As housing prices continue to rise and wages remain stationary, homebuyers struggle to afford the houses that they want, which is bad news for first-time buyers in particular. However, investors are able to reap all of the benefits of this market, with it continuing to show strength and good return.
When looking into purchasing investment property, there are a number of considerations that you’ll need to make. For example, if you’re creating a retirement fund with an IRA account, it’s advisable to get advice from experts like the IRA Services Trust company first. But when it comes to finding the right investment property, one of the most important factors in choosing this is the location of it.
Getting the location right and investing your money in an area that continues to see growing house prices and a high number of homebuyers / renters will help to make sure your investment is worthwhile. To help you find the ideal location for your property purchase, we’ve put together some of the most sought after locations that provide the best return on investment.
This is one of the most thriving areas in the U.S. and this is largely down to the vast number of investors, second-home buyers and retirees that are purchasing property here. Because many of the properties are being purchased by this type of buyer it creates a volatile market and one that saw a drop during the economic downturn. With this now stabilizing, house prices are rising again and because vacationers and retirees are now returning to the area, they’re creating more demand for jobs, which provides a need for more rental housing for the workers.
In Orlando, investors received a 14.9 percent overall return on their investment during 2015, which is due to rental prices being higher than average. Tampa, Florida, has also been on the rise, with a 3.1 percent population growth rate over the last three years, according to the latest Census data. This has meant that investors in this area saw a 16.4 percent return on their investments.
Other popular locations in Florida include Cape Coral and Fort Lauderdale, with the highest average house prices being found in West Palm Beach, at $285,000. Tampa has the lowest average at $193,000 but has still seen the 9 to 14 percent rise in house prices that the rest of Florida has.
During the recession, Texas did also succumb to a dip, but a much shallower one than many other states, which has allowed it to bounce back quickly. A number of industries have grown rapidly in Texas, including technology in Austin and petrochemical construction in the Gulf Coast.
The three-year growth rates of populations in Texas have been above the national average of 2.3 percent, with 6.1 percent in San Antonio, 6.2 percent in Dallas and 9 percent in Austin. These figures indicate what demand there is for rental property in these areas and when coupled with the fact that house prices are still relatively cheap, despite being on the rise, it makes it a must-have location for investors. House price growth projections were 26 percent in San Antonio, 33 percent in Dallas and 27 percent in Austin. Average house prices are $201,000 in San Antonio; $211,000 in Dallas and $281,000 in Austin.
During 2015, investors were seeing a 20 percent return on investment, before expenses, due to this rise. Experts also predict that there are more upcoming cities in Texas, including Fort Worth and Houston. And, due to their lower than average pricing at present, these areas will continue to be a top investment location for quite some time yet. Experts believe they’ll remain a good investment until property prices become overpriced by approximately 20 percent.
Other areas providing a good return on investment include Denver (13.4 percent return), Miami (18.6 percent return), Atlanta (16.4 percent return), Detroit (16.2 percent return) and Las Vegas (15.3 percent return).
The Golden State remains absent from the top investment locations due to many areas, including Los Angeles and San Francisco, being overpriced and a dangerous investment due to having house prices that are higher than they should be by 30 percent.
Whatever your reasons are for investing in property, research and knowledge are key. Many people will have heard of someone who’s lost out on investment property in the past but with patience and a thorough understanding of locations and demand, great returns are available with these types of investments.
Edwin Blue President & Chief Executive Officer, Edwin earned his Ph.D. in Physics from UCLA. After employment with Lockheed Martin, General Electric, and Atomics International, he started an IT service company for banks and credit unions. In 1979, when IRA accounts became more available, Edwin recognized a unique need that his banking customers had when it came to servicing IRAs. He founded the IRA service company known today as IRA Services, Inc., and its trust-chartered entity, IRA Services Trust Company. Since IRA Services earlier years, Edwin has set an exemplary foundation for the rigorous system of assessment, strategy, and execution still used by his organization today.
It is good to see Detroit providing a good return.