely linked to tenant pool, but not always.
- Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”
Key metrics for each Property Class:
Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.
Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.
Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.
Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.
Where did we get our FICO credit score information from?
Check out this chart:
|
FICO Score |
Pct of Population |
Default Probability |
|
800 or more |
13.00% |
1.00% |
|
750-799 |
27.00% |
1.00% |
|
700-749 |
18.00% |
4.40% |
|
650-699 |
15.00% |
8.90% |
|
600-649 |
12.00% |
15.80% |
|
550-599 |
8.00% |
22.50% |
|
500-549 |
5.00% |
28.40% |
|
Less than 499 |
2.00% |
41.00% |
Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
Metro Detroit has 132 cities, the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying. Check out the map on our website where we’ve made this all easy to follow.
We can also share numerous examples of properties & portfolios we’ve assisted investors with!
DM us if you’d like to discuss this logical approach in greater detail!
Horror Stories:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
Logical Property Management4.9469 Reviews
30 Replies
- Member since 2024 · 14 posts · 2 votes1y
@Evan Rekowski You will probably want to narrow it down to the cities that most interest you. I have been struggling in the same situation but since I travel around Kansas for work often, I have made it a point to walk/drive around the cities and get a feel for them, then numbers on all the properties currently listed to see what kind of cash flow they generate (assuming the full cost of the home). This gives me a very surface level idea of how much properties are worth in those areas.
- 1yRebecca KnoxBusiness MemberSpecialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
Definitely pick Wisconsin. Out of state investors buy here.
If you were in Texas, I would tell you to invest in TX.
It's just easier to invest closer to home. There's active investors in Whitewater and many possibilities I'm sure, for student housing as well as airbnb...
But the active investors in Whitewater also invest in Milwaukee.
- Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes1y
Invest where you live. Focus on finding a 2-4 unit to house hack. Rinse and repeat that process a few times
- 1ySamuel DioufBusiness MemberReal Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
Hey Evan, when starting out, if you're in a market that allows you to do so.. I think it'd be best to start in your backyard. That way you can get the hands-on experience while navigating your first few investments, learning the ins-and-outs.
I'd say house-hacking is one of the best ways to get into real estate investing. You’re able to learn the basics of a real estate investment with lower risk and build equity at the same time.
Reafco - Samuel Diouf4.929 Reviews - 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
-don't start with something significantly below the median
-start with a house hack that you live in
-a house hack will not, and is not meant to, "cash flow"
-repeat several times and you'll have a portfolio
-good luck
- Memphis, TN · Member since 2024 · 180 posts · 223 votes1y
Hey Evan!
Love that you’re starting early — that’s such a huge advantage. A lot of new investors overthink where to start, but the best move is finding a market with solid cash flow, landlord-friendly laws, and good property management in place.
I’m an agent in Memphis, TN, and it’s been a great market for newer investors because the entry prices are lower, rent-to-price ratios are strong, and you don’t need a massive budget to get started. Many of my clients buy here from out of state while still finishing school or starting their careers, since they can build a team locally and stay hands-off.
Happy to share what typical numbers look like here and how people analyze deals from afar — no pressure at all, just happy to help.
Best of luck!
- 1yMelissa JusticeBusiness MemberRental Property Investor · Phoenix, AZ · Member since 2024 · 519 posts · 1k+ votes
Great mindset, Evan - doing the research early puts you way ahead. If you’re after affordable, cash-flowing markets, look into Columbus, GA and Akron/Canton, OH.
- Columbus, GA: Military presence, low prices, solid rent-to-price ratios, and good cash flow potential. Just vet neighborhoods carefully.
- Akron/Canton, OH: Cheap SFR, duplexes and small multis, strong rental demand, and higher cap rates. Great for starting out.
Focus where the numbers work, not just where you live - Midwest and Southeast markets are still investor-friendly and great for beginners.
Always happy to chat more about what's worked for other investors. Best of luck!
- Real Estate Agent · Clayton, NC · Member since 2015 · 51 posts · 17 votes1y
Start in your own backyard, theres no need for you to go out of state. Find your local real estate meet up group and network with other investors and see what is working in your neck of the woods.
Know your numbers, especially on rehab cost. Do not underwrite a property with fictitious numbers. Find an investor friendly contractor and walk the property with them and let them tell you what the rehab cost will be.If you can build to rent, then thats probably the best option (in my opinion) unless you do a full gut remodel job and have a nice product.
Good Luck!!!
- 1ySeth McGatheyBusiness MemberReal Estate Agent · Milwaukee WI · Member since 2024 · 321 posts · 255 votes
Congratulations on getting into investing early!
If you are in Wisconsin, I highly recommend investing here. I am an agent here and a lot of BiggerPockets followers are buying in Wisconsin. At BPCon last week they even mentioned it during a keynote as one of the best markets in the country right now. (Milwaukee specifically). Also, if you are just starting I always recommend starting close to home if you can. There is a lot to learn and being in the heat of it can be super beneficial. That isn't always possible for investors in expensive cities/states, but you are in a great investment state, so I highly recommend starting local.
