Top 10 Most Profitable Cities for Real Estate Investing

It’s no surprise that real estate is booming all over the country. Even cities that saw significantly smaller populations or were hit hard when the housing bubble popped years ago are on investors’ minds. First, let’s review what an investment property is and some of its benefits, then let’s cover the top ten most profitable cities for real estate investing and why you should consider investing there.

What is an investment property?

According to Investopedia, “Investment property is real estate property that has been purchased with the intention of earning a return on the investment, either through rental income, the future resale of the property or both.” These properties are usually not an investor’s main home, but serve as supplemental income through short or long-term rentals.

Short-term rentals are often referred to as vacation rentals and serve guests for shorter periods of time. Sites like Airbnb and VRBO provide outlets for investors to make money using short-term rentals.

Long-term rentals involve renting out an investment property to a renter who is looking to stay for a longer period of time. Investors interested in long-term rentals are focused on the end goal, like generating supplemental income or making a profit when the property sells in the future.

Depending on your needs and goals, different cities and properties will be best for you. Here, we show you the top 10 places best places to invest in real estate.

Where to Invest in Property?

10. Austin, Texas

Austin is an up-and-coming area for young people and families, alike. One of the draws of Austin is its increasing nightlife and attractions and its affordable homes. With the university close by, investors can expect to rent out their property to students or faculty in the area.

austin-texas-investment

Benefits of investing in austin

Some of the key benefits of buying a property in Austin, Texas include:

  • A rising demographic of young people, meaning that individuals might be looking for a long-term rental to grow or start a family.
  • More businesses, including the technology industry, are opening up in the area.
  • Nightlife is growing, as well, meaning that rent will increase as the population grows.
  • Real estate is affordable. The median home price in the West University area, for example, is $239,000, and downtown the median home price is $379,000.

Considerations of Investing in Austin

Don’t expect to get rich quick by investing in a city like Austin. In the area, most investors expect from 5-7% appreciation. In other areas, such as California, these rates are low. In addition, there is a high rate of people moving out of the area, including graduating students and people leaving for better paying jobs. This constant flight might be worrisome for some investors.

9. San Diego, California

Ask any local in San Diego and they will tell you to jump on the housing market while you can. This diverse city boasts some of the best weather in the country, access to beaches and cities, and many other attractions (including great Mexican food!). Investors who have more capital might be interested in this growing Southern California city.

san-diego-investment-property

Benefits of Investing in San Diego

  • Some of the key benefits of investing in San Diego include:
  • A booming real estate market and increasing home prices. If you invest in San Diego today, expect your investment to increase in a short amount of time.
  • A diverse population of renters. In the area you will likely see surfer kids, working professionals, international families, and much more. Chances are, you will be able to find renters for your property with this wide pool of applicants.
  • Views! Nothing beats a Southern California view, which you can find in almost every part of San Diego.

Considerations of Investing in San Diego

If you are a first time investor, chances are you won’t be able to afford your dream home in a city like San Diego. If you are looking for an investment property, expect to pay more in such a high-demand city.

Another consideration of the area is that it has a very transient population. A lot of San Diegans are in the military, are students, are Mexican citizens staying for a short time, or other people looking to leave in the near future. If you don’t mind changing tenants regularly this might not be a deal-breaker, but if you are looking for consistent renters, San Diego might not be for you.

8. Charlotte, North Carolina

Charlotte is a southern city that has taken Millennials and older generations by storm. While some of the recent news surrounding the city has been unfavorable, it is a growing metro area with a lot to offer. Located on the cusp of the Atlantic Ocean, real estate in this area is ever-increasing.

charlotte-nc-investment

Benefits of Investing in Charlotte

  • You can get a good home at an affordable price. The average home sale price is about $185,000, which means that average rent is about $750 a month.
  • Even amenities are cheap. Locals boast that you can get a beer for $2 during a night on the town. These prices will attract younger renters.
  • In addition to a lively downtown, Charlotte also has greenery and keeps up wildlife conservation.
  • Talk about good food! Charlotteans’ favorites are barbeque and fast food.

Considerations of Investing in Charlotte

  • It’s still the Deep South, meaning that it lacks the diversity that some renters and investors might be searching for.
  • Homes sell fast and might not be seen without working with a realtor. Even on the popular house-hunting site Zillow, some homes might be under contract in less than 24 hours after it hits the market.
  • Investment properties likely won’t increase in value as much as other areas (but is still a viable option!)

7. Houston, Texas

Like Austin, Houston is redefining what most of the country thinks of when they think of Texas. The city is attracting a younger market with lively downtowns and many schools in the area.

