As a massive number of distressed properties came to the market in the midst of the housing bubble implosion, investors literally became a sponge in absorbing some of the excess. In the fall of 2012, investors accounted for one out of every five existing home sales. As home prices have risen, it has become more challenging for investors to buy at prices that still have the economic incentive to attract entrepreneurs and capital. Investors accounted for one out of every eleven existing home sales in June of this year.
There are two approaches that investors can take. For markets with a high rent-to-price ratio, it makes sense to rent properties. Flipping properties is logical in high appreciation markets. Investing in housing is not just a rich person’s game – even the middle class can participate.
To pinpoint the best markets for budget-minded investors for both flipping and renting homes, Realtor.com had HomeUnion analyze metros across the country to identify the best markets for rental standalone single family properties and also the top markets for flipping. To target markets for budget minded investors, they restricted analysis to those with prices in the affordable range of $232,500 or less, the median price of U.S. homes in April of this year.
HomeUnion’s findings of the top-10 markets for budget minded flippers and investors are listed in the following two tables. Also added for each of the Metropolitan Statistical Areas (MSAs) are job growth rates for the 12 months ending June 2016. HomeUnion utilized other factors in assessing the top flipping market other than price appreciation. The second table is the same as in the previous Jones on Real Estate Blog on the Highest Yielding Rental Markets.
To read the entire Realtor.com article of the HomeUnion study click http://www.realtor.com/news/trends/invest-in-real-estate-on-budget/?cid=soc_editorial64149476&adbid=757579927461908482&adbpl=tw&adbpr=17351940
With homeownership now at the lowest level in the past 50 years at 62.9 percent, renting remains a venue of growing demand, but it only makes sense in markets with rent levels supporting an adequate return on investment. Add some leverage from almost record-low interest rates and the return on a 20 percent down payment can be impressive in specific markets and properties.
Ted