Want to build your real estate empire? Start by pinpointing which areas to target!
Click on each city in this interactive map to learn more.
So how did we come up with this info? We took a look at the Average Cost of Each Home versus Average Rental Rate to come up with a yearly return percentage. This is done by taking the yearly average rental rate total and dividing it by the average cost of a home in that city. To simplify the data, we chose to focus on 3 bedroom, 2 bath starter homes using sales/rental data from July - Sept, 2019.
When these two performance metrics are put up against each other, you can use this info to find out which cities are best for building your rental real estate empire. Use these tips to take the next step...
Tip #1 - Work Smarter, Not Harder.
Seasoned investors know that time wasted is opportunity lost, so gain efficiency in your property search by using this data as a spotlight to focus your energy. If you only have a few hours each week to search for the right home, spend that time with your singular purpose in mind... finding winners.
Tip #2 - Get Picky.
Knowing what you want in a rental property starts with your highly refined investment goals. If you plan on managing the property yourself, then narrow your search to properties within 10 miles of your home. Maybe your plan involves rehabbing single-family homes into duplexes or buying homes with land that you can subdivide and sell for a profit... What are your goals?
Tip #3 - Look for The Second Source of Profit.
Year over year growth in value is how many of us gathered so much equity in our personal homes. We bought them for 200k, then 6 years later they were worth 300k. That's appreciation, the kind that turns into a big check if you ever decide to sell your home. Another great use of this data is finding areas that are poised for steady growth in value. The recipe for success that I mentioned earlier isn't just used for finding good rentals for immediate use, it also points us towards finding which cities will grow in value as they attract more and more home buyers.BONUS - Which Areas are Poised for a Big Value Jump?
A second use for this data is that it also gives us an inside look at the behaviors of renters vs. buyers (rental rate vs. housing cost). If the average home value in a city is relatively low but the rental rate is high (and rising steadily), this is our recipe for success. Renters are less picky than home buyers. One reason for this is because they may see their next home as a temporary housing solution. Compared to home buyers, they are less worried about their house being perfect and more concerned with meeting immediate needs, such as drive time and school ratings. Put yourself in the average renter's shoes to see that property value growth happens in stages. Renters first, then home buyers. Use indicators such as renter behavior data and rising rental rates as a precursor to future home value gains in each city.
Our work together is to make the data accessible and approachable, to see the human behavior behind the charts and percentages. Learn more about our investor services here and you will be able to focus your search to find the right property for your needs now... and the future.
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