It’s a tough economy and most people don’t have jobs, let alone excess money for investments. So what’s the best way to increase your net worth in a time like this? Well, Robert Kiyosaki once told me (and hundreds of others at a conference), that the best way to make a million dollars is to get into a million dollars of debt and to have somebody else pay it off. Translation: Get a home with mortgage, rent it out, have tenants pay off mortgage. Repeat.
Lucky for you, if you just happen to live in the Greater Austin area, you are in prime country for doing this. As a property manager in Georgetown, I manage homes in Austin, Round Rock, Cedar Park, Leander, Pflugerville and Jarrell. In every one of those markets, I’m seeing a consistent pattern: AUSTIN ROCKS FOR REAL ESTATE INVESTORS!
Check out this article that I ran across:
Austin named a top market for rental property investing
Austin Business Journal
Date: Monday, July 11, 2011, 12:28pm CDT
HomeVestors of America Inc. named Austin one of the top 25 best markets to invest in rental properties.
The Dallas-based real estate market forecaster and buyer unveiled the “HomeVestors-Local Market Monitor Best Markets to Invest in Rental Property” ranking on Monday. The company estimates that about 14 percent of single-family homes are currently rentals.
The listing was ranked according to expected risk-return prospects based on three-year home price and rent forecasts. Austin was listed at No. 24.
Las Vegas topped the list with home prices down about 45 percent from their 2006 peak. Rental rates are down about 10 percent, but a majority of the city’s entertainment and casino industry staff are renters. Detroit came in second followed in order by Warren, Mich.; Orlando, Fla.; Bakersfield, Calif.; Tampa-St. Petersburg, Fla.; Phoenix; Ft. Lauderdale, Fla.; Rochester, N.Y.; and Stockton, Calif.
Original Article Here:
HomeVestors and Local Market Monitor Ranking Reveals Best Markets to Invest in Rental Property
DALLAS, July 11, 2011 /PRNewswire/ — HomeVestors of America, Inc., known as the “We Buy Ugly Houses®” company, andLocal Market Monitor, a leading forecaster of real estate markets, today unveiled the “HomeVestors-Local Market Monitor Best Markets to Invest in Rental Property” ranking. In order to help inform real estate investors of current rental property investment opportunities, the “Best Markets” ranking will be updated quarterly.
HomeVestors and Local Market Monitor estimate that approximately 14% of single-family homes in the U.S. are maintained as rental properties. The companies believe there is no other regularly produced, reliable national ranking of the expected future performance of homes maintained as rental properties, which makes this ranking particularly useful to prospective investors.
“Since 1996 HomeVestors® real estate franchises have been at the forefront of buying older houses in need of repair, and updating or rehabbing them, often in the interest of maintaining the homes as rental properties. Until today, there’s never been a reliable national performance indicator for this growing segment of the investment market,” said David Hicks, co-president of HomeVestors of America, Inc. ”We’re pleased to have developed this ranking system with Local Market Monitor to help investors in single-family rental property identify opportunities and gauge potential local market investment performance relative to the national average and other markets.”
Top 10 Markets, Commentary and Top 100 Markets Ranking
The “HomeVestors-Local Market Monitor Best Markets to Invest in Rental Property” ranking forecasts the expected performance of rental real estate properties, specifically single-family homes maintained as rental properties. The rankings show the extra return, or risk-return premium, that an investor must demand from rental property in a local market. The risk-return premium can be added to the regular capitalization rate to produce a risk-adjusted cap rate at full occupancy for a local market. The ranking is calculated based on three-year forecasts of home prices (reflecting underlying home-price appreciation potential) and gross rents (as a proxy for potential investor cash flow).
