BiggerPockets Real Estate Podcast - 866: Do College Football Towns Make the BEST Real Estate Investing Markets?

Episode Date: January 2, 2024

What makes a good real estate market? A stable or growing population, large employers nearby, tourism, and, as a bonus, college-educated residents. Put those all together, and you’ve just stumbled upon your next great real estate investing area: college football towns! After digging into the data, the On the Market panel discovered that many top college football markets aren’t just great for partying and tailgating; they’re also undeniably promising property markets! On today’s episode, Dave, Henry, James, and Kathy will uncover four of the BEST college football markets in the nation and share which ones they personally would invest in. Looking for cash flow? We’ve got a couple of markets. What about long-term appreciation? We have those, too! We even have one STRONG college football market that has seen prices drop off over the past two years, with HUGE potential for rising prices in the near future. If you’ve been waiting to buy your first or next rental property but don’t know where to invest and which metrics to watch, this is THE episode to listen to. The On the Market panel will explain exactly how they analyze each market, which ones make sense for which investor, and why you’ll want to score a deal in these cities before it’s too late! In This Episode We Cover: The four best real estate markets for cash flow, appreciation, and football  One expensive market with amazing house flipping profits and NO income tax  The boomtown market that's seeing BIG price drops but has massive appreciation potential Two cash flow real estate markets with low home prices and strong populations The metrics expert investors look at before they invest in ANY real estate market And So Much More! Links from the Show Find an Agent Find a Lender BiggerPockets Forums BiggerPockets Agent BiggerPockets Bootcamps Join BiggerPockets for FREE On The Market Join the Future of Real Estate Investing with Fundrise Connect with Other Investors in the “On The Market” Forums Subscribe to The “On The Market” YouTube Channel Dave's BiggerPockets Profile Dave's Instagram Henry's BiggerPockets Profile Henry's Instagram James' BiggerPockets Profile James' Instagram Kathy's BiggerPockets Profile Kathy's Instagram Investing in College Rental Property — Step-by-Step The 8 Best Housing Markets in The US For Low Prices and High Cash Flow Austin Price Decline Forecast Click here to listen to the full episode: https://www.biggerpockets.com/blog/real-estate-866 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [e-mail]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey, everyone. Welcome to the Bigger Pockets podcast. My name is Dave Meyer, and I'd like to start by just wishing you all a very happy new year. This is going to be a very fun episode of the podcast where we're going to be talking about some of the best markets to invest in in the United States. And in order to do that, I have brought my friends and co-host from the On the Market podcast to join us. First, we have Kathy Fecky joining us. Kathy, tell me one of your New Year's resolutions this. year. Oh, man. I would say it's to watch less Outlander before bed. What is Outlander? It's, you know, I started watching it because my mother-in-law's dream was to go to Scotland, and so Rich and I are taking her to Scotland, and I heard there's a whole tour in Scotland for Outlander. It's a show on, I don't know, Scotland. So now I'm addicted. But then what happens is I stay up too late watching it, and then I don't get up early enough, and I love getting up early. so I just need to limit it. I just need to back off a little bit of Outlander.

I'll be honest. I was expecting a real estate-related New Year's resolution, but, you know, each of us have to have our own goals. So if you are trying to watch less Outlander, we are all here to support you in that resolution. Well, it is real estate related because it'll get up. I'll get to bed earlier and get up earlier and be able to focus more on real estate. I like it.

Better mindset. All right. Henry, Washington. is also joining us from Northwest Arkansas. Henry, what's one real estate resolution you're working towards this year? Oh, Kathy, Outlander's such a weird show. It is weird. My wife watches it and I just catch, maybe I just catch it at the weirdest parts,

but I'm like, this is a little too much for me. A little too much for me. My New Year's resolution is to finish my resolution from last year. So last year I made a goal to lose 100 pounds. and I got 65% of the way there. And so I've got another 35 pounds that I need to lose in 2024. Damn, man, you should be very proud of yourself, 65 pounds. That is very, very impressive.

That is. You look great. You look great. You do look great and we're very proud of you. You can keep saying that, actually. It's fine. Again, you both are just sort of failing on the real estate goals, but I really support you and your resolution.

Maybe James Dade are our life. last co-host from Seattle. What is your resolution? You've got to give me something about real estate. Well, I will say the last New Year's resolution we talked about on our podcast, I totally, I didn't even make it one day. It was to quit Rockstar. I think I just kept going.

