The Pivotal Factor You Probably Don’t Know to Watch for in a Rental Market

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So you’ve decided you’re ready to buy a rental property, and you’ve decided you aren’t going to limit yourself to one area as far as where to buy said rental property, and now you need to figure out where to buy it. If you are looking outside of your local market to buy in, chances are you are doing so in hopes of gaining the best returns you can get on a property.

If you didn’t care about returns, you’d probably just buy in your own backyard. Maybe you aren’t even looking for the best returns; maybe you just want good returns (assuming your local market can’t give them to you). Regardless, if you are deciding on a market to buy in that is other than your local market, I’m betting it’s the returns that matter.

Assuming it is the returns that matter, the most important thing you can do while analyzing rental markets and properties is understand what factors impact returns. Factors like income and expenses, property condition, vacancy factors, tenant quality, market growth and desirability. Some of these things are obvious, and some of the others may be less obvious to the inexperienced investor — or maybe to experienced investors, too!

A million articles could be written as to how these factors can impact returns, and most of these factors are at least mentioned somewhere in various articles I’ve read, but there is one factor that I’ve never seen written or talked about anywhere that every rental property owner should be aware of.

Over-saturation.

What is over-saturation exactly? Well, it’s easy. In the case of rental properties, it means that a particular market or area is over-saturated with available rental properties — not rental properties available for investors to buy, but rental properties available for tenants to rent. Well what does that cause? If a market has a considerable number of rental properties available to tenants, tenants will have a ton of properties to choose from when trying to find a place to live. Call it a “tenants’ market” if you will. I just made that up, unless the term already exists and I just haven’t heard it, but either way that’s exactly what it is.

Tenants have gobs and gobs of rental properties to choose from! The problem for the rental property owner? You have major competition! Potential tenants for your property — and especially good tenants — have so many rental properties to choose from when looking for somewhere to park their families that you may find yourself having a really tough time getting your property filled. And the problem with this? Vacancy is one of the most costly expenses to a rental property owner.

Related: How to Find a Tenant in Any Market: A Comprehensive Guide

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My Real-Life Example of Over-saturation

A Rental Market’s Heyday

I can give you an example of over-saturation from personal experience (unfortunately). If you’ve followed a lot of my blogs, you know that my rental properties are in Atlanta. I bought my properties when Atlanta was in its absolute heyday. I mean, hedge funds were scooping up properties left and right, big-time buyers were fighting the hedge funds and taking what they could, every little guy was fighting their way through the crowds to get properties, and it was literally probably the top best city to buy investment properties in. This was just a few years ago.

Atlanta became the big hot spot for investors to buy in right after Memphis and Phoenix had topped the charts, and right before Houston and Dallas were making their way into the game. Atlanta was it, man. There was no better place to buy if you wanted the best houses for the cheapest prices and the highest rents. The price-to-rent ratios were insane! Hence why the market was so desirable for so many investors.

A lot of people get tripped up though thinking that Atlanta is still the best market to buy in like it was a few years ago. Atlanta is still an okay market to buy in — you can still get properties for decent prices and decent returns. Some could argue that Atlanta has already seen the bulk of its growth though, so buying there now isn’t going yield near as much in appreciation as it would have had you bought there four years ago.

Others could argue that for what you have to pay in Atlanta for a property now, you can pay the same price in other markets and get much higher returns and an overall better deal. Okay, maybe it’s not other people arguing it as much as it’s actually me telling you that. I think Atlanta is still a good market, but I think it’s had its moments, and there are just better markets out there to buy in now. I personally wouldn’t buy in Atlanta right now. It wouldn’t even be one of my top choices.

If you want to read more about how a market can shift in investing dynamics, check out “Warning: The Market You Should Be Buying in Has CHANGED!.”

People all the time tell me they are interested in Atlanta as the market they want to buy in (and I totally understand why they think they want to buy or should buy there). Up until recently, my main arguments to them as to why I don’t personally encourage Atlanta anymore have been those I just mentioned — the major growth in Atlanta has already happened, and there is better bang for your buck in other markets. I also usually throw in a mention or two about Atlanta having just general chaos with investing due to the feeding frenzy that took place and notoriously bad appraisals.

How I Learned About Market Over-Saturation

Just recently, I’ve added a new deterrent to my list: over-saturation. I didn’t even know over-saturation was a thing until I ran into it myself last summer with one of my properties.