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Benefits of Investing in Houston

  • The city is growing rapidly. Since 2010 the population has grown by 8.9%. In one year, between July 2014 and July 2015, Houston added 40,000 residents.
  • Home prices are low, with the average around $150,000.
  • Business owners and wealthy families are growing the artistic and musical attractions that Houston has to offer, making it more cultural than ever.

Considerations of Investing in Houston

  • The biggest thing on residents’ minds are natural disasters such as hurricanes and tropical storms. They do happen.
  • Commutes are long and residents will need a car to take full advantage of the area. Compared to some metro areas, this may be a deal-breaker.

6. Boston, Massachusetts

The East Coast real estate market has always been booming, and Boston has continued to hold its own. Although the Boston scene may already be more developed than other cities on this list, it’s still a contender for the best place to buy an investment property.

boston investment

Benefits of Investing in Boston

  • It is developed, attracts a wide array of individuals, and is close to many popular points of interests.
  • Once a Bostonian, always a Bostonian. Investors can likely expect renters to stay for a long time because the area is so attractive.
  • Besides being a popular city in itself, it is also close to hits like New York City and Washington, DC.

Considerations of Investing in Boston

  • Because it is already a large metro area, homes will sell for more than in other places. An investor must have enough capital to afford a place in the area. According to the Boston Globe, home sale prices are up 31% compared to in 2010.
  • Supply is very limited, so act fast!
  • Because housing is more expensive, most blue collar workers will be pushed to the suburbs, therefore increasing traffic and commuting times.

5. Salt Lake City, Utah

With Silicon Valley getting so crowded, some people are calling Salt Lake City the next big technology hub.

salt-lake-city-investment

Benefits of Investing in Salt Lake City

  • Job growth is at an all-time high and vacancy rates are at an all-time low.
  • Average rent rates jumped 4.9% and are at $892 for an apartment unit.
  • Tech, and other industries, are growing in the area and the city is no longer only for families with children.

Considerations of Investing in Salt Lake City

  • The weather may scare some renters away, with cold winters and hot summers.
  • The culture still lacks the diversity some Americans have come to expect.
  • There are a few strange liquor laws lingering around, such as no liquor at dine-in restaurants without ordering food, which might shy some younger renters away.

4. Tampa, Florida

Florida was a state hit hard by the recession and housing market crash, but it is getting back on its feet surely and stronger than ever.

tampa-fl-investment

Benefits of Investing in Tampa

  • The city is located close to a major Air Force Base, which means that short-term renters are abundant. Military families also have a guaranteed housing budget, which might set some investors’ minds at ease.
  • There are a lot of condos and apartments for sale, as well as single family homes. It is likely that an investor can find a property that fits their needs.

Considerations of Investing in Tampa

  • Because of the large military population, expect renters to be more short-term than other areas.
  • Florida home sale prices fluctuate, meaning that you could sell your investment property and make a profit, or you might have to sit on it while waiting out the low times.
  • Like North Carolina, this southern state faces the threat of natural disasters regularly.

3. Las Vegas, Nevada

It may surprise you that the Las Vegas housing market is still alive and well, but as the city continues to grow so do its housing opportunities.

las-vegas-investment

Benefits of Investing in Las Vegas

  • We all know the saying “what happens in Vegas, stays in Vegas,” which is one of the reasons why people will always come back. Tourism is booming in Las Vegas, which means good news for business owners.
  • Although Vegas went through a slump a few years back, they are now attracting a younger crowd again. With live shows, DJs, and other entertainment, young people will come (and bring their friends!)
  • There is more to Vegas than just the strip. Locals know of all the good, less commercialized nightlife.

Considerations of Investing in Vegas

  • A lot of housing in Vegas is short lived, either because residents tire of its lively nature or because of better jobs elsewhere. Because of that, short-term rentals are more popular.
  • Although Las Vegas has done its job of attracting young people, the market isn’t as booming as it used to be. Investors might be curious of its future.

2. Boise, Idaho

When you hear about Idaho, you likely think of farmers and potatoes. But the state has a lot more to offer than you may think. From skiing at Sun Valley to living in cities like Boise, this market is hot.

boise-investment

Benefits of Investing in Boise

  • The market is new and fresh, meaning that you can purchase a property at a lower cost than other areas in the country.
  • Job growth and population has grown dramatically.
  • Multiple reports have considered Boise as one of the best cities to raise a family. This means that investors can expect new parents to stay for the long-term.

