There was a strong run-up in home sale prices last year, in part due to a lot of institutional investing in foreclosed properties. Many investors are wondering what's next, as this boom has slowed down in many markets.
According to Realty Trac, the top five U.S. markets for average return on investment in residential rentals are Detroit, Michigan; Atlanta, Georgia; Greenville, Mississippi; Macon, Georgia and Baltimore, Maryland. The bottom five U.S. markets are New York City/Long Island; Edwards, Colorado; San Francisco/Oakland, California; Bozeman, Montana and Nashville, Tennessee.
Kathy Fettke, CEO of Real Wealth Network in Northern California, says that in high-priced markets, the cost of real estate is high and the rents are low. In high-priced coastal markets, such as San Francisco and New York, she says you're better off renting. She tells her investors not to invest in rentals in these areas and instead, buy in cash flow states where the prices haven't yet peaked to give them appreciation and cash flow.
In parts of California, the expansion phase is just beginning so there is a shortage of housing, Fettke says, with a stronger economy and population growth. "It is a good time to be building and that's how we're making money in California," she says.
Alan Langston, Director of the largest REIA in the U.S., based in Phoenix, Arizona, disagrees with the Arizona Republic, who says that single-family properties are no longer a good investment. He says that the Phoenix rental market is a strong one, with a lot of demand and low vacancy rate of currently less than 4%. Property can be acquired with a cap rate return that most people who find good, almost 35 times the return you would get by keeping your money in a money market account.
This real estate market update was provided by Alternative Investing News, providing online alternative investing video news content. Alternative Investing News is a featured network of Sequence Media Group. This video was brought to you by Vantage Self-Directed Retirement Plans.