Probably one of my favorite properties that I own in Atlanta became vacant last April. No big deal — I have a great property manager who was doing everything he needed to for this property to be rent-ready as fast as possible, and I had never had an issue getting this house rented in the past. It’s adorable! It’s in a B to B+ neighborhood, it’s an A- house (if I were to give personal ratings), and it’s just a really cute nice property. Don’t get me wrong, it’s not in a high-class area by any means, but it’s not a horrible area either. Very standard middle-of-the-road type. In the past, this house has always gotten a ton of action when it’s been advertised for rent. People love it, it’s great for any size family, and it’s just always been fairly desirable.

Until last year.

This house has rarely ever gone more than 30 days without having a fairly solid rental application on it. It hasn’t always been rented in 30 days, but it’s at least been very close to being occupied in that timeframe. This past time, however, I’m not kidding you when I tell you three months had gone by with barely an application on it. I called my property manager one day and asked him what in the world was going on. Was he not advertising it, what was happening here? He said — and this was the first time I learned of over-saturation — “Well, the problem is, tenants right now have so many properties to choose from, getting anyone in the door is just really hard right now. It’s not just your property, it’s all the properties.”

Right then it hit me that there was a major repercussion that came from the recent feeding frenzy there — now there were too many rental properties in Atlanta! How can I even compete with that and get more tenants interested in my property? Well, not easily, and quite frankly, I didn’t. Luckily I ended up with some good tenants in the property, but all in all it was about five months of lost rent due to vacancy before my property manager found them.

Related: How to Analyze the Real Estate Market to Avoid Major Investing Mistakes

The point is, a perfectly good rental property that normally only took one month to fill had now just taken five months. Do you know how costly that was to my bottom line? Man almighty. And how does one compete against that type of situation? I don’t even know that answer yet.

Now when people ask my opinion of Atlanta as a market to buy in, I immediately introduce this concept of over-saturation to them and warn them of the repercussions. I think just about every other factor about a market can be researched in some way, or at least asked about, but I for one never even knew over-saturation was a thing, much less to ask about it!

The Takeaway

There are two major takeaways I want you to get out of reading this article:

  1. The hot markets at any given time are hot for a reason, and likely worth buying in yourself. But always think a few years down the line, and think through any possible repercussions for jumping in with the big boys.
  2. If you are considering a rental property in any area, down to the specific city or neighborhood you are looking in, always call a good property manager and ask their take on the current rental situation. Ask about rentability: are there a lot of renters who want that area, how are the current vacancy rates, how long is it typically taking to place tenants, and is there any level of saturation happening?

Don’t get me wrong, I wouldn’t trade my Atlanta properties for the world. I definitely consider this a hiccup for now, and luckily the margins on my properties are so high that I’ll be able to make up for the lost months in not too long, but I also have no idea how long this over-saturation may last. Maybe it is only a thing at this tail end of Atlanta being so popular, or maybe it’s an ongoing issue. I have no idea, but I’ll find out! I also don’t see any of the current popular markets experiencing this level of over-saturation because none of them have experienced the level of feeding frenzy that Atlanta did.

Has anyone else ever run into over-saturation issues? If so, where was it and what was the result?

Leave your comments, stories and experiences below!

About Author

Ali Boone

Ali Boone(G+) left her corporate job as an Aeronautical Engineer to work full-time in Real Estate Investing. She began as an investor in 2011 and managed to buy 5 properties in her first 18 months using only creative financing methods. Her focus is on rental properties, specifically turnkey rental properties, and has also invested out of the country in Nicaragua.

47 Comments

  1. Curt Smith

    Thanks Ali, Here’s some useful tactics I tell folks to do. Use craigslist.com rental. Put your area name into the search and other surrounding area names. Write down how many properties CL returns for YOUR area? What percentage of the listings are the subjects all caps. What percentage are offering 1/2 to full months free rent. How many offer “free” in the subject. All very bad signs.

    Do this search:
    http://atlanta.craigslist.org/search/apa?query=Decatur&housing_type=6
    558 listings (alot), some free months alot of all caps ads.

    Now this one in a Northern suburb and B class rental area.
    http://atlanta.craigslist.org/search/apa?query=Norcross&housing_type=6
    100.

    For Urban landlords doing this search before you buy is important.