Considerations of Investing in Boise

  • While the population is growing, Boise isn’t as attractive to young people as some of the areas on this list.
  • The weather is extreme and might not be for all residents. Expect cold winters and hot summers.
  • Boise, and most of Idaho, is more rural than other metro areas. This could be good for some renters and not for others.

1. Denver, Colorado

Denver is a very profitable area for investors right now. It has been attracting diverse populations for years and has a lot to offer renters.

denver-co-investment

Benefits of Investing in Denver

  • The area has grown and there are many points of interest nearby.
  • Public transportation is prominent and appeals to many renters.
  • There are many schools and universities nearby for children of all ages.

Considerations of Investing in Denver

  • The market is hot, so act fast! Places sell fast in the area.
  • A lot of the homes for sale are older and may require extensive fixing up.

Investment properties are a great way to generate supplemental income and make a profit, if marketed correctly. These are ten of the most profitable cities for real estate investing, but no matter where you live Revestor can help you find the best short-term investment properties in your area.

Should You Invest In Property? The Rise in Rental Prices Indicate Yes!

According to leading CNN Money experts, homeownership rates are currently at all time lows. Rental prices, however, are increasing steadily and are driven in part by increased demand and lower turnover among current renters. Forbes Magazine recently noted that San Francisco, California, is experiencing the greatest annual increase in rental rates at 14.9 percent; however, other cities across the U.S. are also seeing significant upward movement in the rents charged for residential properties.

With potential rental revenues on the rise and real estate prices remaining largely stable, now is a great time for investors to realize greater profits by diversifying their portfolios to include residential rental properties. Making the move to property management can be a financially rewarding step. Still not sure if investing in income property is the right fit for you? Here are three reasons why you may want to consider becoming a landlord in 2015.

Reason #1: Affordable Investment Properties Are Available

Although the Federal Housing Finance Agency reports continuing increases in the cost of residential properties in the U.S., this overall trend has not yet reached critical mass. Affordable homes and rehab properties are still widely available throughout the country and can provide real options for aspiring landlords. By performing the necessary due diligence on properties under consideration, investors can often achieve higher revenues from their rentals and increased value at the time of eventual resale. Online real estate platforms are available to project likely appreciation and cash flow for properties, allowing even new-to-the-game investors to make the right moves in the real estate marketplace.

Reason #2: Timing is Everything

With residential rents continuing to rise, the potential for profitability is, as expected, also increasing. Recent data released by Zillow indicates that renters should expect to allocate approximately 30 percent of their monthly income to housing costs. This is in sharp contrast to the 15 percent paid on average by homebuyers across the country. For investors, this 15 percent differential represents solid profit and increased revenues that can be used to leverage further purchases and rehab costs. Most real estate analysts are in agreement that now is the time for investors to make their move in the residential real estate market.

Reason #3: You Have the Right Tools for the Job

The innovative and unparalleled algorithms used by the Revestor online search service are designed specifically to help real estate investors determine which properties are best suited to their financial situations and management plans. This cutting-edge tool incorporates a number of key indicators to provide the most accurate predictions of profitability. Some of the factors considered by the Revestor system include:

  • Current and projected rental incomes and cashflows
  • Expenses commonly incurred by landlords
  • Home owners association fees, where applicable
  • Projected property taxes
  • Insurance premiums
  • Property management fees
  • Financing and acquisition costs
  • Appreciation rates
  • Rehab costs
  • Return on investment
  • Net profits

These essential elements can make or break a real estate investment strategy. By taking advantage of the information and predictive data available through the Revestor suite of tools, investors can ensure that they are making the right moves in the residential real estate marketplace.

Even with the highly advantageous conditions in play for investors, a fair amount of research and due diligence is still required to ensure the highest degree of profitability from each real estate holding. Tools like Revestor can deliver accurate information to help ensure that aspiring landlords can achieve higher profitability and enhanced revenue streams in the residential rental environment.

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SOURCES:
http://money.cnn.com/2015/05/21/real_estate/rent-prices-rising/
http://www.forbes.com/sites/laurengensler/2015/02/24/rising-rent-smaller-cities/
http://www.fhfa.gov/Media/PublicAffairs/Pages/US-House-Prices-Rise-1pt2-Percent-in-Second-Quarter-2015.aspx

Real Estate Investing is a $175 Billion Market

First checkout the infograph below via BiggerPockets.com AND Memphis Invest then we will get to the $175 Billion!

