Here’s my situation: I am about to sell two properties in Northern California and should have approx. 200K in equity (cleared about 100K on each property within 1-2 years) with a 400K mortgage to roll into a 1031 (thus, will need property or properties worth 600K plus). Currently the properties are slightly negative each month, but the appreciation has been great. Now, however, I fear the peak is coming and my personal situation is demanding passive income. We need to do our exchange in a market where we can get positive monthly cash flow and I would prefer at least $750 per month or more based on the above mentioned numbers.
Does anyone have any good suggestions about where we might look to achieve this goal? I would be willing to consider any geographical region but would obviously prefer somewhere with a good rental market and some hope for appreciation and west is best.
Looking forward to some responses.
p.s.–I’ve considered Portland, OR but it might be cutting it too close to make it work–any thoughts?
Arizona and Nevada were great markets to put money into and have cashflow a couple years ago but now they are mostly break-even or negative cashflow as well depending on what LTV you use. The best places to find cashflow rich properties would be the midwest or the south, but they usually don’t appreciate as fast. Texas is also a decent market to get cashflow SFH properties in. I have a few friends that have bought houses under 100k and they get pretty good rents on them with low expenses.
Buffalo, NY area has great cash flow due to the low valued properties you can buy here. Also locally is one of the best 1035 exchange guys in the business, Russ Gullo. Let me know if you need further help.
I would stay away from both coast lines due to the expected RE bubble. The midwest(Chicago or Indy)are hot, even the north central part of florida offer some real bargains!
I agree with the above statements regarding the midwest. If you want positive cashflow, go to the midwest where houses are still well below $250,000. I own rental property in San Diego, CA but it is literally impossible to have positive cash flow there with the high cost of property.
Recently I purchased a couple of 4 bedroom 1700+ sq ft house in St. Louis, MO for around $200,000 each only 5 miles away from downtown and am enjoying a very nice positive cashflow. These are really nice clean neighborhoods. Downtown St. Louis is currently undergoing major renovation and people are moving back into the city.
There also has been several articles about people cashing out their property in overheated markets to trade it in for property in the midwest. Make sure you do your own research before you buy anything though.
Texas is a great market and a lot of Californians have already been putting their 1031 exchange investments into Dallas, Austin, Houston and San Antonio. We have a number of California clients still looking for properties out here. (I’m one of them who has been here for 19 years, Texas grew on me!) Think about multi family (apartments are interesting possiblities), office, retail as well as SFR.
The new Toyota plant is going in SE San Antonio which was a slow market previously. Other parts of San Antonio have been growing over the past few years. Property along the IH - 35 corridor are popular because of trade from Mexico. Houston has been sleeping for awhile but I would bet not for long. Dallas took a hit with the Communications industry taking a dive several years ago but in the Bizjournal they were talking about office rents in down town are coming back.
Shasta,
I had 3 investor’s from Australia in my office last month - basically told them what area’s were a “war zone” type, to stay away from. One of the now new clients of mine, bought 4 properties while here.
It is the old “buyer be ware”, know what your getting into, research the market and you should be fine.
I have been buying property in Raleigh, NC. The last being a 48 unit apartment complex. I have found deals in Raleigh that produce some positive cash flow with decent upside appreciation potential. I think it is a market that is worth looking into…and it is not a war zone.
I agree that many investors are coming to Texas. Austin, Dallas area, and Houston are all good markets.
Get signed up for the Real Estate RECON news from Texas A&M as well as the Austin Business Journal. We have a lot of developments, new highways, and revitalization that will cause property values to increase. There is talk of a real estate bubble, but you just have to be a smart investor.
SH130, the Austin-San Antonio Corridor, East Austin revitalization, Airport redevelopment, Featherlite Tract, light rail, Lance Armstrong Bikeway, etc. are just a few projects.
Has anyone investigated northwest Arkansas (Bentonville, Rogers, and Fayettville). All Walmart suppliers must have a presents there. Real Estate values have been going up; however, you can still by fairly cheap.
Also, I think Walmart has a new distribution center in Utah. This might also be another area to consider. Walmart seems to influence real estate values where ever they are.