    • Ali Boone

      Oh very cool Curt! Thanks for sharing that! Yep, that is exactly along the lines of figuring out the rentability. It’s strange sometimes when you’d think a property should be so easy to market, there are just all sorts of things that can make it difficult that we’d never think of.

  2. Alex Craig

    Great article and very relevant to today’s market. Have you tried adding features to your home that make it stand out above the competition? I saw several areas in Memphis headed that direction in 2012, so we had to change our model. Basically try to minimize purchases in areas where hedge funds and other investors are extremely active and if you do buy in those areas, over renovate the homes so that they are the best looking rental in the area. I saw most funds & local investors buy decent looking homes and barely do any work, leaving out dated fixtures and worn carpet, whereas we bought homes and added tons of upgrades (new vinyl plank flooring, ceramic tile in kitchen and baths, new counter tops, brush nickel faucets and shower heads in all bathrooms, oil rubbed bronze fans, landscaping, etc etc). This model has worked well for us and rarely do we have one of these nice homes sit on the market beyond 30 days without a reservation fee. We figured these upgrades cost on average about $5,000 in additional labor and materials, but they are effective in reducing vacancy and maintenance. That additional $5,000 will certainly be re-coupled As we move towards more renters around the country, I think the old model of adding the bare minimum to rental homes is a outdated model.

    • Ali Boone

      That’s very possible Alex and definitely something to consider when trying to market a property. I have a property manager on my properties so I’d have to ask him what all he was doing, but that’s a great point about finding a way to make your property stand out over the others.

    • Ali Boone

      Troy, interesting, I didn’t realize that. I’ve had my reasons to not drift towards Vegas, but they’ve been more based on just generally transient tenants and the market only having the one industry (entertainment) which fluctuates directly with the economy. Hmmm…add in over-saturation to that…interesting.

  3. Michael Woodward

    Thanks for the article Ali! Spot-on! I’ve been waiting for someone to write something on this subject so thanks for reading my mind! 🙂

    Ever since the foreclosure boom happened a couple years ago, I’ve seen TONS of people streaming into the rental business (corporate, mom & pop, Joe down the street, Lewy next door,….. you know what I mean….. EVERYBODY!). I’ve been watching real estate trends for the past 12 years and have never seen such a large influx of newby landlords as we’ve seen recently. I don’t see how the market can sustain it. I’ve asked some questions across the forums about over-saturation but so far no one sounds concerned. Kudos to you for ringing the bell. I don’t know which direction the rental market is headed so I’m going to find a comfortable spot on the fence to watch it develop. When I see a return to more normal conditions (the one where most people realize that landlording isn’t for EVERYONE) I’ll get back in. Unfortunately, I expect the sour taste to take a couple more years to develop. After that, we’ll likely hear the thunder of rentals dumping back on the market. This won’t be true for every market but I think every market will feel the effects. I miss the 90’s.

    • Ali Boone

      Lol Michael! Who doesn’t miss the 90s? Although I wish it were the 70s, personally. Even better than the 90s. Oh wait, we are talking about real estate….sorry, I drifted towards music for a minute.

      Well keep us (me) posted on what you view from the fence. Will be interesting.

      What kinds of questions did you ask on the forums?

  4. I expect that we will continue to see this trend until the FED raises interest rates. Right now, we have too many people being forced into investments that they would prefer not to make because it is the only way to see any return on their money. My 90 year old grandmother has considered real estate and dividend paying stocks just because she can’t get a decent rate on CD’s, etc.

    Until that happens, I am only buying houses that are very nice and in the best school district compared to what I usually would purchase. I want to be the tenant’s top choice when they are comparing rentals. I noticed the tenant’s market effect in a nearby city over 10 years ago due to other factors, and sold everything I owned in that city. I became aware of why I was having such frequent turnover when the city paid for a study to prove that they needed to build more affordable rental housing. The study showed that the town already had too much affordable rental housing. The lightbulb went on in my head – I finally figured out why there was so much turnover no matter what I did. You can’t fight a tenant’s market – you can only get out!

  5. Gaurav M.

    I can relate to that. Happened to me during the 2011-12 buying frenzy in Phoenix. One of the properties I purchased sat without a tenant for nearly 3 months. Got a tenant after reducing the rent twice. Its been almost 3 years now and no rent increases there. I’m not too worried though as it still cash flows nicely and its appreciated very well too which is just icing on the cake.
    But one other thing that some investors fail to consider that rents maybe stagnant for a while but expenses like taxes, insurance, repairs and vacancies do continue to rise.

