The economy is rebounding and the real estate market is beginning to recover, but home prices are still low enough to make it easy for those with good credit to be able to buy. In addition, many families who lost their homes to foreclosure are looking for houses in good neighborhoods with affordable rents. It is the perfect formula for purchasing an investment property or two and renting it out for a profit.
Before jumping into the landlord business, investors need to consider the first rule of real estate: Location, Location, Location. While there are opportunities in most markets to snap up foreclosed or devalued single-family homes that can be rented out for a tidy profit, some areas are riper for the picking than others. The goal is to find a market, or neighborhood, that has a low enough purchase price and a high enough rental interest so that the rent charged more than covers the mortgage payment, taxes, insurance, and maintenance of the property.
According to RealtyTrac, corporate investors such as banks and real estate firms are buying up thousands of these homes across the country. However, there are still some markets that are open to individual investors and provide “the best chance to buy rental homes that generate good cash flow.”
Florida appears to be one of the best places to invest in rental properties for single families. No less than eight cities or metropolitan areas make the list of top 20 markets for investment properties. In addition to large cities like Tampa and Orlando, investors should investigate opportunities in towns like Ocala, Deltona, Palm Bay, Jacksonville, Lakeland, and Port St. Lucie.
Michigan, Missouri, and Ohio are good bets in the Midwest. Each of these states had two cities make the top 20. Both Saginaw and Detroit offer prime Michigan opportunities while Missouri investors should look at Springfield and Kansas City. In Ohio the top cities are Toledo and Dayton.
Other cities in the top 20 represent the Southern and the Western United States. Memphis (TN), Austin (TX) and Atlanta (GA) are rife with profitable rental opportunities as are Las Vegas (NV), Phoenix (AZ), and Ogden (UT).