All Forum Posts by: Jakub R.

Nobody has an objective answer to this question. And frankly, it does not matter that much. Both the NE and the Midwest have chronic housing shortages, prices are still going up, while the Sunbelt is softening. 

What really matters is you need a market you understand, have quick & easy access for frequent visits (that also helps with the knowledge part) and a team you can rely on. How good your property manager is will make a bigger difference than city A vs B. And I think you should also pick a city you feel excited about on a gut level, and not have to convince yourself, just because of the data. Trust your instincts!

I am pretty lucky that my job brought me to Milwaukee. RentCafe publishes a rental competitiveness index, that gives you some idea about rental demand. Milwaukee has been in the top 10 for the last 5 years, 12 renters per available property lines up with my personal experience. I have been investing here for over 15 years and think it's one of the most underrated cities. We have seen steady 7% appreciation over the last 10 years and no change in sight. Look it up on YouTube. I am pretty bullish for the next decade and I am probably biased, I can't objectively tell you how it compares against other cities, so you'll have to make a judgment call.

source: rentcafe

@Jakub R.

just to challenge you a little, and hopefully expand your thinking:

-note i didn't say that you have to invest in your literal, immediate area.  what if you go out 1-2 hours in every direction?  doesn't that open up multiple states and multiple markets?  what about the Lehigh Valley in PA?  why do you assume you have to go thousands of miles away?  how many of those markets have you been to?  what if you spent the next 10 weekends spending the weekend in each one, meeting their people, drinking their coffee, and seeing what you think?

-"NJ is not landlord friendly" - then how come there are so many investors succeeding there?  and doesn't that mean that it's a barrier to your competition?  there is no easy right now.  I promise you, Ohio is not easy.

-there's no cash flow anywhere right now.  period.  interest rates are too high.  here's some math for you: estimate how long it will take to pay off just the closing costs on a property with $87 a month in "cash flow."

and finally, if you do determine that you will invest "out of state," you have to not do this:

https://www.biggerpockets.com/forums/48/topics/1242392-rough...

https://www.biggerpockets.com/forums/48/topics/1137397-balti...

https://www.biggerpockets.com/forums/432/topics/1231840-sell...

https://www.biggerpockets.com/forums/311/topics/840134-memph...

https://www.biggerpockets.com/forums/963/topics/1195280-expe...

hope this helps

happy to dialogue further

OKC Metro

@Jakub R.

there's no answer to this question.  there are successful and unsuccessful investors in every market.  I like what was said by @Andrew Postell - I'd stay close to home.  picking a random property thousands of miles away is high risk.  you can't just math your way to a market.

hope this helps

You should explore the Midwest, where you can expect good cash flow and moderate property appreciation. Many OOS investor invest here from markets on the West and East coast. 

That’s a solid question, Jakub. For long-term rentals, the sweet spot usually comes from places that balance affordability with steady rental demand. Areas with diverse employment bases, universities, or consistent population growth often give you that combo of stable cash flow plus moderate appreciation over time.

Are you leaning more toward maximizing monthly cash flow right now, or would you prefer to sacrifice a little of that for stronger appreciation potential in the long run? Happy to keep the conversation going!

@Jakub R. as a 15 year, out-of-state investor, my recommendation is to ALWAYS choose whatever city you have the most trustworthy contacts in. That's the best market.  Keep in mind that you may never see your asset. That's an ENOURMOUS amount of trust/money to put into a stranger's hands. What I mean here is that if you know someone in a one city...but that city may not have as good as numbers as this "other" city...then stick with the city where you know people. One wrong move, one wrong contractor, one wrong vendor…will erase any "benefit" one city has over another. Your network is the most important piece for any potential returns when you invest out of state.  When I lived in NYC I couldn't invest there.  I had to invest out of state.  Now, I see your profile says NJ...I would do whatever I could to try to target a town that's within 1 hour of you.  Do everything you can to be local.  You have more control, you can screen your vendors, meet with other investors, etc.  Everything leans to trying everything you can to be local.  And if you cannot, then go with the city where have people you can trust.

Hope all of that makes sense.

You're welcome.

Returns vary in function of the kind of deal/property. To give you an idea, we'er talking about a net cash flow return of typically 6% AFTER mortgage payment. This isn't the largest part of the return, which is the increase in equity: loan amortization + capital appreciation. Those very high returns come from the combination of the very low mortgage interest rates and the steady capital appreciation.

Regarding my investment portfolio, I'm still in a growth phase and a phase in which I help an partner with other investors so that they can invest in the most profitable opportunities without having the necessary presence on the ground, time, knowledge and contacts, which is something I really enjoy doing.

The biggest hurdle is finding the right opportunities in a hot market, although it's a matter of time, for me at least, so it's not really a hurdle.

Legal aspects aren't a hurdle from me because I studied in my native Belgium and have been based in Quebec, both of which have a similar legal system to that of Spain and Portugal (civil law).

As to regulations, in Spain, it's a matter of investing in the areas and type of properties that are least affected. Portugal is the only country I know of who recently went backwards when it comes to short-term regulations, making them less strict.

Hope this helps.

Hi Jakub,

I'm invest almost exclusively outside of North America nowadays and my main purpose is to maximize my returns. The main factor to build wealth in real estate is the level of interest rates and it's way too high in Canada and the US. Therefore, nowadays, my preferred countries are those in which I can get a mortgage at a very low interest rate (basically get free money), which leads me to the European Union. Then, I look for the lowest rates, the best market growth and the highest returns and Portugal and Spain come on top, provided that you buy the right properties in the right locations and follow the right strategies.

Thankfully for me, I have great personal connections in those places. Also, because I'Km an active investor and have to spend a significant amount of where I invest, I want to like the locations where I invest for lifestyle reasons as well and I do. Because I focus on short-term rentals, the places that are the most profitable will often be where people like to go so both factors will go hand in hand for many people.

Finally, when we come to taxes, what I've learned from other successful investors is that taxes shouldn't be a main factor in an investment decision. If I have to pay a very high amount in taxes, it can just be a sign that I make a lot of money and I'm ok to give back to society that way too. Of course, if the taxes in a given jurisdiction almost amounts to profit confiscation, I'll go elsewhere but that's not the case.

Hope this helps