Investing out of New Jersey

[Adam Pervez]

Hi All,

I am interested to know which cities have been good areas for investment. I have heard that Columbus, Indianapolis, and a lot of the states in the Central Region have been good areas to invest in. I am looking to house hack and can move anywhere with my occupation being fully remote. I have also looked into Rochester, NY as well. Curious to know what other cities are worth looking into in this market.

Thanks!

[Remington Lyman]

Quote from @Adam Pervez:

Hi All,

I am interested to know which cities have been good areas for investment. I have heard that Columbus, Indianapolis, and a lot of the states in the Central Region have been good areas to invest in. I am looking to house hack and can move anywhere with my occupation being fully remote. I have also looked into Rochester, NY as well. Curious to know what other cities are worth looking into in this market.

Thanks!

It does not matter where you start as long as you develop your Core 4. The core 4 is David Greene’s long-distance investing strategy and consists of a realtor, contractor, property manager, and lender. Once you have this team in place, you should be able to invest in any market confidently.

As for picking a specific market - I would go after one with an increasing job and population growth. I invest and work in Columbus, Ohio. I am also looking to invest in Cincinnati and Cleveland.

[Sam McCormack]

@Adam Pervez

I agree with @Remington Lyman , you should build your core 4 and from there you can feel better about any market. Lower price for houses you could go to a midwest market, again pretty much what Remington said with the big Ohio cities

[Nate Sanow]

I’m a big fan of Tulsa and OKC. Not just because I live here, I’ve moved around, but something here makes things obtainable. All my eggs are in this  basket. If your a digital nomad you should check out Tulsa Remote. Roughly 2000 tech workers have moved here since it’s inception and basically they get paid to buy a house. 

[Pam Brown]

Hey Adam- I'm a real estate Broker with PMI Indianapolis. Our Team has everything that you are looking for.

I've lived here my whole life and Iove the Hoosier Hospitality that Indy offers.  It's a big city but not huge. There are also a lot of nice towns just north of Indianapolis to check out.  Fishers, Noblesville, Westfield and Carmel.   

All of my info is on my Profile if you would like to connect!

[Bob Stevens]

Quote from @Adam Pervez:

Hi All,

I am interested to know which cities have been good areas for investment. I have heard that Columbus, Indianapolis, and a lot of the states in the Central Region have been good areas to invest in. I am looking to house hack and can move anywhere with my occupation being fully remote. I have also looked into Rochester, NY as well. Curious to know what other cities are worth looking into in this market.

Thanks!

 Cleveland has been the best overall rental market for about 10 years. Forbes had it #1 2017-18, but they were not paying attention. It was MUCH better prior as well. 25- 30% NET caps were to be had with all in pricing of about 45k , Now 10% net caps as pricing has doubled tripled or more. BTW these numbers are based in cash purchases 

Good Luck 

[Steven Foster Wilson]

Quote from @Adam Pervez:

Hi All,

I am interested to know which cities have been good areas for investment. I have heard that Columbus, Indianapolis, and a lot of the states in the Central Region have been good areas to invest in. I am looking to house hack and can move anywhere with my occupation being fully remote. I have also looked into Rochester, NY as well. Curious to know what other cities are worth looking into in this market.

Thanks!

Hi @Adam Pervez, 

A great way to start your OOS investment is to get as much useful information as you can in every market you're looking at. Ohio has an awesome market. If you're looking into investing here, I recommend the major cities and here's why:

-Columbus, great for appreciation, pp is a bit higher around $220k for multifamily https://learn.roofstock.com/bl...
-Cincinnati, has a mix of cash flow and appreciation, average multifamily around $180k. https://www.noradarealestate.c...
-Cleveland, has alot of cashflow potential, average multifamily is around $140k. https://learn.roofstock.com/bl...

Looking for cashflow? Look into Cleveland, its got good cashflow potential with appreciation happening as well.
Looking for appreciation come to Columbus, there are still 1% deals, but the more attractive part is the population growth and other economic drivers!

[Shawn Mcenteer]

Hi @Adam Pervez  this post sounds a lot like me when I first started real estate investing.  NJ can be intimidating to invest in I did a huge amount of research for out of state and looking back at it all there is no way I would have the equity and cash flow I have today had I went the out of state route.   Right now I am over 300 consecutive rental payments without a single missed month, rents are going through the roof and with the rate increases I am expecting even more rent increases coming this spring. The craziest part of NJ right now is we are still appreciating and the Multi family market is crazy hot while many markets nationally are seeing price decreasing, homes sitting on market longer, we still have huge demand. 

[Eric Fernwood]

Hello @Adam Pervez,

Instead of selecting a location based on people’s opinions, I recommend selecting a location based on your goals.

If your goal is a passive income that will get you off the daily worker treadmill, accumulating enough rental properties anywhere will work. However, location becomes your most important decision if you want to stay off the treadmill. What will put you back on the treadmill? Inflation.

For example, suppose $5,000/Mo. enables you to get off the treadmill today. How many dollars will you need to stay off the treadmill at 8.5% inflation?

While the number of dollars increased each year, the increases only compensated for inflation and nothing more. Any less, and you are back on the treadmill.

To have the additional dollars you need to compensate for inflation, rents must rise faster than inflation. However, how much properties rent for is determined by the market. Therefore, a critical location selection metric is that pre-COVID rents rose faster than inflation.

You can use historical appreciation if you have trouble getting historical rent growth. Rents follow prices, so if pre-COVID appreciation was greater than inflation, you should be good.