So I failed. I failed at that. I'm not putting that back on the agenda. Well, my New Year's resolution is always to just do more deals. You know, I got to do. My goal is to get our volume back. to 2021 levels because they were at just a map that we were just running hot and obviously 2023 was a lot flatter we're probably down 30 percent so I want to get it back up to that magical

2021 volume of sales and yet I spoke with you yesterday and you said you also wanted to slow down a little I know that's that's so I don't believe it that's like his rock star that's like his rock star resolution it's just complete nonsense he's just completely lying Yeah, Kathy caught me on a moment. I was in between two different days at the moment, but then you just keep going. You chug a rock star and you're back on it. So these things are related. Okay, I get it.

Yeah, peaks and valleys. For me, my resolution is if you follow on the market podcasts or know anything about me, I live in Europe and I have invested almost entirely passively over the last four years. And my resolution is to start buying again directly single family, small, multifamily deals in the U.S. I'm going to tour a couple of markets in the first couple of weeks of January to pick where I'm going to do it. And I am very excited to jump back into that part of my real estate portfolio. And with that is a good transition, I guess, to what we're talking about today, which is some of the best markets to invest in in the United States. And we thought a really fun way to present information about good markets is to follow the four teams that are in the NCLNC.

college playoffs right now. So each one of us here on the show is going to represent one of the towns and colleges in the playoffs. So James is going to be representing Seattle and the University of Washington. Kathy's going to be representing Texas at Austin and the Longhorns, Henry the Crimson Tide for Tuscaloosa, Alabama, and I will represent Ann Arbor, Michigan for the University of Michigan. And I want you guys, we're doing this because it's a fun way to talk about markets and to debate about which different things are, which different metrics are the best and the most important. But as we're talking about these things, think about the different metrics and the ones that are most important to you and your strategy. The thing that I think we would all agree on, despite the debate we're about to have, is that different markets work for different people. There is no such thing as the best market in the United States.

It's really about which market works for you. So as we talk about these things, just take notes of. of which metrics, which points that each one of us make that are applicable to your situation, and then go use them when you do market research and make decisions about your deals. A lot of property managers think their job is answering tenant emails and coordinating repairs. That's not the job. The job of a property manager is protecting and growing your operating income and earning your trust while they do it.

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of the Fundrise Flagship fund before investing. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement. There are two kinds of real estate investors, those who have reviewed their insurance, and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claims. That's why investors work with NREG.

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and talk about his own backyard first. So James, why? First, tell us a little about the Huskies. You know, what do we got to look for in the games today about the Huskies? And then tell us a little bit about Seattle as an investing market. Well, not only is Seattle the best investing market. The Huskies are the best team this year. They are the number two ranked 13 and 0.

And this is the final year of the PAC 12, which is kind of sad to me because I grew up watching Pac-10, Pac-12 football. And now it just got obliterated. And this is its last year. So we're hoping we win the final championship game. And they are going to smash Texas on Jan 1. And I do plan on going to the championship game in Texas. so I'm excited to go. James, tell it, tell, do you have a ritual for watching the game?

Like, this episode comes out on the first. We're obviously recording it beforehand, but you will be watching the game while everyone is listening to this. What do you do to support your huskies? Well, I mean, as soon as you put your underwear on, you've got to put your gear on, too. So it's hats and jerseys right away. I will say my Seahawk, I will say my Seahawk rituals are a lot more aggressive. But it's, you know, it's, you know, it's a.

You just got to rep them. And so we'll be, I'm actually going to be in Australia randomly, but I will be reping the W throughout all, on all continents. All right. Well, that's an image for everyone to think about during the game today, James. But why don't you tell us about Seattle as a market? Obviously, this is your backyard where you have built your entire career. So tell us a little about why Seattle is such a great market for you

and what strategies people listening to this might want to come. consider. Yeah, I mean, Seattle, not only the Husky is the best team, Seattle's probably the best market that I know to invest in. And I know that goes, you know, I hear a lot, they're like, oh, it's expensive. The landlord laws can be tough. And those are all true things. But it is an amazing city to invest in, in general, to give you quite a quick background of what it is. There's over 4 million people and the unemployment rate is 3.9%. What makes Seattle so good to invest in is the median income, is 97,000. And in the tech space, it's more like I think around 120,000.

