Because so many real estate investors seek to buy local properties that they can easily manage, those real estate investors who are willing to go where the best returns are can enjoy some significant advantages. In a country as large and diverse as the United States, there are some genuinely great opportunities for investors who are willing to follow the money.
What makes a good market for real estate investing?
There are a number of characteristics that almost all good markets for real estate investing share. These characteristics can be divided into primary and secondary categories. Primary characteristics of good real estate markets for investors are a high rental yield, a high rate of increase in real estate prices, solid employment growth and sold population growth. Secondary characteristics, which always affect the first group, are things like the quality of public schools, crime, property taxes and the fiscal responsibility of state and local government, including their treatment towards small business.
With that in mind, here are some of the top real estate markets for those seeking to invest in income-producing properties.
Orlando is on a hot streak. The city is experiencing year-over-year population growth of 2.47 percent and employment growth of nearly 4 percent, making it one of the fastest-growing economies of any city in the country. At the same time, rental yields of 5.97 percent and home appreciation of 12 percent mean that investors there are netting an incredible 18 percent per year.
St. Petersburg, Florida
Like other Florida cities, St. Petersburg benefits from low property taxes, no state income tax and a generally favorable business climate. It is also running at 4 percent employment growth, one of the highest in the country.
Also, real estate investors in the city are currently making 6.6 percent per year on their rental incomes while enjoying appreciation of nearly 15 percent, making St. Petersburg one of the most promising destinations in the country for real estate investment dollars.
Although most real estate investment experts would advise staying away from areas with declining populations, Cleveland is a notable exception. The lakefront city posted an incredible 15 percent average rental yield and 13.3 percent increase in home values, meaning Cleveland-based real estate investors realized a nearly 30 percent return on capital last year alone.