What is the best city to invest in rental housing in the U.S.?

Asked by Truenorth, Canada, KY Sun Oct 23, 2011

I am a Canadian investor looking to invest in rental housing - which of the ex-bubble cities should I invest in given rent to price ratios and other considerations? Thoughts anyone including realtors?

I am looking at Las Vegas, Phoenix, Orlando, Tampa, Jax etc. and having trouble deciding which is the best city to choose. Any advice would be well appreciated.

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Terry Bell’s answer
Terry Bell, Agent, Santa Rosa, CA
Sat Oct 29, 2011
How about a nice investment home in the wine Country of Sonoma County, Northern California! You'd have a great vacation shopping for homes, visiting to checkup on things, and probably the best appreciation on your dollar! Rental prices are strong here too! Our year round temperate climate is comfortable and it doesn't rain from June to October! Close to San Francisco and other commuting destinations! Best,
Terry Bell, Realtor, Santa Rosa, CA 95405
0 votes
DesignSlave, Home Buyer, 90077
Sun Aug 31, 2014
Not to be otherwise, but why have you asked people in Los Angeles, when it's not on one of the cities you're 'looking at'?
0 votes
Peter Oh, Agent, Los Angeles, CA
Wed Aug 28, 2013
Here are the numbers.

Year-over-year, Las Vegas and San Francisco were the only two cities to post gains of over 20% in June. Atlanta, Los Angeles, Phoenix and San Diego were all up more than 19% year over year.article on usa today.


Please let me know your thoughts
0 votes
Felix Hung, Agent, Huntington Beach, CA
Sat Oct 29, 2011

What are you looking to accomplish with this investment? Phoenix + Atlanta will give you better immediate cash flow but the best deals right now are in the most depressed markets. Places like California are great investments - not necessarily right for everyone. It really depends on your situation and your long term goals with this investment.

How long do you expect to keep this investment?
How much do you want to spend?
What is your exit strategy for this investment?

Some things to consider:

1. unemployment rate in that metro area
2. vacancy rates
3. supply/demand of housing
4. major employers in the area (where are the jobs coming from)
0 votes
Heather Paul, Agent, Santa Monica, CA
Fri Oct 28, 2011
Hello Truenorth, you will want to consider a few things when deciding where to invest in
1. Jobs-is there adequate jobs in the area
2. Location!
You are going to want to invest in an area that has a good supply of jobs so your property will be rented all the time, I would avoid areas such as Las Vegas, and many areas in Florida, they have both have a huge supply of properties available on the market, but little jobs. Vacancy rates are much higher. Overall, Los Angeles is an excellent place to purchase investment property and the rents will be much higher than all the other areas you are considering.

If you would like me to email you a list of good investment properties in the area, feel free to contact me anytime.
Have a great day,
Heather Paul, Realtor
Coldwell Banker
0 votes
Robert Chome…, , San Diego, CA
Mon Oct 24, 2011
I think all those cities are good choices. I especially like Phoenix and Orlando. Michael makes some great points. The cash flow is mush better in these cities than coastal California, but in Coastal CA you will always have stronger rental demand. The probably with Coastal CA is it is hard to line up a price to a rent. In Phoenix you can buy a SFR for $80k that is 5 yrs old and get $1,000 in rent. In Coastal CA you would have to buy a house that is 60+ years old in a sketchy neighborhood for $260,000 that may need $20k of fix up work before you rent it and get maybe $1,700 in rent.

I also like Riverside and San Bernardino County, they have similar price to rent ratios as Phoenix and Orlando.
0 votes
Sam Musallam, Agent, Northridge, CA
Mon Oct 24, 2011
Hi there, Las Vegas offers excellent ROI in today's investment market with many properties selling for less than what it would cost to build them new, and a pretty strong rental market. I am not familiar with the East Coast.

Best of luck.

Sam Musallam
Coldwell Banker
(818) 851-2425
0 votes
Angel J. Her…, Agent, Hawthorne, CA
Mon Oct 24, 2011
Los Angeles CAlifornia HAs always been a strong Reantal/residential market, now what is the rate oif return of your investment and how much initial capital are rady to use. You can call me direct at (310)704-4863
name is Angel J. Hernandez with Prudential California Realty, LIc .01320751
0 votes
Michael Cheng, Agent, San Jose, CA
Mon Oct 24, 2011
If you're looking to make money in rental housing, you'll have to follow the long-term trends, since you really make your money after 3-5 years. Currently, this country has an enormous population of aging retirees, about 46 million. Since the majority are on fixed incomes, e.g. Social Security, they prefer to spend less than $1K per month on rent. And, they tend to prefer warmer places to retire, since it keeps down the heating bills. So, you just have to find parts of the country that offer those combinations.

The reason those cities you listed shot up so much during the housing boom was partially based on investor anticipation of this trend. Unfortunately, they overpaid and got ahead of the actual trend by about 5 years. But today, any of those cities would make for great rental investing as prices have dropped by up to 70% while rents have remained stable. Seniors are now slowly making the move to those cities as their incomes allow. Some are delaying retirement in this slow economy. The key for you is to find properties with the right cash flow and return metrics. Cheap is good, but not good enough by itself.
Web Reference:  http://www.archershomes.com
0 votes
Jonathan Kim, Agent, Los Angeles, CA
Mon Oct 24, 2011
I think the best place is city of Los Angeles or City of Long Beach. It is very population dense and finding next tenant at market rent is very easy as putting a sign on the lawn. Vegas has very low price homes but if you can not rent it than you are losing opportunity cost on rent. Two bedroom one bath rent for average of $1100/month with less than 1000sf. need to buy in city of los angeles.
0 votes
Emily Knell, Agent, Huntington Beach, CA
Sun Oct 23, 2011
I have a condo for you in Las Vegas, only $47,000 (no this price is not missing a digit), rents for $750-800/mo. 3b condo 1190sqft, gated community, built in 1996, HOA is $138/mo. Cash preferred. As an out of country investor, I think any Conventional loan amount would be too low for lenders. (not 100% sure on that)

At the peak of the market this unit was selling for approx. $190K. Email me directly if you have any questions, I don't look back on this same Trulia thread for answers posted after mine.

Rents have increased significantly in Vegas, Phoenix & many of the areas that have been hit harder by foreclosures. People who get foreclosed on & short sellers, need to live somewhere & rents have increased.

562-430-3053 c
Realtor Since 1996
Main Street Realtors
0 votes
Blake Robbins, Both Buyer And Seller, Seattle, WA
Sun Oct 23, 2011
This article has outlined the Seattle/Tacoma area as one of the most solid, as well as up and coming markets in the nation! http://blogs.wsj.com/developments/2011/08/09/tacoma-seattle-…
Web Reference:  http://empower.ws
0 votes
Bud Zeller, Agent, Folsom, CA
Sun Oct 23, 2011
Consider the Sierra Foothills regions of Northern California!
0 votes
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