20 Markets where buying rentals still makes sense

Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes

http://www.realtytrac.com/content/news-and-opinion/single-family-rentals-top-20-markets-7670?a=b&utm_medium=3&utm_source=359119&utm_campaign=3400&accnt=359119

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Ned CareyPro Member

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Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes

13y

I beat every one of those in Baltimore.

Not very credible when the financed cap rate and the all cash cap rate are different. Financing has nothing to do with cap rate. Furthermore the cap rate would be higher not lower on a leveraged investment. You are capitalizing a much smaller investment.

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Ned CareyPro Member
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Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
13y
I beat every one of those in Baltimore.

Not very credible when the financed cap rate and the all cash cap rate are different. Financing has nothing to do with cap rate. Furthermore the cap rate would be higher not lower on a leveraged investment. You are capitalizing a much smaller investment.
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Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
13y
Linked
http://www.realtytrac.com/content/news-and-opinion/single-family-rentals-top-20-markets-7670?a=b&utm_medium=3&utm_source=359119&utm_campaign=3400&accnt=359119

I want to hear more about the $217k SoCal property that rents for $6k a month.
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Rob K.
Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
13y
I'm not sure how accurate that article is. Even the best return of 10.38% is pathetic and not something I would even look at.
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Patrick L.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
13y
Well the article bases the return on the median home price in the market, of course most rental properties are going to be well below the median price so the numbers don't have much meaning (except for maybe hedge funds)
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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
13y
I'm definitely leery of this article. Some of the markets they mention are inaccurate, they are leaving out some of the biggest investors' markets right now, and yeah... take this one with a grain of salt.
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Account Closed
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
13y
Doing any analysis on "average" and "median" numbers is completely meaningless IMHO. You have to look at each deal on its own merit. The general media is full of silly articles and lists like this and a serious investor should pay no heed to such nonsense!
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Ij O.
Real Estate Agent · Bowie, MD · Member since 2014 · 13 posts · 2 votes
12y
@Ned Carey, what areas or zip codes in Baltimore do you get good returns and is safe enough for families?
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Jerry W.Pro Member
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Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
12y
@Joshua D. is going to be thrilled that Detroit made the top 20 in best places to buy rentals! hehe
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Account Closed
Detroit, MI · Member since 2014 · 40 posts · 5 votes
12y
I'm thrilled to hear that @Jerry W. especially when many have lost faith in our great city of Detroit.
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Raymond B.
FL · Member since 2009 · 2k+ posts · 357 votes
12y
@Ij O.

@Ij O.

To make the @ work, do the following:

Hold down the shift key and type @?

Look below this Window, and you will see a list of names of people that have posted in this thread.

Click on the name of the person that you want notified via an email, that you responded to them.

If you are a Colleague with anyone that has NOT posted in the thread, and you want them to see your post, hold down the shift key, type the @ and the first 4 letters of their First or Last Name.

Then look below this Window and click on that person's name.

Raymond
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Aaron Mazzrillo
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
12y
Originally posted by @Jon Klaus:
Linked [url]http://www.realtytrac.com/content/news-and-opinion/single-family-rentals-top-20-markets-7670?a=b&utm_medium=3&utm_source=359119&utm_campaign=3400&accnt=359119[/url]
I want to hear more about the $217k SoCal property that rents for $6k a month.

Lin He is a friend of mine. He's an extremely savvy investor and it is a real deal. Not one you find every year, but the numbers on that deal in the article are accurate.
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David Krulac
OP
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
12y
@Ali Boone

Which cities would you leave off the list and which cities would you add to the list, Thanks.
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Ned CareyPro Member
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Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
12y
Originally posted by @Ij O.:
@Ned Carey, what areas or zip codes in Baltimore do you get good returns and is safe enough for families?

That is a tough question. Every zip code has good areas and most have bad areas. Your criteria "safe enough for families" is a vague criteria. I would consider the nicer parts of Belair Edison and Edmondson Villiage as the upper middle of the range for rental properties. The weaker parts of those areas are below what I would like to own. Yet many of my friends who are successful landlords own there and happy to do so. - Ned
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Matt Devincenzo
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
12y
Originally posted by @Account Closed:
I'm thrilled to hear that @Jerry W. especially when many have lost faith in our great city of Detroit.

I believe that was a tongue in cheek remark! If you listen to some of the podcasts you'll see that there is a trend behind the Detroit remarks.
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Account Closed
Detroit, MI · Member since 2014 · 40 posts · 5 votes
12y
@Matt Devincenzo which podcast are you talking about? I'd love to get more info.
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Matt Devincenzo
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
12y
@Account Closed the BP podcast. There isn't a specific episode on Detroit or anything, what I mean is there are periodic off the cuff remarks as to it not being a place that Josh would invest. That's why Jerry was making the joke saying he would be thrilled it made the list.
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Account Closed
Detroit, MI · Member since 2014 · 40 posts · 5 votes
12y
lol ohhh @Matt Devincenzo
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Ron S.
Trenton, MI · Member since 2012 · 35 posts · 1 vote
12y
Actually the downriver area just south of Detroit in Southgate Wyandotte Riverview area is a great place for rentals. They are about a 20 minute car drive from the City. This area can easily produce 20% returns on your money. But it is getting harder to find the better deals as pricing has increased alot in the last year. I am currently in a highest and best offer on a home in this area now.
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Engelo RumoraBusiness Member
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
12y
We work in some of those market and can definitely get much better returns than posted haha

Its good to see such a list tho :)
Podcast Guest on Show #89
Oz Realty4.5356 Reviews
Website View Page
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Ij O.
Real Estate Agent · Bowie, MD · Member since 2014 · 13 posts · 2 votes
12y
@Raymond B.

