I am looking to invest in small multifamily properties (2, 4, 6 unit buildings but no larger and no apartments). Does anybody have any advice or suggestions on where good places in the US are for this kind of investment? From the cash flow and vacancy rate standpoints I mean.
I work in the SE Texas market. Depending on whose numbers you look at our commercial real estated is about 15% below NATIONAL average. If you live in CA or mant NE states where your local market is 15% to 20% above market you can realize some real advantage. Houston is the energy capitol of the world and our local economy is booming, housing prices have been lagging but are starting to appreciate, however there are lots of bargins.
Look in the “inner loop” area, rental pressure is increasing due to the fact that many higher end rentals have been converted to condos and a lot of the lower end units have been knocked down and the land converted to town houses and single family development.
I like the Houston market. I would not buy a multi-family there though.
Staying inner loop is a good idea if you are a long-term investor. The echo boomers are starting to enter the market now. This generation is putting off marriage until later and looking to live close to the action. They are willing to give up space for proximity. Houston has a high echo boomer population–ranks above national average.
If you are going more for the people who have a family or are looking to start one and want a real community feel, look to places like The Woodlands.
RE is very cheap in Texas, compared with the coasts. I would not factor appreciation into any part of the investment equation. If it happens, it happens.
I looked over Dallas, SA, Houston, and Austin. I liked Houston the most, in regards to rental props. The home value to rent ratio is nice.
I agree with every thing with one slight exception. Yes appreciation “outside the loop” is low due to virtually unlimited land, but appreciation inside the loop has been above 10% over all and up to 14% in the hot areas like “The Heights”. Raw land and teardowns are moving even faster. This is one area that I specialize in, and what makes it so interesting is the zoneing or lack there of both today and historically.
Yea, because of the echo boomer population, inside the loop should continue to grow for a bit.
Still, you would not factor appreciation into a cash flow equation since appreciation is a speculative factor. Getting in on property inside the loop should prove to be a good venture.
That 10% appreciation what over how long?
Thanks! This is good information. However, I’m not sure I understand fully: you are suggesting the inner loop for potential appreciation AND cash flow due to echo boomers moving in. But are you suggesting single family homes, condos or multifamily in the inner loop?
Also, it sounds like outside the loop there is good potential for cash flow in single family homes. Is that correct?
I am not a duplex person myself. I don’t see that being a realistic approach in Houston, but I could be wrong. Someone once told me that duplexes were not the thing to do there. I tend to agree because there are many housing options.
I think SFH first then condos. I have found many homes in Houston (inside and outside of loop) that will cashflow.
I think over the long haul, your best appreciation will come inside the loop. It “may” be tougher to find cash positive properties there, not sure. If going outside, look for good neighborhoods and master planned communities.
Thanks all for the feedback. I have been looking long and hard for investment cash flow property. So far:
maybe Sac, but its growing astronomically. Not a cash flow without 20% down or more, in other words, like the rest of the world.
Seems to be appreciating faster than rents can catch up.
Same as CA, not as pricy, but its an equity play rather than a cash flow play.
I would love to find a market where I could buy a small house and break even and get a 5 or 10% growth per year. Of course I live in CA so I would have to get a manager or do a great job of finding tenants.
Thoughts, thanks for letting me share.
Only 47 more states to look at! LOL…
Look where you’d least expect. Look in areas where the sales prices are low but the rentals are strong…look around military bases…look in the Southeast.
For cash flow small properties in San Antonio, check out www.antexgroup.com.
I am buying new and nice HUD homes in SFW area. New basic homes sell for 100-140k and rent for about 1100. With an option loan, you can have cash flow.
Otherwise, I am in apts. and property mgt. is a big key.
Is Texas one of the best places to invest.
Re Texas virtues, well, the numbers look good. Some say any oil state.
When I think with coming oil shortages, I’m planning to stay in Texas about 5-10 years.
Another strategy is to invest where you like to, have to travel.
It appears that some of the best value retention areas are the suburbs of most major metros
You mentioned lease options in Texas. Be aware of the recent laws virtually outlawing L/O in the state. Check out the threads in the “Sub 2, Lease Options” forum.
Hi Mark/Evergreen/ Other Texan experts
Where can I locate a good property management company and maybe good realtors with investment properties knowledge? I have been looking at the listing from bidselects and it sparks my interest in Texas tremendously.
I live in S. FL and I couldn’t find any properties that will give me cash flow unless I put at least 50% down.
What is your suggestion for long distance investor?
NORTHEAST OHIO…NAMELY AKRON…THIS IS MY LOCAL MARKET. I HAVE AN INVESTOR I WORK WITH THAT WENT TO FLORIDA AND RAN INTO SOME INVESTORS THERE… HE TOLD THEM WHAT HE WAS BUYING IN AKRON, BUT THEY COULDN’T BELIEVE WHAT HE WAS SAYING… I KNOW HIS FINANCIALS…HE BOUGHT A SFR IN 03’ FOR $8,000. HE GETS ABOUT $600/MO. IN RENT.
HE BOUGHT A 2FAM. IN 02’ FOR $30,000…HE GETS $550 DOWNSTAIRS–$500 UPSTAIRS…
I DON’T KNOW IF THIS IS SOMETHING THAT APPEALS TO YOU BUT I HAVE ABOUT 100 PROPERTIES CURRENTLY IN MY E-MAIL THAT RANGE FROM $0-$50,OOO FOR 3BDRM/1BATH. SOME NEED WORK, SOME DON’T.
THIS IS AN AREA OF THE COUNTRY THAT HAS A HUGE “MAGNIFYING GLASS” ON IT.
THIS AREA HAS BEEN EXPOSED TO A LOT OF “PREDITORY LENDING” INVESTORS IN THE RECENT PAST. THERE ARE ALSO A LOT OF “FORECLOSURE” PROPERTIES AVAILABLE PARTLY DUE TO THOSE “PREDITORY DEALS” THAT HAPPENED.
THERE ARE DEALS OUT HERE, JUST TAKE A LOOK!!!
Can you clarify what you mean by THIS IS AN AREA OF THE COUNTRY THAT HAS A HUGE “MAGNIFYING GLASS” ON IT? Why is there so much focus on this area and by whom? The lenders?
Most of the true “predatory lending” issues that we are facing in Ohio are in the Cleveland Market. Ohio as a whole is monitoring the “high cost” loan arena.
Where are you at in Ohio, BARMZ
would try a few larger cities in southern states:
AL, GA, SC, MS
larger southern cities are allot cheaper than buying property in CA, NY,NJ
I have recently done a deal with a borrower in NJ he owns multiple apartment buildings and duplexes. A majority of his 4 unit duplexes appraise around 1.8 million with a rent coming in at $1,500-$1,800 per unit per month.
He has just recently acquired a few duplexes in Montgomery, Alabama. One 4 unit duplex/apt. in particular cost him roughly 460k. This rents at $735 per unit per month to tenants.
Of course you get half the income but yet he has alot less debt. on the prop.
MDHAAS IS CORRECT ABOUT THE CLEVELAND COMMENT, BUT I’VE HAD A BIT OF A PROBLEM WITH MY INVESTORS IN THE AKRON AREA.
THE LENDERS ARE GETTING A LITTLE NERVOUS(AT TIMES) ABOUT INVESTORS. THEY ARE REALLY PICKING THE FINANCING APART…TO PROTECT THEMSELVES OF COURSE.
I DO KNOW THERE ARE MANY DEALS OUT THERE. A LOT OF HOUSES TAKEN BACK ON FORECLOSURE!!