These days, it seems like just about everyone is either getting into the real estate game or wistfully dreaming about it. The popularity of HGTV has made many folks believe they can pocket some serious cash renovating an old home and then reselling or renting it out for sweet, sweet profits. Easy!
But then there’s a pesky little thing we call “reality.” To truly make bank in the housing investment game, you need to pick your markets carefully—especially since profits just about everywhere are being squeezed by high home prices, a shortage of affordable older places for sale, and cutthroat competition from legions of buyers and fellow investors.
Realtor.com®’s bargain-happy economics team found America’s hottest real estate markets for investors, the cities where the highest percentages of home sales are for flipping or renting out, usually after a rehab. They tend to be more modestly priced cities in the Midwest and South, areas that have a larger selection of older, lower-priced homes, strong economies, and population growth creating demand for housing.
“Most of these midsized cities have strong job growth and lower home prices and a more relaxed lifestyle attracting millennials,” says Senior Economist George Ratiu of realtor.com.
Real estate investors purchased 7.7% of all homes in the second quarter of this year—a slight 0.6% bump from a year ago, according to a realtor.com analysis. (In June, about 3.7% of all home sales were flips.) Overall, that’s the most speculation the market has seen since the nation was still clawing its way out of the Great Recession in 2013.
“The return remains attractive,” says Ratiu. Flippers raked in a typical profit of $62,700—not including the money they poured into fixing up the property—in the second quarter of 2019, according to real estate information firm ATTOM Data Solutions. That typically translates to profits between 20% and 33% of the home’s value after repairs.
Our rankings looked at the number of investment home sales in the 100 largest metropolitan areas, which include the main city and surrounding towns and cities. We defined these purchases as ones with a corporate or nonindividual’s name on the deed (investors often buy property under company names; this does leave out some mom and pop investors). We also included flips, which were defined as homes that were sold and then resold within 12 months for a profit. OK? Ready, set, flip!
Source: Realtor.com | written by Clare Trapasso | October 14, 2019
https://www.realtor.com/news/trends/10-best-places-to-buy-investment-real-estate/
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