Just wanted to clarify a little and narrow the discussion to a more specific situation.
Investor has about 300K of equity available. The goal is
1. To buy a Condo or another residential investment property with Equity Line as a cash buyer and then refinance shortly after the purchase to fix interest.
2. For Positive cash flow - assumption is: no money down (just equity) and about 4.5% 30 year fixed rate
3. The area must have a good appreciation potential, good demand(easy to rent) and quality tenants
I am not looking for specific properties as an answer. The question is - what market do you think is most appropriate within these constraints.
If it is "cash-flow" it will depend upon how much money you are going to be putting down (generally you need to put down 25-30% before you start to approach cash flow on a monthly basis), but it also depends upon the property you are buying. If it is in poor condition, you may be putting hundreds or thousands of dollars a month to keep it in habitable condition. You also need to factor in issues that effect your rental income such as vacancies and potential for non-payment of rent, as well as expenses such as maintenance, insurance or if you are buying a condo, special assessments and increases in common area charges.
Investment properties offer three very important benefits: cash-flow, future appreciation and tax benefits. Savvy investors buy properties where they will get all three types of benefits over time.
condos, I d recommend hot areas where rents are very high.
I am working with a client now where we are buying a small 2 bed condo in the South End for around 500k, and rents will be around 3k per month: a good cash flow.