And we have a lot of condensed, very well paid, very well employed workers. And the median home price is only at $6.99.750. So for the income that's being brought in, it's actually somewhat affordable. But the reason it's such a great market, we have built an amazing portfolio. And we can cash flow it at 10 to 11% cash on cash returns. turns every year. We do this, and the reason that it's such a great market to invest in, it's a heavy value at because what we have is we have a booming city where the tech is expanding. The reason the tech is expanding is because we have no income tax in our state.

And as these tech companies in San Francisco have to start competing with Amazon, right, our two big anchors, are Microsoft and Amazon, our big tech cubs. What's happened is Google, Apple, and everybody else has had to come to our state. city because they can't compete with the wages because anytime you're making over 13% more than California, people's quality of life automatically goes up. So it's a booming city and we've seen a lot of growth and the growth is going to continue. The tech expansion throughout the market is massive. Microsoft is building a 10-year campus buildout. Apple's investing in their campuses. Google's expanding their campuses. That tech money is real money that's coming in and building infrastructure. But not only can you

make high cash on cash returns if you are into value ad. We also make an average of 35 to 40% on our flip properties and dev deals. So it's a high, high return business. Well, James, one thing I can't agree with you on is I also wore Husky underwear, but that's because it was the fat kid brand and that's what I wore when I was a kid. Other than that, I think what you meant to say was that Seattle is a great investment market for people who already have money. I mean, the prices are expensive, and that means you're going to have to put a down payment down, and 20% of $200,000 in the Midwest somewhere is a whole lot easier than 20% of $550,000 for a fixer-upper. So I think you have to get pretty creative if you're a new investor who doesn't have a lot of money

to be able to jump into a market like Seattle and take advantage. I agree. The margins you have, man, I get jealous when I see your profits and your proceeds on a flip because you'll make on one flip, but it takes me like four or five to make. But it seems a little riskier as well. So Seattle scares me. Yeah, I agree. I mean, Seattle's a great place to invest, you know, 20 years ago.

I wouldn't invest there unless I were James Dainert and really knew. how to do it. Or if there were, you know, little pockets outside that are growing or yet to be discovered, perhaps that could work. But the people I know, Tarle Yarber, for example, he's not, you know, he's not doing the buy and hold. And I'm a buy and hold investor. So I don't think it would work for me. James, what do you say to that? Do you think regular people can jump in? Regular people can jump in. We work with clients all day long that are regular. It works for any types of price point. Just because Seattle, certain pockets of Seattle are expensive, that is for sure. But there's also very affordable pockets, too. You can flip a house and buy it for 350,000, sell it for

$4.99. You can buy rental properties into $350,000, and they just need a little bit more work. The beautiful thing is about being an expensive market, though, or more expensive market, with the big equity positions, it allows you to leverage more. So you don't need as, even though the pricing's bigger, you can get deeper discounts with bigger equity. positions, and so you can stack your leverage if you want. And as an investor, it's about figuring out that market. Like the first deal I ever did, I had to take 100% financing on and pay for it, but it gave me so much equity. It gave me the gunpowder. I could start rolling it from there. So that first deal can give you that cash to grow very quickly. You heard it here, folks. James

Dana is going to give you the cash for your first deal in Seattle, Washington. To get you started. And remember what I said. I paid a lot of money for that money. It just be wary the rates. All right, James, you've done a decent job defending yourself, but I think all of James's problems, James' opinions are a little biased, given that he's only ever invested in Seattle. So let's go to a different part of the country, one that has been really in the center of a lot of news over the last couple of years.

Kathy, you've got the University of Texas at Austin, Texas. Tell us a little bit about the team. I'd love to hear your recounting of what the team is like. And then tell us about the market. Well, listen, if I were 17 years old, I would definitely consider going here. The team is the Longhorns, of course, record 12 to 1. Win probability of college football playoffs, 25%. James is shaking his head.

James does no chance. Austin is cool. Austin is weird. It's a, that's what they say. It's a great place. to invest for the long term. It's been the darling of real estate investors for years. And right now, it's a buyer's market. And realtor.com just came out and forecast that for 2024, actually, prices, their forecasting will continue to decline. They said 12%. So is it a good time to buy right now?

