I am looking for Markets where one can buy a 3/2 home with 20% down max, and get positive cash flow immediately.

My own criteria for rental markets is this:

1) area must have major university
2) prefer it to be a state capitol
3) must have at least two large tech employers

Then I do the math and find nice homes where i can get positive cash flow.
That means the rents must be high enough, and home prices must be low enough. I found Boise, ID. to be a great market, that met these criteria and got positive cash flow when I bought in 2003. Good appreciation since.

Now I am looking for other markets, preferably in a sun belt state.

Any Suggestions? Has anyone here been able to get positive cash flow immediately in markets that meet these criteria?

Thanks,

Calzephyr
Davis Real Estate

I think you're asking the right questions and generally you have the right philosophy: run the numbers, seek out solid investments that generate positive cashflow w/ a 20% down payment.

Generally speaking you want to look at markets where home prices haven't run wild over the past few years. Think Houston, Fort Worth, Rochester, Wichita, Little Rock, and many others. Have a look at the recent Global Insight study [/url]to see which markets are undervalued and which are overvalued.

And, you'll notice, I'm disregarding some of your stated rules: namely state capitals and two large high-tech employers. I think you should question whether or not these are guidelines that you really believe in. Do you really feel like you'd be willing to invest in Santa Fe, but not Albuquerque? That you'd invest in Carson city but not Las Vegas? Why restrict yourself to state capitals.

WalMart is based in Bentonville AR. No state capital and no high tech employer, but having the biggest retailer in the world in your backyard has done a lot for property owners there.

And the answer to your question is: yes. You can find properties that generate positive cashflow w/ a 20% downpayment. And by doing so you're setting yourself up to either a) benefit from a bounce in prices or b) protect yourself if prices slide - it's a lot easier to weather a rocky market w/ a cashflow positive property than one that's eating your wallet like an alligator every month.

Good luck!

Christopher Smith

Being in Houston myself, it is a great market to invest in. The real estate market here hasn't seen major fluctuations in price, namely because our inventory has kept a steady pace with the recent inflow of buyers and investors. We also have the central headquarters for HP here, so you have quite a bit of relos in the NW side of town. You can also find a good supply of renters there, as you have engineers on contract work coming in to town frequently. You'll find that you can purchase 3/2/2 properties under a $100,000 w/ 20% down and make $2-300 cashflow very easily, if not more.

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I am working with quite a few investors from California and the East Coast for the Memphis area. It is the renting/leasing capital of the U.S. I think. I am working business models that involve $10,000 homes for Section 8 to $150,000 homes for lease/purchase options, all the way to someone looking for a million dollar home they can get for $750k.

We have U.T. Memphis, U of Memphis, Rhodes....FedEx World Headquarters and are home to dozens of corporate headquarters such as International Paper, several hotel chains (parent companies), Schering-Plough, Service Master -- Huge presence by Nike, Cannon and 100's of others due to being the transportation HUB of the us. Positive cash flow is easy to accomplish with a positive pull from a re-fi after you rehab.

What is your price range and general business model you prefer?

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Ed - An agent in my office bought 2 duplex's and 2 triplex's in Omaha, Nebraska about two years ago, put only $20,000 as his total down payment and they cash flow over all. It would be very difficult to do that in my market in the Puget Sound area of WA. Seems like the Midwest and some of these hard hit areas in the south might be perfect for buying some cash flow properties...if you can keep them rented.

By the way...the real estate agent above has a someone managing the rentals and oversees any work orders as well. So far It's working out to be a good investment for him.

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Jerry Campbell, CRS, GRI
Muljat Group
Bellingham, WA 98225
Professional REALTOR for 15 years
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Bellingham Real Estate | Whatcom County Real Estate | Bellingham Homes For Sale

My area is a great area for investors as well. Home Investors are doing well in Katy Texas, especially those that want to buy and hold. Our market is still appreciating AND showing increases in total number of sales while much of the surrounding HOUSTON area is showing both decreases in value and total number of sales. The investor market in Katy is very strong right now.

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