Buying properties in places “where the prices are still low but with a lot of growth potential” is the key to investing in real estate. Forbes.com lists down this year’s best U.S. cities for real property investment in the article below:
Forth Worth-Arlington,Tex.
Buying a home can be a great investment, as investors gobbling up
properties over the last few years–when prices and mortgage rates were
at the bottom–well know. Now, with homes prices and rates ticking
steadily back up, investors are backing away from the market, leaving
more room for the rest of us.
Perhaps you fear you’ve missed the best time for buying housing.
Prices were low last year, but there are still deals to be had. The good
news is that less competition for housing and an overall less-crazed
market than in 2013, as I wrote about in
Housing Outlook 2014: 10 Predictions From The Experts, can
make for fairly decent timing for smaller-time investors. The key is to
buy where the prices are still low, in cities with a lot of growth
potential.
Whether you’re looking to get into a first home that you’ll live in
for a few years, or simply buy a fixer-upper that you can rent out right
away, there are still plenty of cities where your money is a fairly
safe bet. We teamed up with Local Market Monitor, which tracks home
prices and local economic factors in more than 300 housing markets, to
put together a list of the Best Buy Cities–the top 20 housing markets to
invest in for 2014. To come up with this list, Local Market Monitor
pulled data for the largest 100 metropolitan statistical areas (a
geographical designation used by the U.S. Census) with populations of at
least 575,000. From there, the choices were ranked primarily on four
factors: population, home prices, and the local jobs economy. Each of
our Best Buy Cities have high population and job growth, relatively low
home prices, and are still considered under-valued (although in every
case except Virginia Beach-Norfolk, Va., home prices have gone up). This
makes them fairly low-risk investment opportunities for buyers who are
smart and know not to overpay.
Forth Worth,Tex.
The key to coming up with this list is a proprietary measure that
Local Market Monitor dubs the “Equilibrium Home Price.” Basically, it
tracks what the average price for a market should be, if speculation,
weird distortions in local income, and other factors (like the housing
collapse) weren’t present in the market. The measure presumes that
prices will eventually return to this level. When homes are far under
the equilibrium price, investors are getting a good buy and can expect
to make a good return. The other important consideration for investors
is, of course, a healthy local economy. After all, there is zero point
in purchasing a home in a market where the population is fleeing. That’s
why Best Buy Cities are places where opportunities are growing.
“We are at a stage in the economic cycle where job growth–and demand
for housing–is accelerating in some markets,” says Ingo Winzer, founder
of Local Market Monitor. “The types of jobs created are often
lower-paying, most suitable for renters, younger people who are willing
to move from somewhere else and who don’t want to own a house right now
but might have a young family and would like to rent one.”
Fort Worth-Arlington, Tex., and Dallas-Plano-Irving, Tex., top the
list of our Best Buy Cities, at No. 1 and No. 2, respectively. Both
cities offer homes that would be within reach for middle-class
Americans, at $168,383 in Fort Worth-Arlington and $180,645 in greater
Dallas. Prices in greater Fort Worth are considered 20% below their
actual value, according to Local Market Monitor. Homes in the greater
Dallas region are 12% down, so less off, but they are expected to rise
more–29%–over the next three years.
Dallas-Plano-Irving,Tex.
For buyers who intend to rent out their homes, the populations in
these cities are growing at a healthy clip: from 2009 to 2012, at 4.9%
in Fort Worth and 6.1% in Dallas. At that rate, Dallas is tied for the
fastest-growing city on the Best Buy Cities list. It’s ranked fifth in
terms of job growth, at 3% as of the latest Bureau of Labor Statistics
stats. Driving the demand are companies like Dallas’s One Technologies,
LP, an online credit monitoring marketing service that was ranked the
fastest-growing private company in the area by the
Dallas Business Journal.
“The total eventual returns may be higher in markets that are still
under-priced right now–that’s why those are higher in the rankings–but
the rental returns should be good in all of them,” Winzer says. “I
particularly like the investment markets in Texas and Oklahoma, with
their low unemployment rates and ability to profit for years from new
shale oil and gas development.”
Trinitas Partners is a private equity investment company specializing in real properties. Learn more about real property investment on this website.