Well, if you can get a great discount better than 12%, probably. But I think Austin will be a great place to get to know and understand because prices appear to be coming down they have in the city and in the red rock area come down about 10%. As I understand it, some markets probably even more. So this is a city that is growing. It's the new Seattle. Sorry James, but you've got Google, Tesla, Amazon, Apple. You've got SpaceX, meta, expanding, billions and billions of dollars coming in. Just Alon Musk alone with Tesla is bringing in 10,000 jobs. And if you heard him on his other recent podcast, he says that's that brings in, you know, 6x that or whatever, because then there's all the services needed. So Austin's not slowing down in growth. It's just that prices went up so

dramatically over the last few years that it's tapering off, coming down. And that to me says there could be a buying opportunity in 2024. It would be a good time to really get to know the neighborhoods. Now, if you're going to go and move there and hold, great. You know, especially if you can get a duplex or a fourplex, rent those other units out and hold it for the long term. I do believe that Austin, you know, right now the median home price is $459,000. Compare that to Seattle, which was $699,000. I really believe Austin is the new Seattle. Again, sorry. But, you know, I think there's room for growth, just not. next year, not in 2024. But when prices are down, it's a buyer's market. You want to buy in a

buyer's market. So many times people get this confused and want to buy in a seller's market when everybody's buying and the seller has the power. Right now you have the power. So I would keep an eye on Austin. You're still not going to, you know, cash flow as well as some of the other cities that are, you know, that are also growing in Texas. That's why we focus on Dallas where the median home price is lower. We're looking at San Antonio. The market, that the whole area between San Antonio and Austin is going to be like one metro area like San Jose and San Francisco, where that just all grew in. I think that's going to happen there between San Antonio and Austin. So lots of opportunity, if you buy right and can hold it, maybe good for flipping if you know the market well.

And not maybe this year, but in the years to come. Poor, poor Kathy, we're giving her the number one biggest correction market in the entire country to try it to Fed right now. And you're doing a very admirable job of it. I will give you that. But I'm just joking because there is this kind of weird dynamic right now where with many of the markets that are seeing the biggest corrections also have some of the long term best. fundamentals, like the best population growth, the best economic growth, the best job growth. So it is actually an opportunity. I'm just kind of teasing you. But I do think it's one of those markets that you have to be pretty careful with. Yes. Kathy, if you were moving to this market,

you said flipping, are there any other strategies you think people should consider? If you're in California and you're moving to Austin, it's still super cheap. So, you know, I see people doing that. and I have friends doing that. And, you know, they're buying homes that they can fix up and they're going to live in for a while. And I think they're going to do really well, especially if you're buying in some of these areas where all that growth is happening, which is kind of everywhere, honestly. So, yeah, if you're looking to live there, I think you're going to do well over the long term. If you're looking to, you know, buy, you know, build something potentially. honestly, I wouldn't do it in

2024. I would do towards the end because like I said, you know, realtor.com came out with their 2024 housing forecast. It's not looking good for Austin in terms of prices. Like there, it looks like it's still coming down. But we also saw mortgage rates come down. So who knows?

Who knows? You got to know, it's just like James said, you know, he's making it work in Seattle. If James can make it work in Seattle and you know Austin well enough, I tell you right now, there's listeners and I'd love to hear it in the comments. I want to hear from you guys. There's listeners who are making a ton of money in Austin. They just know it well enough to be able to make that work. I agree. I think it's a different investment mindset with a market like Austin because what Austin's going to be good for is like

real wealth accumulation. If you can get in now and negotiate a really good deal because of the rates are high and there's not a lot of competition, like people who are selling now need to sell or else why else would they be doing it? And so if you could get in, find yourself something now and maybe it doesn't make you a ton of money over the next one to three years. Maybe it doesn't make you much at all. But if it's going to increase in value by 50, 70, $100,000 over the next five years, because as rates drop and demand goes up, like people want to live in Austin because it's cool and it's fun and there's huge amenities and it for for all that cool and fun you get it at a more affordable price than living in a coastal city and so like there's any place that's got a reputation

like that people are going to want to move to and they're going to want to own homes and so if you've bought some of these properties now when you can get in at a good price and capture that appreciation like real wealth is built through appreciation and uh and uh through appreciations and uh through a and debt pay down over time. So it's more of a long-term play. It's not really like a, you're not going to get, you know, month over month, phenomenal cash flow in that market unless you are a market expert and know where exactly what pockets you can go do that in. So it's just a different strategy, but that doesn't mean you can't make money there. For decades, real estate has been a cornerstone of the world's largest portfolios. But it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was such a suddenly easy, all the benefits of owning real, tangible assets without the complexity and expense. That's the power of the Funrise Flagship Fund. Now, you can invest in a $1.1 billion portfolio of real estate, starting with as little as $10. The portfolio features 4,700, a single-family rental homes spread across the booming sunbelt. They also have 3.3 million square feet of highly

