10 rental market with the worst return.

"Skip California and head to Florida ? that is, if you want to buy a single-family home and rent it out for profit.

According to a study released Thursday by RealtyTrac, if you want to make hefty profits in the rental market, you?d better steer clear of buying properties in certain areas of the country. Of the 10 counties with the worst rental returns, five were in California and three in New York.

Meanwhile a number of markets in Florida and Georgia have high gross annual rental yields at 20% and above. In many of these markets, you?ll find ?the perfect storm for buying rental property,? says Blomquist, as home prices are still recovering in the area (which means you can still buy real estate cheaply), and there?s strong rental demand, as many people who were foreclosed upon are now renting themselves and retirees are flocking to these areas (many of whom rent before buying)."
http://www.marketwatch.com/story/10-rental-markets-with-the-worst-returns-2014-10-02


There is a chart of the worst and best return rental market. Edgecombe, NC has an annual gross yield of 41.57%

Once you factor in higher property tax and additional insurances to cover fire, flood, wind & hurricane in Florida, California ROI probably will look better. 

eyephone said:

Meanwhile a number of markets in Florida and Georgia have high gross annual rental yields at 20% and above.

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Johns Creek FTW!

iHeartIrvine said:

Once you factor in higher property tax and additional insurances to cover fire, flood, wind & hurricane in Florida, California ROI probably will look better.

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I think your missing the point. Markets with high home prices, makes it hard to get enough money in it to cover the mortgage.

Example: Tampa Florida. According to Zillow the median home prices in Tampa is $133k. With 20 percent down, your mortgage payment is $710 (including tax and insurance using zillow mortgage calculator). The average rental list price is $1,200 in Tampa using Zillow.

Hi Eyephone,

Great post on the rental market. Attached is map of all the Adjusted Gross Yield by County. This AGY cap rate is calculated by (rent x 12)/ purchase price). Imagine that every county in the nation is like a mid-cap stock that has both capital appreciation potential and  high dividend payments. You ideally want to look for both when acquiring an investment property.
http://www.realtytrac.com/content/n...orst-markets-for-rental-returns-heat-map-8023

http://www.cnbc.com/2015/06/24/americas-top-states-for-business.html

I am someone who believes that appreciation can be predicted in real estate by studying demographics. Above is the link for the best states for business. You want to look at population growth, job growth, good school, Asian migration patterns, tax friendly state. Texas is ranked #2 while Colorado is ranked #4 for the best states for business. You can see that the Dallas and Denver housing market is already make new highs surpassing the 2006-2007 peak before the crash levels.


Case Shiller : Dallas Housing Index


Case Shiller: Denver Housing Index

Over the past 12 months, Denver (10.3%), San Francisco (10%) , and Dallas (8.8%) have appreciated the most.

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Panda said:

Hi Eyephone,

Great post on the rental market. Attached is map of all the Adjusted Gross Yield by County. This AGY cap rate is calculated by (rent x 12)/ purchase price). Imagine that every county in the nation is like a mid-cap stock that has both capital appreciation potential and  high dividend payments. You ideally want to look for both when acquiring an investment property.
http://www.realtytrac.com/content/n...orst-markets-for-rental-returns-heat-map-8023

Click to expand...

Thanks for the link.

Three markets in Georgia in top 20 for best market rental return.

Eyephone, I thought you would find the chart below to be of interest. This chart shows the appreciation data for Atlanta metro, Los Angeles metro and S&P 500.

It is interesting to see Atlanta's appreciation mirror similarly to that of Los Angeles after the crash from 2012. One may see the data below and think that S&P500 has outperformed both the Atlanta and Los Angeles housing index over the long term horizon. However we need to keep in mind that the appreciation data below is assuming no leverage. If you are putting down 25% on your investment property, your appreciation should multiplied by 4. What is also not represented here is cash flow, amortization, and depreciation tax benefits of owning property investments vs stocks.

eyephone said:

Panda said:

Hi Eyephone,

Great post on the rental market. Attached is map of all the Adjusted Gross Yield by County. This AGY cap rate is calculated by (rent x 12)/ purchase price). Imagine that every county in the nation is like a mid-cap stock that has both capital appreciation potential and  high dividend payments. You ideally want to look for both when acquiring an investment property.
http://www.realtytrac.com/content/n...orst-markets-for-rental-returns-heat-map-8023

Click to expand...

Thanks for the link.

Three markets in Georgia in top 20 for best market rental return.

Click to expand...

Panda said:

Hi Eyephone,

Great post on the rental market. Attached is map of all the Adjusted Gross Yield by County. This AGY cap rate is calculated by (rent x 12)/ purchase price). Imagine that every county in the nation is like a mid-cap stock that has both capital appreciation potential and  high dividend payments. You ideally want to look for both when acquiring an investment property.
http://www.realtytrac.com/content/n...orst-markets-for-rental-returns-heat-map-8023

Click to expand...

We think alike. Are you financial planner or something? I m not, for the record.