The Top 10 markets in the new ranking are:
- Las Vegas, Nevada
- Detroit, Michigan
- Warren, Michigan
- Orlando, Florida
- Bakersfield, California
- Tampa-St. Petersburg, Florida
- Phoenix, Arizona
- Ft. Lauderdale, Florida
- Rochester, New York
- Stockton, California
Commenting on the local markets and the ranking overall, Ingo Winzer, president and founder of Local Market Monitor, Inc., said:
Overall, the highest ratings are in markets where home prices have fallen substantially, including Las Vegas, Detroit, Tampaand Phoenix. Home prices in these markets also are below-average, so empty homes are easily turned into competitive rental properties. But there is also extra risk in these markets.
Current rental vacancy rates are 12 percent in Las Vegas, 19 percent in Detroit, 9 percent in Tampa, and 13 percent in Phoenix.
- Las Vegas – Jobs are still being lost and home prices are down 45 percent since the peak in 2006. Rents have dropped 10 percent. Much of the large workforce in the casino industry consists of renters; the homeownership rate is a low 55 percent. The current unemployment rate is 12 percent.
- Detroit – Although the recession bottomed out a year ago, the unemployment rate is still high at 11 percent. The population shrank 4 percent since 2006.
- Tampa – Largely a retirement market, home prices fell 10 percent in the last year due to the over-supply of investment properties built during the boom. Jobs are growing again in the service industries. Homeownership dropped a sharp 5 percent since 2007.
- Phoenix – Jobs are growing again after a very deep recession. Home prices dropped 40 percent since 2006, with rents decreasing just 8 percent. Population growth since 2006 is a strong 8 percent.
|HomeVestors-Local Market Monitor Best Markets to Invest in
Rental Property – Top 100 Markets
|Rank||Market||Risk-Return Premium Relative to National Average
(National Average = 5.3%)
|1||Las Vegas, Nevada||+4.7%|
|6||Tampa-St. Petersburg, Florida||+2.4%|
|8||Ft. Lauderdale, Florida||+2.3%|
|9||Rochester, New York||+2.1%|
|12||Fort Worth, Texas||+1.8%|
|14||Syracuse, New York||+1.7%|
|18||West Palm Beach, Florida||+1.5%|
|22||Grand Rapids, Michigan||+1.3%|
|32||Oklahoma City, Oklahoma||+1.0%|
|34||Little Rock, Arkansas||+0.9%|
|35||Riverside-San Bernardino, California||+0.9%|
|36||Kansas City, Missouri||+0.8%|
|37||San Antonio, Texas||+0.8%|
|39||Buffalo, New York||+0.7%|
|40||El Paso, Texas||+0.7%|
|42||Colorado Springs, Colorado||+0.6%|
|43||Edison, New Jersey||+0.6%|
|44||Minneapolis-St. Paul, Minnesota||+0.6%|
|45||Camden, New Jersey||+0.5%|
|47||Columbia, South Carolina||+0.5%|
|49||Poughkeepsie, New York||+0.4%|
|51||Baton Rouge, Louisiana||+0.4%|
|52||New Haven, Connecticut||+0.4%|
|54||St. Louis, Missouri||+0.3%|
|55||Greensboro, North Carolina||+0.3%|
|58||Albuquerque, New Mexico||+0.2%|
|59||Albany, New York||+0.2%|
|63||Raleigh, North Carolina||+0.2%|
|68||New Orleans, Louisiana||0.0%|
|73||Charlotte, North Carolina||0.0%|
|78||Virginia Beach, Virginia||-0.3%|
|80||Greenville, South Carolina||-0.3%|
|81||Charleston, South Carolina||-0.4%|
|83||Salt Lake City, Utah||-0.5%|
|87||Lake County, Illinois||-0.8%|
|88||Nassau-Suffolk, New York||-0.8%|
|89||San Diego, California||-0.9%|
|90||Providence, Rhode Island||-0.9%|
|93||San Jose, California||-1.3%|
|96||Los Angeles, California||-1.4%|
|97||Newark, New Jersey||-1.4%|
|99||New York City, New York||-1.7%|
|100||San Francisco, California||-2.4%|