Thursday, October 9, 2014
Study Shows Top Safe Havens for Rental Investing
A recent study by RealtyTrac claims that if you are considering becoming a landlord with single-family homes you should forget California.
Ohio, Oklahoma, Florida could offer much better investments.
RealtyTrac analyzed median sales prices and average fair market rents for three-bedroom properties in 586 U.S. counties.
Rental returns were calculated using annual gross rental yields: The average fair market rent of three-bedroom homes in each county, annualized, and divided by the median sales price of residential properties in the third quarter.
Markets with home prices that have shot up can be difficult to get enough rent to cover the mortgage. For instance, the study found that New York City and San Francisco have gross rental yields below 4%.
On the other hand, parts of Florida and Georgia where home prices are still recovering from the 2008-2009 crash have yields of 20% and higher.
As an investor in single-family homes in my area, I’ve never paid much attention to national or regional studies. That’s because in my experience each county has cities, and neighborhoods within those cities, that can hold great investments … regardless of what broad-based studies may show.
Furthermore, gross rental yields are only a starting point in your search for a rental property. They don’t mean squat if they’re getting eaten up by taxes, repairs, and deadbeat tenants.
You can find the complete RealtyTrac study here.