    • Ali Boone

      That’s true Gaurav. And great input too. What year did you buy in Phoenix? Sounds like it was when it was a super hot market. And yep, I’d place Phoenix, Memphis, and Atlanta (and turns out Vegas) into the grouping of major over-saturation problems because of how nuts those markets were with selling to investors.

  6. Kevin Polite

    @alex craig. I’ve done the same thing and the last home I bought was rented within a week. I tend to go to areas where the hedge funds dare not go, but they are still very safe and have acceptable (for me) returns.

    Also, I believe there will be bargains in Atlanta and possibly other markets because many of the mom and pops and other investors that bought when prices were good are realizing landlording is not for the faint of heart.

    • Ali Boone

      Very possible Kevin. I know I couldn’t be a landlord….ick. I’ll always go the property manager route. But yeah, will be very interesting to see what happens in 5 years or so with all the investors who bought. Potential for another wave of a new investor frenzy?

      • Kevin Polite

        @ali boone. I totally agree with you, but I make sure I update all mechanicals so I don’t get those 4am calls (fingers crossed). In addition, my full-time gig for the last 5 years has allowed me to work from home and my units are all within 10-15 minutes away. If that situation changes I may possibly need to go the route of PM which I’m not looking forward to after hearing the stories on here about finding a good one.

  7. Tony Tran

    I agree with you Ali. I feel the same impact with my properties in the more metropolitan areas. I am feeling this is less true for smaller, less known counties. My out there properties have done pretty well.

    If you dont mind me asking, what market are you in today?

    Tony

    • Ali Boone

      Hey Tony, good put. My properties are in Atlanta but I work with properties all over. But the other markets are newer so wouldn’t be in the same stage as far as I can tell. And I wonder too if it won’t be so bad now that the major buying frenzies have calmed down. I mean it was so busy there for awhile while prices all over were so amazing and such….they are still great but not to the levels they were so even the hedge funds have backed down, everyone is calmer, etc. Maybe that will help? No idea.

  8. Larry Fried

    Excellent article, Ali! Over-saturation of rental properties has been something on my mind lately as a result of a market where I have several properties, Jacksonville, FL. There was a lot of hedge fund activity there for a while and over saturation of rentals may be the flip side of the appreciation the activity caused. I don’t think it has reached a point similar to Atlanta. Yet it is enough that I am concerned that when I have a vacancy, and my first may becoming quite soon, that it will not be re-rented easily. Fingers crossed.

  9. Ken Corsini

    Ali – Sorry to hear about the one property you had trouble renting somewhere in Atlanta. Its got to be said though that one property does not a market make. Perhaps the neighborhood or zip code you bought in has experienced some rental saturation, but I think it’s difficult to characterize an entire market that way … especially if the data suggests otherwise.

    According to Zillow, Metro Atlanta home values are up 12.8 percent as of the end of last year. Zillow also did a study on rent increases in various markets that indicate Metro Atlanta saw significant rent increases last year ($30 per household). I don’t see how a market could be experiencing over-saturation while at the same time increasing average rent amounts.

    We’ve rented hundreds of houses over the last two years all over Metro Atlanta and have not seen any trends that would indicate the rental market is slowing or becoming more difficult. Yes, occasionally we might have a house in a particular neighborhood that stays vacant longer than expected, but that is not indicative of the market as a whole.

    I agree with you that it’s important to watch for over-saturation in a particular market. However, I would suggest using aggregated data to make the determination rather than one or two negative experiences.

    • Ali Boone

      I totally hear you Ken. I definitely didn’t come to the conclusion that Atlanta is over-saturated just based off my one property though…. it was after having problems with a couple properties back-to-back, but more importantly in talking with several managers who expressed it being a city-wide problem currently.

      But with that said, most definitely it could be segregated into different areas of town, different property types, etc. That’s great you’re having good luck with all your properties! You guys had a lot of good ones, and a lot were in different areas of town, so who knows where the split happens.

  10. Interesting–Canadian here going through the exact same thing in Ottawa Ontario. I think the entire city is saturated with available apartments largely due to “stealth” federal government job cutbacks in recent years and dramtic overbuilding of condo towers. Vacancy never used to be an enemy to my bottom line but over the past 18 months, it’s become my biggest threat with tens of thousands of dollars lost due to vacancy despite massive amounts of money spent on improvements and lowering my rents anywhere from 5-15% 🙁

    • Ali Boone

      Oh wow Brian, yeah that’s serious! Frustrating too, because of all the factors about a rental we can control, that is a tough one to fight. Makes me think of ND with the oil boom….they built so much housing for the workers and they had such good profits on them, suddenly there were a gazillion empty apartments. Scary to think about!