Depending on what city you are in, I suggest house hacking your first property. That way you can learn how to be a landlord without diving into the deep end. You get to learn about picking tenants and see how they treat the property first hand. Your overall risk is so much lower, and on top of that you can get a property for so much less capital if it is your primary.
If you can't house hack for some reason, then just make sure you are picking a city that you know well enough (or have someone guiding you that knows well enough) to pick solid neighborhoods.If Milwaukee is one of the cities you look into, feel free to reach out and I would be happy to help you dig deeper into the Milwaukee market to see if it is the right fit for you.
Regardless of where you pick, best of luck to you!
Seth McGathey - Shorewest Realtor4.912 Reviews - 1yArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 966 votes
Hey Evan, great to see you thinking ahead while still in school, that’s exactly how long-term investors get a head start. When you’re comparing markets, focus on job growth, population trends, rent-to-price ratios, and landlord friendliness. Texas and the Carolinas have seen strong appreciation, but cash flow is getting tighter in some metros. Don’t overlook Midwest markets, lower entry prices, solid rent returns, and steady tenant demand make them great for starting out. You can always scale appreciation later once you’ve built a strong cash flow base.
- Investor · Buffalo · Member since 2025 · 45 posts · 27 votes1y
Do you have the capital to house hack while you are still in college? I would echo what everyone else has said about staying close to home. It is market you already know, you would get the best financing terms possible, and you have more latitude when selecting roommates instead of tenants.
- Whitewater, WI · Member since 2025 · 6 posts · 18 votes1y
Thank you for everyone that replied to my post, I know that this is a business that can't be done alone.
I wish everyone the best,
Evan - 1yAaron ZimmermanBusiness MemberAccountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
By buying in your backyard, you can definitely reduce your risk. At the end of the day, your ability to execute comes down to your team. I'd say go into the market that you have the best team.
additionally, when starting out, if you can house hack, this will lower the upfront barrier for a down payment and you'll get favorable financing terms. You'll also learn the skill of landlording too. There's more benefits to house hacking but I'll digress!
Brick House CPAs53 Reviews - 1yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
How much do you know about Property Classes?
Recommend you spend some time learning about them, so you don’t mistakenly buy a property that will NEVER meet your expectations!
Why is Property Class so important for investors to understand and apply in their investing strategies?
Because the Property Class dictates the Class of the tenant pool that the property will attract.
The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.
Both Property Class and Tenant Class will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually rent it?
Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?
So, if you fail to apply the correct assumptions to a property, your expectations won’t be met, and it may even be a financial disaster.
We use the following to rank Property Classes, in order of importance:
- Property Tenant Pool: closely linked to location, but not always.
- Property Location: closely linked to tenant pool, but not always.
- Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”
Key metrics for each Property Class:
Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.
Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.
Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.
Where did we get our FICO credit score information from?
Check out this chart:
FICO Score
Pct of Population
Default Probability
800 or more
13.00%
1.00%
750-799
27.00%
1.00%
700-749
18.00%
4.40%
650-699
15.00%
8.90%
600-649
12.00%
15.80%
550-599
8.00%
22.50%
500-549
5.00%
28.40%
Less than 499
2.00%
41.00%
Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
Metro Detroit has 132 cities, the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying. Check out the map on our website where we’ve made this all easy to follow.
We can also share numerous examples of properties & portfolios we’ve assisted investors with!
DM us if you’d like to discuss this logical approach in greater detail!
Horror Stories:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
Logical Property Management4.9469 Reviews - 1yTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
Move where you can find the best job/income relative to the cost of living in that area. Your W2 income is going to be the greatest driver of wealth building for the first half of your career. Make as much as you can in a job that you don't hate. You can figure the real estate investing piece wherever you live. There are no secret markets or secret strategies. Make money, save it, buy good assets (RE or index funds), and let the compounding effect of time take over.
- 1yCharles ClarkBusiness MemberReal Estate Broker · Milwaukee, WI · Member since 2020 · 306 posts · 209 votes
Hey Evan, great question you’re definitely ahead of the game by thinking about this early!
You’re already looking at some strong markets, Texas and North Carolina in particular have a solid mix of job growth, population inflow, and landlord-friendly laws. Arizona has good appreciation potential but is getting a bit tighter on cash flow, while Wisconsin still offers affordability if you stay local and know the neighborhoods well.
When you’re comparing markets, I’d focus on these key metrics:
-
Rent-to-price ratio (aim for 0.8–1% or higher)
-
Job and population growth trends
-
Landlord regulations and property taxes
-
Diversity of industries (to avoid dependence on one employer/sector)
Also, look into markets where you’d actually want to live or visit frequently, especially for your first few deals, it makes managing and learning much easier.