sought after industrial facilities, thanks to the e-commerce wave. The flagship fund is one of the largest of its kind. It's well diversified, and it's managed by a team of professionals. And it's now available to you. Visit fundrise.com slash BP Market to explore the fund's full portfolio, check out historical returns, and start investing in just minutes. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement. There are two kinds of real estate investors, those who have reviewed their insurance and those who think that they have. Most

don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claims. That's why investors work with NREG. They specialize exclusively in real estate investors, understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns. If you own a rental property, don't assume you're covered.

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That's Indeed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need. All right. So James, has Kathy convinced you that Austin is the new Seattle and are you going to pick up shop and start flipping homes in Austin? Hey, I do like Austin. And part of the reason I like Austin, too, is it was a little bit more of a bubbly market.

And so it's getting more overcorrection. So I do think that the market's a little bit of a panic still there. So you can get some good buys. When the market's scared, there is some good buys there. I agree with Kathy on that. But that's the reason why Seattle is actually better than Austin. It's less bubbly. It is a less cooler place to live.

And so, like, during the pandemic, they saw way more surge in population than Seattle saw because it was a cool, swanky place to live. And I get it. Austin is a really cool city. I like going there. I would invest there. But Seattle's a lot more stable. We didn't get the surge because Seattle's just a little bit rainier. It doesn't have that same coolness of it.

But the stability is why I like Seattle a lot better than Austin. And speaking of which, though, on the football, how did Texas be 12 and 1 and they are four? favored to win. Everyone's always hedging against Seattle. They gave us a 12.5% chance, and they have a 24, Texas has a 24% chance. We're going to see how this goes, but I guarantee you that the Huskies will win, and I also guarantee you that Seattle will make you more money. Are you going to guarantee it with your own money, James? If someone loses money, you'll reimburse them. You know, actually, I don't want to ever guarantee a return. So, come find us and we'll help you. out to the process of the world.

The SEC has entered the chat. Yes. That is not a year. We'll add a disclaimer at the end of the show. Stability is key. Seattle has proven over the last 18 months it's a much more stable market. All right. Well, Kathy, thank you for bringing that information for us.

So far, James has represented Seattle and his hometown favorite and his alma mater, the Huskies. Kathy represented the University of Texas and the Longhorns. Now, Henry, we're moving to your neck of the woods with the University of Alabama. Tell us about the Crimson Tide and Tuscaloosa. Alabama. Yeah, man, this is, you know, this is, this is right in my weird. I live in essentially a market that's almost, that's, that's pretty similar to Alabama being, you know, Fayetteville, Arkansas, you know, mostly a college town. But what's cool about Alabama is there's a lot more market dynamics than just the college. When you look at

the economy in Tuscaloosa, Alabama, Not only do you have the University of Alabama there providing tons and tons of jobs, but you've also got the health care system in Alabama. And Mercedes has a manufacturing plant where they manufacture a lot of the SUVs for Mercedes in Alabama. So there's lots of jobs to go around. You've got a fairly affordable median home price of just over $200,000. But what's cool is you got a median rent of $600, $600, $1,600. So that's a pretty good rent to purchase ratio.

And it's got some of the lowest, it's got lower vacancy rates than the national average. I'm sure a lot of that has to do with college or student housing. But when you couple the average salary, well, the average salary is just under 55,000 a year. So when you couple an average salary on top of good jobs, population growth that's growing year over year with a pretty decent median rent. price and a pretty low average home price. It's a great place where you can actually buy properties that you know not only are going to cash flow, but they're going to stay rented with lower vacancy rates. Meaning, and with lower vacancy rates, that just means there's less competition. If something's on the market for rent, it's typically going to get rented. And so you're able to know that I'm going to

have tenants consistently that are going to pay a good rent that's going to cover my mortgage plus my expenses. I'm going to have great people with great jobs in more than just one industry. And so, yes, it is not a sexy place like, like, excuse me, yes, it is not a sexy place like Seattle or Austin. But there is still plenty of fun things to do. It's a college town. Trust me, I've been to an Alabama football game. Them people are not short of having a good time out there. There's plenty of good times to be had out in Tuscaloosa, Alabama. So I think it's a great place to invest your money. It's got great fundamentals and market dynamics. Yeah, that sounds like my kind of market. Look at that. Meeting home price, $208,000, median rent, $1,600. Those numbers work, especially