      • Curt Smith

        That’s what I heard happened at the top in 2006-7ish. Landlords where happy, then the banks would lend to stated income borrowers and renters left in droves, in just a few months. Leaving landlords to wither in the wind with their debt payments. Least that’s one of the melt down stories.

        At least Atlanta is still a destination city for migration, corp headquarter moves (Mercedes) etc. I think we won’t ever be a ND a classic bubble scenario. And rentals in good high school (5 or better) will be fine.

        See the first comment here, that’s a tool / tactic to use to measure glut. Keep track of the number of listings every month for your area. Compare to better areas.

  11. Wow!! Great story Ali about your experience with over-saturation, pretty wild!

    I do remember a time when there was a lot of over-saturation both with sellers and landlords. I think it got to a point where these folks started giving away free items (i.e. televisions, computers, etc.) just to sell or fill a home. Really intense!

    Being in the business, one thing I’ve learned is that things do not always stay the same — change is inevitable. Learning how to adapt to change and get through the hard times will always bring many experiences and lessons learned to the table.

    Nicely written, thanks for sharing! 🙂

  12. Very well written and topical piece Ali. You are spot on! I’ve helped a number of investors (including myself as one) negotiate through the challenges of finding the best options for investment properties. Along with the over saturation potential as you discuss, and the zillow or craigslist review for rentals as others mentioned, I utilize Kijiji (here in Ontario) to see what is renting in a given area, for how much and what is included. Atleast here (in Canada) I have reports for given cities that will speak to the rental market which also helps. All this information speaks to the specific area market. I also use a trick of driving through the target area (or have someone do it.. or use google maps) and look at the properties surrounding, care of lawn/property, types of vehicles (nicely kept, clean or on blocks in pieces…) As you are an investor, you are very aware that you should know or learn as much as possible about what you will be investing in. It’s not just about the numbers a REALTOR is “posting” for a listing, it’s about being able to consistently maintain or better the income you are expecting from it 😉

  13. David Greene

    There is a huge trend right now towards multi unit housing selling at a premium due to the high rental demand. Millenials aren’t buying yet and everyone wants to live in urban areas with high “walkability” areas. This is opposite of how it was during the last boom when everyone was trying to buy themselves a nice fat home and wanted the biggest and the best they could afford. My question is, who here is planning for when the momentum swings back to wanting to own homes in the suburbs and all this multi family starts to see its demand dip? It’s only natural for the millennial generation to start having children at some point and wanting more space, as well as for wages to eventually rise. Does anyone else have a strategy to prepare for when more and more markets start to see this “tenant over saturation” and finding a tenant is once again tough to do? I can see a potential bubble forming in multi housing. For crying out loud people are becoming landlords that had no interest in it 10 years ago just because the returns you can get at the banks are non existent. I’d love to hear who is positioning themselves to pick up some apartments in the future when tenants are moving out and wanting to buy, and what strategies they are going to use.

    • Curt Smith

      David, In a general way, each suburb and McMansion area will be unique but if you study the population bulge there are a high number of aging folks in big houses in the burbs and the population curve drops quickly leaving much fewer folks behind them to buy these suburban homes. Add in student debt, low quality jobs, trending down average house hold take home, there will be NO rotating back to the burbs and the real nice homes. It’s a mater of time and the rotation will be slow and region dependent (North hardest hit) but I wouldn’t bet on a swing back to buying expensive homes. The 1% will always buy but I suspect there’s more homes than the 1% need, leaving a glut. The population curve, student debt and dropping average wages seal this forecast.

      The new hot category has moved beyond MF to be mobile home parks.. Yup!

  14. Matt Aspen

    Great article & comments!

    The mantra I keep hearing is don’t buy rentals in areas without jobs (I’m not comfortable w/ baby boomers ‘testing’ out areas they want to potentially retire in because once they decide they want to settle in, they’ll buy & stop renting).
    But, such areas are expensive; I’m in the Bay Area & don’t foresee ‘jobs’ here going away any time soon. So, seems like there’s a trade off between dishing out crazy amounts of money for one expensive property (in turn, bring in a whole lot rental income) vs. buying several rentals & being exposed to (a) over-saturation (b) unstable job markets.