@Raymond B.
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Ij O.
Real Estate Agent · Bowie, MD · Member since 2014 · 13 posts · 2 votes
12y
@Ned Carey very well. Thanks a lot. I will search and see what I can do in those areas. I think Baltimore has a lot of affordable opportunities. I just want to make sure I go in the habitable areas. Enjoy the weekend. IJ
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Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
12y
Some similar data was posted on the BP blog:

http://www.biggerpockets.com/renewsblog/2013/09/20/best-worst-real-estate-markets-847/

And my comment there holds for the article in this thread too:

"I have to snicker at use of median values and median rents. No way to tell if that median valued property actually gets at least the median rent ... so not really meaningful to toss around statistics like that."

1 Reply
Aaron Yates
Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
12y
The biggest issue with reports like this is that most Cities have areas within, that range from low to high price.

So you really can't take a median average for a 'City' to base your investing on. ESPECIALLY a city as 'Large' as Detroit. Neighborhoods in different areas within that city can vary dramatically on prices and statistics.

Think of it this way.. our country was founded by people who overtook the people already living here..

Then the invaders (now we are called Americans) claimed the land and eventually called it the United States of America.

Then they wrote the history books to make us believe that the 'Indians' welcomed us (after we slaughtered them) and created 'Thanksgiving'.

The books were written to try and convince us to believe what the 'governing people' wanted us to believe.

Although this is a strong example and many will surely hate what I posted, it's the truth and also applies to the report given in this post. People, ALL People, only report what they 'want' people to know personally or in a business aspect.

If you rely solely on these reports for investing then chances are you are already too late.

Always do your 'own' research if you truly want to succeed in anything in life.
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Robert Taylor
Broker, Investor, Property Restorer · Fox Point, WI · Member since 2012 · 288 posts · 120 votes
12y
First off, I'm always quite leery of ANY "Top 10, 20, 100 or whatever" list of ANYTHING! Its like when Maxim (do they still even publish Maxim?) or whatever magazine comes out with its list of the "10, 20 , 100 HOTTEST women" each year. Now, obviously every single guy (or girl) has their own set of criteria for this and no one is exactly the same. We may agree in general on some or even many of the results, but its not as if you're supposed to walk away from reading that list now realizing that yes, Angelina Jolie IS "hotter" than Giselle whatever her name is-you know Tom Brady's wife-and that you should now feel dumb because you think Lady Gaga is gorgeous and not only was she not on the list, but they were making fun of her in another list! Same goes for the "Top 100 guitarists of all time" list that a bunch of music mags do, where one list has Eddie Van Halen at #1 while another list has him behind the guy from RATT! All of these lists are so subjective, even if we could agree on the criteria, there would still be arguments as to who's #1, #2, etc.

Besides that, how in the world can they even begin to lump all sections of any at least moderately sized city into one lump category? Here in the Milwaukee area, you can buy rentals in "the hood" for really low entry prices and they cash flow very well, assuming you can keep them rented and actually collect the rent each month. Don't expect much in the way of appreciation though. From there, you can move on up the market through lower-middle class, middle-class, all the way to the top of the market. It generally seems to me that the higher you go in the market, the less cash flow you're going to have each month, (as a percentage) but you may have a better shot at the property appreciating in value over time, although that's certainly not guaranteed whatsoever.

What about buying in neighborhoods that you think are turning around, going from bad to good, as has happened in more than a few parts of Milwaukee? So, you may or may not be looking for instant cash flow from the tenants and as far as appreciation, you're not looking for a set, certain amount of increase each year, but you're more or less making a bet that the area will come around and you'll cash in big time several or more years down the road? I know people that have done just that and made huge money that way!

I just don't see the value in reading these articles that lump entire cities into one boat. There are so many different ways to invest, speculate, etc in real estate that you can't just lump it all together!
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Jerry W.Pro Member
Moderator
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
12y
I actually liked this report. True you cannot just call a realtor in Memphis and say buy me a $73,000 house and rent it for $1050 and be safe. I think it's more about trends and generalities. there are trends that might make you want to look at certain markets closer, no more no less. The fact that hedge funds buying has impacted prices and rental rates is something that has always concerned me. I love the Indianapolis market, but the hedge fund activities worries me about possibly changing the rate of return and the possible small bubble problem if they ever pull out quickly. They mention the need to look at each investment for location, condition, etc. Thanks for sharing the link. I won't base my investing strategy on this report alone, but it was information that I found useful and informative.
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