The $9.2 Billion Impact of 28.1 Million Real Estate Investors

Infographic Courtesy of: BiggerPockets.com AND Memphis Invest

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According to the survey above 28.1 million American’s currently own an investment property and 7 million of them consider themselves active investors with plans to purchase in the next 12 months (please keep in mind the survey was done in 2012). If investors plan to spend a median of $7,500 on 1.2million properties then investors will spend $9.2 Billion on rehab costs per year.

These are great stats but what are investors spending on tools, closing costs and service providers to close these deals?

Well let’s start from the top and go from there:

GDP and Real Estate Investing

You are welcome to use this graphic on your site or blog as long as you provide credit to Revestor by providing a link to our site www.revestor.com

If you start with GDP, Real Estate is 12.6% or $1.926 Trillion of the total $15.685 Trillion GDP.

Residential real estate sales end up being about 38% of all real estate totaling $729 Billion.

24% or $175 Billion of all residential real estate is investing.

There are a lot of dollars made off of that $175 Billion!

At the top of the list, according to RealtyTrac, are investors – with an average profit of $18,391 per sale. (Not all properties are flips but if they were, investors would be earning 13%, or $22 Billion of the pie.)

According to the above survey from our friends at BiggerPockets, next on the list would be contractors with $9.2 Billion of the pie. (we did not include in our graph)

Then of course real estate brokers and agents earning an estimated 5-6% of the pie at $8.75-$10.5 Billion.

According to NAR the ratio of investors using financing to all cash is about 50/50. Mortgage Brokers, Lenders and Servicers are next on the list with at an estimated 3-4% of $87.5 Billion. I know this seems high but 3-4 points includes origination, gain on sale (GOS), service release premium (SRP), servicing, etc. In fact this is quite conservative at $2.62-$3.5 Billion.

Closing costs from service providers (appraisal, inspection, escrow, title, etc.) we estimate to be 1.5-2.0%, or $2.6-$3.5 Billion.

How much do investors spend on support staff, assistants, analysts, researchers, education, software, tools, etc to acquire investment properties? [COMMENT BELOW] with your thoughts…

How much do real estate professionals (agents, brokers, mortgage providers) spend on online marketing?

Well according to the 2012 Real Estate Advertising Outlook report by Borrell Associates this year, 55% of all real estate advertising, or $13 billion, will be spent on online media. Total advertising equals $23.7 Billion.

Does that mean if 24% of the business is from investors that real estate professionals will spend 24% or $3.12 Billion on online advertising? If real estate professionals who work with investors spend a total of $5.69 Billion we’d be surprised. I would estimate the number to be more like $3.4-$4.2 with $1.87-$2.3 Billion of that spent online to target investors. (not a bad number and we hope we can carve out a nice slice of that pie by connecting investors to real estate professionals)

24% of the residential real estate market is a big slice of the pie and $175 Billion is a big number and can’t be ignored. We believe the numbers will continue to grow as more investors are able to qualify to buy again. The first wave of foreclosures occurred in 2007. The seven year waiting period will be up for many “re-investors” starting in 2014. Will they make better decisions this time around?

How Many Realtors Are At Your Football Game

Ever go to a party and find that every other person is a realtor?

If you’re living in Arizona, Hawaii or Florida, there’s a decent chance you have. While California leads the pack in terms of sheer numbers of realtors, those states are the top three for realtors per capita according to an article published midyear by business news website AGBeat.com.

The numbers themselves were compiled from the National Association of Realtors. To give you a sense of the fierce competition out there, consider this: In Arizona, which ranks first in the nation for realtors per capita, there is one realtor for every 168 residents.

Now let’s put that number in perspective. Let’s say you went to an Arizona Cardinals football game at University of Phoenix Stadium, located in Glendale, a suburb of Phoenix. The stadium capacity is 63,400 people. If the stadium sold out to a perfect representation of Arizona’s population, at least 377 of those people would be realtors.

Here is a look at the numbers, in more detail:

1. Arizona, 1 realtor for every 168 residents.

2. Hawaii, 1 for every 173 residents.

3. Florida, 1 for every 175 residents.

4. Washington, D.C., 1 for every 193 residents.

5. Nevada, 1 for every 200 residents.

6. New Jersey, 1 for every 201 residents.

7. Connecticut, 1 for every 229 residents.

8. California, 1 for every 241.

9. Colorado, 1 for every 257 residents.

10. Idaho, 1 for every 267 residents

The profession has generally been on the rise again as the housing market recovers from the dismal years that capped off the end of the last decade. Places like South Carolina have reported an uptick in people entering the profession. But, even so, in some places, the profession is clearly still a draw.