Top 10 Places to Invest in Real Estate



Location, location, location. As you look for investment opportunities in 2014, take a moment to look beyond your local market. By doing so, you have the opportunity to make double digit returns on your investments.

For instance, take a look at Wichita Falls, Texas. It’s an oil town with money. But more than that, nearby Sheppard Air Force Base provides a steady stream of renters. In this expansive prairie region of Texas, home prices are cheap with a median cost of $84,000, according to RealtyTrac. A 1,700 square foot house recently listed for $89,900. Houses that size easily rent for $1,000 or more. The average return on investment in this region is 13.4%. Are you making anything near that where you are?

In Lubbock, Texas, you’ll find 2,100 square foot homes again being rented to oil workers and in this case to college students that are delivering an 11.8% return on an average investment of $111,000. The point is the economy in Texas never did go south and you should be investing where the money is.

© pogonici - Fotolia.com

© pogonici – Fotolia.com

College towns almost always make a good investment. Syracuse, N.Y. is a good example where you can expect a 10.9% return on your average investment of $120,000. That’s about $90,000 below the national average.

Very close behind Syracuse is Oklahoma City where houses are a touch more expensive but average rents are approaching $1,200. Here you can expect a 10.8% return on your rental investment. These are newer houses built around 2009 requiring very little maintenance.

Fifth on the list is Ithaca, N.Y. At an average cost of $180,000, house prices are approaching the national average but rents are topping out at over $1,600. Leaving investors with the expectation of a 10.7% return on investment.

Back in Texas, you want to take a close look at the Austin region. The fact that the average cost of a house drops to $158,000 and rents dip to $1,400 still means you make an annual return on your investment of 10.7%. We’re talking about large houses in the range of 2,400 square feet in the heart of Dell Computer headquarters country.

There is a trend here because coming in at seventh is back in city of Rochester, New York. Here, 1,200 square foot houses are going for about $122,000 and renting for more than $1,000. That leaves you, as an investor, with an annual return of 10.3%.

Moving to another region of the country, you’ll find that you can invest in an immaculate brick ranch house on a half-acre lot for less than $145,000. It will rent for close to $1,300 to deliver a return of 10.2%. Still in the double digits.

A little further south, in Gainesville, Florida, you’ll find nice homes with in-ground pools selling for $139,000 and renting for close to $1,200. Giving you a 10.1% return on your investment.

Rounding out the list at number 10 is Schenectady, New York. Here you’ll find a wide variety of investment opportunities. You can buy a small house needing a little rehab for as little as $20,000. However, the average home price is about $153,000 that rents for close to $1,300. At this point, your rate of return is barely 10% but this is home to General Electric and offers plenty of renters to keep your investment constantly delivering a paycheck.

By no means is this list exhaustive. You can very likely find better deals in other cities and towns. The main point is that now is a time of opportunity and should be a time when you expand you investment horizon.

PhotoAuthor bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.

Comments

  1. You need to include your method of calculating ROI. I suggest a factor of 35 % off the gross rents to account for PM, vacancy, capital improvement, and repair before subtracting out operating costs. 153k purchase with 1300 in rents is not a 10% return. I would not pay more than 75k for that rent rate…

    • Brian Kline says:

      Hi Mark,
      Thanks for the comment. I agree with your thought but not so much your numbers. 35% seems like an excessive amount for professional management. Since this would be a rental instead of a flip, the capital improvements should be the same as repairs. But I do agree there’s not much profit margin if you fully finance a $153K house and only collect $1,300 in rent.
      Brian

  2. You have any data for this?

    • Brian Kline says:

      Hi Kenny,
      Much of the data in the article came from research of recent information provided by RealtyTrac. I do believe it to be accurate. I hope you found the article useful.

      Sincerely,
      Brian Kline