if you got student housing and could rent per the room. I haven't done that, but boy, I bet it could be lucrative. So I'm a thumbs up. I like this one because it's actually a college town. Like, obviously there's giant universities in Washington, in Seattle, and in Austin. But I've never been to Tuscaloosa, but we did another show where we were representing markets, and I did some research into Tuscaloosa. And it does really feel like sort of the engine of that city. Henry mentioned there's, you know, car manufacturing. There are other industries. But it does really seem centered around the town and that there's like a lot of attractions around the university.

They're building arts facilities there. and given the spirit of the show talking about what the best college town is, I do like the idea of a place that is really sort of fueled by the university itself. Henry, tell us a little bit more about the game. How much fun did you have? Well, I mean, it was a good time had by all. We did some partying before the game, and then we went to the game. and I don't know if you know much about Alabama as a football team and Arkansas as a football team,

but we don't really do well when we play them. So we weren't at the game the whole time because we were having more fun at the places we were at prior to the game. So we hung around, we cheered. The game was over by halftime and we went back out and drowned our sorrows. That sounds about right. Well, I'm glad you at least enjoyed yourself. All right. Well, so now we've gone through Seattle, Austin, and Tuscaloosa, Alabama. So we've sort of had two more expensive markets, but great, strong fundamentals, a lot of economic growth. Then Henry brought us Tuscalo

which is more of a college town, a big city. It's almost got 278,000 people, so a big city, but a much more affordable city. And the last market that we're going to be talking about today, I will be bringing you, which is Ann Arbor, Michigan, and the University of Michigan with the Wolverines. And I got to tell you guys, I am very excited that Kalin, our producer,

assigned me the University of Michigan because I have been to a grand total of one college football game in my entire life. Well, I went to some D3 games at my college, but a D1 college game, and it was at the University of Michigan. I was a sophomore in college, and I drove to see some friends. And using Henry's evaluation technique of how much fun you had at the party, I'm convinced that Ann Arbor is the single best real estate market in the entire country because we had a

very good time at that college football game. But really, Ann Arbor is actually a very interesting market. Sort of similar to Tuscaloosa, it's really centered around the university, but has a pretty big population, it's 366,000. And it's actually one of the biggest universities in the entire country and has pretty good fundamental. So it's a high income place. The median income is nearly 80,000, but the median home price is only 381,000. So if you compare that to just absolute garbage markets like Seattle, where their median income is higher,

It's, yeah, 97,000, but their median home price is 700,000. So the rent-to-price ratio in Michigan is a lot better. It's actually growing this year. We've had price growth of 3%, which is better than certainly better than Austin, which is just crashing right now. And we also have a solid rent growth. So from where I'm sitting, not only is the University of Michigan the best investing town, But it also is the favorite to win the college football playoffs with the 38.5% chance of winning. So I'm feeling pretty good about Ann Arbor right now.

Michigan is my second favorite college football team. And I will rep them. One of the most cherished items I have in my house is a signed national championship hat by Charles Woodson. And so I do rep the blue. but as far as investing goes, I think the big point that Henry and Dave are missing on their affordable markets, I get it.

They're really good for cash flow. There's great rental metrics. You can do well on cash flow. That is your plan and goal. But even if you're getting your cash flow and you're making $500 a month on a unit, on a single family house, that's great cash flow.

That's six gram for the year. on one deal in Seattle, I can create an $100,000 equity position once I'm done renovating it. It's going to take 18 years for both of your markets to catch up after 12 months with the equity position we're going to gain. And that's why I like Seattle over Ann Arbor and over Alabama. You can get those huge, you can get 20 years of cash flow in nine months by just strategically adding value to that building. Yeah, I would agree with that. Get the juice. You're not, you know, they're just two different worlds, right?