Some other location selection metrics:

• State and city populations are both increasing. If city and state populations are increasing, many things must be right. If either city or state populations are declining, many things must be seriously wrong. Never invest where the state or local population is stagnant or declining.
• Low crime - High crime and long-term appreciation and rent growth do not coexist. I would not invest in any city on Neighborhood Scouts’ list of the 100 most dangerous US cities.
• Metro area population greater than 1 million. Small towns may rely too much on a single business or market segment to be economically stable in the long run and attract new employers and jobs.

Summary

If you want to get off the treadmill and stay off, only buy in locations where pre-COVID rent and price growth exceeded inflation.

Let me know if you have any questions.

[Tyler Lingle]

I second what @Remington Lyman said. Indy and Columbus are very similar markets. Columbus is a bit more mature than Indy I would say. Indy & Columbus are both the fastest growing cities in the Midwest and have great jobs markets. I like Indy esp if you have interest in STR as the climate here is very friendly. Indy has a lot to offer. I personally focus on B- to C+ areas that are developing rapidly but where cash flows are still feasible (although that's hard now due to rates).

[Adam Pervez]

Quote from @Remington Lyman:

Quote from @Adam Pervez:

Hi All,

I am interested to know which cities have been good areas for investment. I have heard that Columbus, Indianapolis, and a lot of the states in the Central Region have been good areas to invest in. I am looking to house hack and can move anywhere with my occupation being fully remote. I have also looked into Rochester, NY as well. Curious to know what other cities are worth looking into in this market.

Thanks!

It does not matter where you start as long as you develop your Core 4. The core 4 is David Greene’s long-distance investing strategy and consists of a realtor, contractor, property manager, and lender. Once you have this team in place, you should be able to invest in any market confidently.

As for picking a specific market - I would go after one with an increasing job and population growth. I invest and work in Columbus, Ohio. I am also looking to invest in Cincinnati and Cleveland.

Thanks for the input! I agree that having a REI team is crucial for investing in any area. It's good to know that there is a platform like this makes it a lot easier than it was many years ago.

[Adam Pervez]

Quote from @Sam McCormack:

@Adam Pervez

I agree with @Remington Lyman , you should build your core 4 and from there you can feel better about any market. Lower price for houses you could go to a midwest market, again pretty much what Remington said with the big Ohio cities

 That seems to be the market people are gravitating towards.

[Adam Pervez]

Quote from @Eric Fernwood:

Hello @Adam Pervez,

Instead of selecting a location based on people’s opinions, I recommend selecting a location based on your goals.

If your goal is a passive income that will get you off the daily worker treadmill, accumulating enough rental properties anywhere will work. However, location becomes your most important decision if you want to stay off the treadmill. What will put you back on the treadmill? Inflation.

For example, suppose $5,000/Mo. enables you to get off the treadmill today. How many dollars will you need to stay off the treadmill at 8.5% inflation?

While the number of dollars increased each year, the increases only compensated for inflation and nothing more. Any less, and you are back on the treadmill.

To have the additional dollars you need to compensate for inflation, rents must rise faster than inflation. However, how much properties rent for is determined by the market. Therefore, a critical location selection metric is that pre-COVID rents rose faster than inflation.

You can use historical appreciation if you have trouble getting historical rent growth. Rents follow prices, so if pre-COVID appreciation was greater than inflation, you should be good.

Some other location selection metrics:

• State and city populations are both increasing. If city and state populations are increasing, many things must be right. If either city or state populations are declining, many things must be seriously wrong. Never invest where the state or local population is stagnant or declining.
• Low crime - High crime and long-term appreciation and rent growth do not coexist. I would not invest in any city on Neighborhood Scouts’ list of the 100 most dangerous US cities.
• Metro area population greater than 1 million. Small towns may rely too much on a single business or market segment to be economically stable in the long run and attract new employers and jobs.

Summary

If you want to get off the treadmill and stay off, only buy in locations where pre-COVID rent and price growth exceeded inflation.

Let me know if you have any questions.

Hi Eric,

I completely agree with this and thank you for the insight! My goal is to accumulate enough passive income that will exceed my expenses. My amount for financial freedom would $7000-8000 per month. Curious to know where you got the chart of rent increasing to compensate for inflation. 

[Eric Fernwood]

Hello @Adam Pervez,

I used a spreadsheet. I will demonstrate starting with $7,000 with 8% inflation.

• Year one: $7,000 x 108% or $7,000 x 1.08 = $7,560
• Year two: $7,560 x 1.08 = $8,164
• Year three: $8,164 x 1.08 = $8,817
• Year four: $8,817 x 1.08 = $9,522

You take the monthly rent for the previous year, multiply it by 1 + the inflation rate, and the result is this year's rent adjusted for inflation.

[James Wise]

Quote from @Adam Pervez:

Hi All,

I am interested to know which cities have been good areas for investment. I have heard that Columbus, Indianapolis, and a lot of the states in the Central Region have been good areas to invest in. I am looking to house hack and can move anywhere with my occupation being fully remote. I have also looked into Rochester, NY as well. Curious to know what other cities are worth looking into in this market.

Thanks!

Owning a rental property in New Jersey - 0 stars. Would not recommend.

Eating a Jersey Mike's sub - 5 stars. Highly recommend.

[Jayson Cain]

Hi @Adam Pervez,
I have started my out-of-state real estate journey in Indianapolis. Now, I have a portfolio of long-term rentals and STRs. I've also helped other investors with their DSCR loans and flip projects. Happy to share my experiences and chat with you more if you're interested.