Top 3 Markets for Single-Family Investors

Some cities are still pulling in major discounts for rental investors.

Despite the fact that rental rates for single-family homes are no longer skyrocketing, most investors still believe that in today’s housing market, rental property is a great investment. As a result, many individual and institutional investors are snapping up properties in order to hold them as rentals. Radar Logic recently conducted a survey to determine where the markets are still ripe for this type of investing based on biggest available discounts on single-family properties eligible for renting. The data firm tracked prices paid by large-scale investors – who usually get slightly better prices on properties because they buy in bulk – in 300 metro areas and compared the median price per square foot paid by investors to all housing transactions[1].

Radar Logic determined that the top three metro areas for rental investing garner large-scale investors discounts of as much as 64 percent off the going retail rate. Pittsburgh, Pennsylvania led the pack with this nearly-two-thirds discount, while Cleveland, Ohio, followed close behind with a 55 percent discount. Detroit, Michigan, rounded out the top three with a 54 percent discount.

Do you invest in any of these cities? Why or why not?

Thank you for reading the Bryan Ellis Investing Letter!

Your comments and questions are welcomed below.


[1] http://www.dsnews.com/articles/radar-logic-best-markets-for-single-family-rental-investors-2013-04-19

Comments (5)

Trackback URL | Comments RSS Feed

  1. glaud says:

    Greed in the making for the next bubble

    • Tony Tomasek says:

      Greed? It’s not greedy to invest your hard earned and harder to save money. If not for investors, the unsold home inventory would still be huge and prices would have fallen further. That would have meant a much more depressed economy and for way longer. It’s easy to sit back and judge people, harder to get out there and take action.

    • TerriTerri says:

      I’ve been investing my money in fixer upper properties in good locations since 1998. There have been some dips, but overall it has been one of the best decisions of my life. I’m not greedy. I get good tenants and keep the rent slightly below market. I fix everything ASAP if there are any complaints. One must think outside the box to get outside the box of certain mentalities.

  2. Joe Ball says:

    I would not even think about putting money into Detroit! There are many factors for buying property, and these areas being the cheapest are probably for a good reason- maybe LACK of demand?

  3. Paul says:

    Investing in the City of Detroit is very risky. I have an interest in an LLC that holds 3 properties in the City. There is a lot of crime but the greatest concern is the house stripping. Copper theft including plumbing and electrical wiring is common. The city is not investor friendly–they are not very friendly to owner occupants either. They have a lead inspection law that is punative to landlords and goes way beyond the requirements of State or Federal regulations. The fines can exceed the rental income from the entire year. If I could have seen this coming I would have sold these properties 10 years ago. No one is going to say that lead poisoning is never a problem in older housing but homelessness is also a problem. Every time you increase the cost of providing housing to low income people, you price the ones with the least resources out of the housing. In my mind the risks exceed the benefits of owning property in Detroit at this time.

    I continue to hold the Detroit housing currently in the LLC but I am not looking to purchase more at least not until the City has a better attitude toward the property owners. If the properties are stripped by thiefs when they are vacant the cost of repairing them exceeds what they are worth. I am looking outside of the City of Detroit for my next investment. Some of these investors are finding out the hard way that you have to be diligent in watching your property in the city. They have bought properties and let them sit too long and they get stripped and (1) the investor looses money and (2) they further contribute to the blight which continues to reduce the value of houses in Detroit.

    Detroit is no place to invest if you are an absentee owner unless you have a very strong and dedicated, street smart management company.

    Paul

Leave a Reply

Category: Real Estate