If you're trying to grow wealth, you're just, you're not going to do it in markets that don't grow in equity. But you won't get cash flow. So it just depends on where you are. If you are wanting cash flow now, and some people do, some people have already made their equity. They want to invest it and just live off the cash flow. And if that's you, that could work. Or if you just don't have a lot of money. money. You know, at $200,000 property is going to be a little easier to get into than, you know,

a higher priced one. So again, it just depends on where you are in life. But if you're trying to make equity, you know, be in equity markets, not in cash flow markets. Dave, I'm not going to argue too much with you here about Michigan. I think Michigan as a state in general is a pretty slept on real estate market that has great fundamentals outside of even Ann Arbor. It's a place where you can really, really get some cash flow. And then in markets like Ann Arbor and some of the other more popular areas in Michigan, you can get cash flow and depreciation. And a lot of people just don't think about Michigan as a state to invest in because it just seems to be one of those states. People forget this estate. But it's also like you've got, it's the weather, I think. People see it as

this cold weather place and they don't want to live there. And so they don't think about it from an investment standpoint, but it's, Michigan in general, I think is super slept on great, great market fundamentals. If I didn't have such a good real estate market, I would be looking at markets like Michigan and Ohio, these cold weather states that have great dynamics. Well, thank you, Henry, for supporting me. I really appreciate that. Now that we have the information for all four college markets, I want us all to vote. I know we are representing the city that we were assigned, but I'd like your honest opinion. We all know what James is going to say.

He's going to say Seattle, but let's just give it the opportunity to say the obvious. James, go ahead. Go Huskies, Seattle. I know what I know. And I've lived what I've lived. And I can tell you it makes huge impacts to be in this major metro city. All right. So we've got one vote for Seattle.

Kathy, are you sticking with Austin or where would you vote? I really am. You know, I, this is a big. one place, I might even be okay with negative cash flow, not really, but this, Austin is booming, and it's, it's, the real estate prices aren't right now, but they will. They will over time. So if I had to choose between the four, it would be Austin. If I didn't, I'd be right outside of Austin in maybe some of the other Texas cities. All right. Wow, two homers so far. Henry, what do you got? I'm going to give two answers, and neither one of them is the market that I represented. So if I was

thinking now in my current investment journey where I've already built a portfolio, I have income coming in from not just real estate, but other parts of businesses that I own. It's not just about cash flow anymore for me. It's more about true wealth creation, equity, appreciation, and tax benefits. And so I would look at Austin and get in and start buying really good deals, even if they negatively cash hold for me. Like if I got to feed a deal $100 a month, but that deal is going to increase in value by $20, $30, $40,000, $50,000 a year and that deal is going to offset my tax bill by $40,000 to $50,000 a year,

that's, I mean, I'm going to get way better appreciation there than I am in my current market. And so if I had to choose one of the four as an investor that the place that I'm at right now, I'm going to look at Austin. If I was a new investor and I was getting in the game and wanted to get my feet wet, wanted to get some cash flow, wanted to be more affordable, less risky, I'm probably going to look at the Michigan market. I just think the fundamentals are great with the population, the economy, the average rents and the entry price for the homes. I think you're going to get a little bit of everything, a little cash flow, a little appreciation. It's not a ton of risk, much safer play. All right.

Well, I'm voting for my own, which is Michigan. And this is actually genuine as well because of what Henry just said. Like the way where I am in my investing career, I do still want to get appreciation. But I'm looking for at least modest break-even cash flow so that I don't have to feed any money into it, ideally. And so when I'm looking at Michigan, I really like that. I really like Alabama too because I like those cities that they really have consistent demand due to the college atmosphere. You're always going to have professors. You're always going to have students. There's always going to be a little bit of tourism, people coming into these types of

places. So I really like that. So I don't really know where this puts us because Henry voted twice. No, Henry said Austin first. Austin wins. You're just more convincing than I am, Kathy. So we're going to let Austin win. I think that's a good market. You're a smart man, Dave. You know, good for Austin. It also has excellent food and I like hanging out in Austin. So I'm willing to, I'm willing to give it to you. Hopefully this information helps you understand these four particular markets. But I think more importantly, we do these types of shows to help you understand how to think about different markets. Most markets in the United States can make money for investors really in any type of

conditions. Just look at James, right? He is investing in a very expensive market and doing it very, very well. You look at other people who are investing in less expensive markets like Tuscaloosa and are probably also doing really well given their personal situation. And so we hope that these types of shows help you understand where you are and trying to align the right types of markets, the right types of strategies for where you are in your investing career. If you like this show, please share it with a friend or give us a good review on either Spotify or Apple. Thank you all so much for listening and we'll see you for the next episode of On the Market. Thank you all for listening to the Bigger Pockets Real Estate podcast.

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