The ranking forecasts the expected performance of rental properties, specifically single-family homes maintained as rental properties. 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).Ingo Winzer, president and founder of Local Market Monitor, Inc., said: "A sharper than expected fall in recent home prices, which are down almost 5% in the last year, has led us to lower expectations for future prices. At the same time, however, higher inflation and slow but steady job growth should boost future rents. The desirability of investing in rental properties is therefore positive.
"The Future Relative Returns for large markets suggest that Las Vegas and Detroit are still very risky, highly speculative markets that could have a big payoff only if the local economy rebounds faster than we expect. The most interesting markets are in Florida and Arizona, where home prices have still not bottomed out but rents will eventually be supported by renewed population growth; investors in these markets must take a long-term view but will be rewarded if they can tolerate high vacancies for a few years."
David Hicks, co-president of HomeVestors of America, Inc., added: "What we're seeing in the marketplace reinforces the results of the latest ranking. Our franchises in West Palm Beach, Atlanta, Phoenix, Dallas, Fort Worth and Tucson all report a marked increase in investor interest in rental property opportunities. Investors are recognizing the potential for homes in these markets to produce above-average financial returns."
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We have been consulting with potential investors quite a bit lately. At certain price-points we have been finding many properties returning 10%+ cash-on-cash returns…that’s without accounting for tax benefits and the potential (albeit long-term) for appreciation.
If you’d like to discuss how to diversify some investments out of low-paying CD’s or volatile equities…call me on my direct line at 561 602 1258 or send an email.
Thanks for reading…Steve Jackson