Raise the Standard RE LLC55 Reviews -
- 1yKerlous TadresBusiness MemberRealtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
Hey @Evan Rekowski, I'd recommend starting simple and focusing on getting your first house hack right after graduation. That's how I got into real estate. I bought a duplex, lived in one unit, and rented the other; my tenant basically covered my mortgage. It gave me cash flow, equity growth, and confidence to buy my next deal. You'll learn how to screen tenants, handle maintenance, and manage a property, all while living in it. That experience is way more valuable than reading or analyzing from the sidelines. Start saving now, build your credit, and talk to a lender about FHA or 5% down options.
Kerlous Tadres | Reafco Real Estate542 Reviews - 1yJoseph TadresPro MemberReal Estate Agent · Columbus, OH · Member since 2025 · 184 posts · 179 votes
Hey Evan! I had a similar plan like you, I bought a duplex six months out of college. Being an out of state investor can have pros and cons. I would reccomend the first one you buy to be in Wisonsin to learn more!
- Property Manager · Coeur d'Alene ID · Member since 2025 · 11 posts · 1 vote1y
Hey Evan, solid list of markets you’re looking at...those all have pretty different strengths depending on your goals.
I work with investors in a few of those areas (Arizona and Texas especially), and what I’ve seen is people usually narrow down their choice by looking at three things:
-
What kind of tenant base they’re comfortable serving (workforce housing vs lifestyle renters)
-
Property taxes and insurance costs (big swings between states)
-
How involved they plan to be in the management side
If you’re still figuring out what kind of market fits your investing style, I can connect you with a few people who started out-of-state and built small portfolios in those same regions. They could share what surprised them most about each.
-
- 1yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votesHey Evan, welcome to BP and props to you for getting ahead of the game while you’re still in school—that’s a smart move. All those states have solid markets in their own way, but one market I’d strongly suggest adding to your radar is Columbus, Ohio. I moved here from Portland back in 2020 specifically to build my portfolio and now own 10+ rentals, and the reason I chose it is because the macroeconomics here are on fire. Population and job growth have been super strong, and big companies like Intel, Amazon, Google, Honda, and Microsoft are moving in or expanding, driving demand and appreciation. You can still find single-family homes or duplexes in the $120K–180K range that hit the 1% rule and cash flow from day one, which is getting harder to find in many parts of the country. When choosing a market, I’d focus on population trends, job growth, rent-to-price ratios, and how landlord-friendly the state is. Columbus checks a lot of those boxes, which is why so many out-of-state investors are coming here. Happy to connect and answer any questions you have!
Quote from @Evan Rekowski:
I am a college student looking to start buying properties once I graduate, and I’m doing my research on good cash-flowing properties to invest in, as well as homes or duplexes that are on the lower side of the average median home price. I’m having trouble deciding where I should be looking and what metrics I should focus on when trying to make a decision on where to move.
My current options are Texas, North Carolina, Arizona, and Wisconsin (where I live now). These seem like good options, but I’m curious to hear what experienced investors think about these states. It would be greatly appreciated if someone who has gone through something like this before could share what they used to make the decision to move to the area they’re investing in.
I appreciate the help,
Evan
Jimmy Lieu, Red 1 Realty4.9122 Reviews - 1yPatrick DruryBusiness MemberReal Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
@Evan Rekowski
If you can invest locally, I would do that. If that isn't an option, then I would look at investing out of state - 1ySam McCormackBusiness MemberReal Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 834 votes
Quote from @Evan Rekowski:
I am a college student looking to start buying properties once I graduate, and I’m doing my research on good cash-flowing properties to invest in, as well as homes or duplexes that are on the lower side of the average median home price. I’m having trouble deciding where I should be looking and what metrics I should focus on when trying to make a decision on where to move.
My current options are Texas, North Carolina, Arizona, and Wisconsin (where I live now). These seem like good options, but I’m curious to hear what experienced investors think about these states. It would be greatly appreciated if someone who has gone through something like this before could share what they used to make the decision to move to the area they’re investing in.
I appreciate the help,
EvanHave you thought about househacking as your first?
Sam McCormack Realtor Hey Evan! The biggest thing to focus on is understanding your goals: do you want appreciation or steady cash flow? Once you know that, it’s easier to compare markets. Some investors look into landlord-friendly, affordable areas where you can still get good returns without a huge upfront cost. Places like parts of the Midwest have been great for that. I’ve seen a lot of solid cash-flowing turnkey deals in cities like Detroit, too.
Let me know if you'd like to learn more about it!- Member since 2025 · 1 post · 0 votes11mo
Hi Evan,
Buying in a market you know well is usually a good idea but buying a property you can afford to keep is likely a little more important : ) My strategy has always been to buy in the best neighborhood I could afford without as much emphasis on the property itself. Of course, glaring defects are not a good idea, not cosmetic but structural issues such as foundations, retaining walls, or bigger ticket items. I started buying at 26 and used my youth and friends to help rehab the properties I purchased. What I found is that as long as a home is clean and well kept with a reasonable rent finding tenants isn't difficult even if the house is a little wanky. Good luck and I am always available to talk shop if you would like.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.