  15. Ali Boone

    Good questioning, Matt. Great point. Do know though that there are plenty of more affordable markets with a ton of job growth going on. Industry growth, jobs, population, etc. It’s not only the big expensive markets like SF. So the trick is just finding the in-between market that is affordable but does have the job growth. They definitely exist.

  16. Uyenchi Ho

    Great article and really great comments! Currently we (my husband and I) are looking to purchase our next rental property. I’m leaning towards fourplex, the husband prefers SFH. The article helps me realize that many of the multi-units we’ve looked at are surrounded by the same multi-unit properties. Most properties in the area are rentals. Competition! Whereas our current rental property in a really great school district that is surrounded by mostly owner occupied homes has never gone a day without rent in the past 5 years. In fact, we increase the rent every 6 months.

    I have not thought about over-saturation of rental properties, especially here in the heart of Silicon Valley, but definitely something to think about now. Thanks!

  17. Samir S.

    Hi Ali,

    Great post! Over-saturation, and resulting vacancy, is one thing that has my wife and I trying to figure out where to make our first purchase. Our thoughts are that once we identify a market, we will purchase only in A-class neighborhoods and can also add value to the property to try and make it stand out among all the other rentals. We are planning to stick with single-family homes (at least for our first purchase), as most multiplexes are surrounded by other multiplexes. That should help reduce the number of doors we would be competing with.

    • Curt Smith

      Hi Samir, The very short answer to low effort medium return rentals is:

      – Find the top high schools districts
      – find the cheapest neighborhoods in top high schools
      – Don’t over fix, but yes do one thing that stands out.

      Remember to caculate ever potential house for the Cap Rate and Cash on Cash (with debt service).

      New landlords too often do a few things wrong:

      – Buy cheap houses in bad areas thinking high cap rate will be easy. It isn’t easy in bad areas.
      – Forgeting to keep a tab on cap rate. I see landlords putting way too much cash into a rental. Then it doesn’t cash flow / cap rate. Might as well leave your cash in a bond fund if you aren’t over 10% cap rate. Serious! Lower effort and risk.
      – Over fixing. Same as above putting too much cash in and not cash flowing.

      • Samir S.

        Hi Curt,

        You bring up some great tips, although I wonder about the 10% cap rate limit. We are hoping to invest in good neighborhoods so we are OK with taking a chance on less cash flow for the potential of greater appreciation later. Would you recommend we look at other investment vehicles in that case? We like the idea of real estate because of the ability to use leverage, too.

        • Curt Smith

          Hi Samir, You asked an important question, what vehicle should I use for investing… We are all at that crux now some 3 yrs up from the bottom, a strongly sellers market in all asset types: MF, SFR even mobile home parks…

          I advocate for every investor to constantly review their business model vs where the market is going so as to not repeat the over the cliff effect as happened in 2006. Always gauge the market.

          Today in Atlanta, probably like the other hot cities, SFR cap rates have dipped below 10%. I moved on,,, following the market and maintaining cap rate.

          Where did we move to? Small towns on major freeways where there’s local trucking terminals and other jobs for my renters to work at. Check your area out going out freeways 45 minutes at least to get away from the local investor who won’t drive for their business. Still cheap houses for landlords, or our new model; rent to own, then seller finance the sale. 3 tactics in play there to reduce competition and keep cap rate up: move farther out, offer something buyers desparately want that other investors aren’t: 2) rent to own 3) optional seller fianancing.

          Figure out what the market wants, then be the only one, one of a few who provide it.

          Forget about counting appreciation into your business model. That is not a smart strategy. Every deal has to cash flow on it’s own, without appreciation.

  18. Ali Boone

    Hey Samir, saw your post to Curt and wanted to chime in… 10% caps are great, but even if a cap is lower than 10% (which a lot are these days for decent properties), I wouldn’t rule out real estate over a bond. Bonds don’t provide the same level of benefits that owning real property does (major financial benefits, that is). Plus, like you say, if you have something in a good appreciation market and good area and such, lower than a 10% cap is plenty worth it.

    If I were you, I would definitely keep pursuing real estate! I do agree with Curt not to count on appreciation and cash flow is key, but there are plenty of great properties out there that meet those requirements and you will still get way more benefit than if you go the bond route. Just my two cents.

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