HomeVestors and Local Market Monitor Ranking Reveals Best Markets to Invest in Rental Property
– Projected National Average Return Ticks Up from Q2 to Q3
– Ranking Shows Expected Performance of Single-Family Homes Maintained as Rental Properties
– No Other National Ranking Like This
THIRD QUARTER 2011 UPDATE – September 19, 2011 – (RealEstateRama) — HomeVestors of America, Inc., known as the “We Buy Ugly Houses®” company, and Local Market Monitor, Inc., a leading forecaster of real estate markets, today released the Third Quarter 2011 update of the “HomeVestors-Local Market Monitor Best Markets to Invest in Rental Property” ranking that was initially published in July. The ranking is intended to help inform real estate investors of current rental property investment opportunities based on their potential future relative returns. The ranking is updated quarterly.
HomeVestors and Local Market Monitor estimate that approximately 14% of single-family homes in the U.S. are maintained as rental properties. The companies believe there is no other regularly produced, reliable national ranking of the expected future performance of homes maintained as rental properties, which makes this ranking particularly useful to prospective investors.
Top 20 Markets, Commentary and Top 100 Markets Ranked
The “HomeVestors-Local Market Monitor Best Markets to Invest in Rental Property” ranking forecasts the expected performance of rental real estate properties, specifically single-family homes maintained as rental properties. The rankings show the extra return, or risk-return premium, that an investor must demand from rental property in a local market. The risk-return premium can be added to the regular capitalization rate to produce a risk-adjusted cap rate at full occupancy for a local market. Said another way, this is the same as the potential Future Relative Return. The ranking is calculated based on three-year forecasts of home prices (reflecting underlying home-price appreciation potential) and gross rents (as a proxy for potential investor cash flow).
For Q3, the national average risk-return premium is 5.4%. For Q2, it was 5.3%.
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HomeVestors-Local Market Monitor Best Markets to Invest in |
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Risk-Return Premium (+/-) Relative to 5.4% National Average |
| Las Vegas, Nevada | 1 | 1 | NA | +5.0% (above national average) |
| Detroit, Michigan | 2 | 2 | NA | +4.3% |
| Orlando, Florida | 3 | 4 | +1 | +3.1% |
| Warren, Michigan | 4 | 3 | -1 | +3.1% |
| Ft. Lauderdale, Florida | 5 | 8 | +3 | +2.9% |
| Bakersfield, California | 6 | 5 | -1 | +2.7% |
| Tampa-St. Petersburg, Fla. | 7 | 6 | -1 | +2.6% |
| Phoenix, Arizona | 8 | 7 | -1 | +2.5% |
| Stockton, California | 9 | 10 | +1 | +2.4% |
| West Palm Beach, Florida | 10 | 18 | +8 | +2.2% |
| Atlanta, Georgia | 11 | 16 | +5 | +2.1% |
| Bradenton-Sarasota, Florida | 12 | 11 | -1 | +2.1% |
| Rochester, New York | 13 | 9 | -4 | +2.0% |
| Fort Worth, Texas | 14 | 12 | -2 | +1.9% |
| Dallas, Texas | 15 | 13 | -2 | +1.8% |
| Syracuse, New York | 16 | 14 | -2 | +1.7% |
| Jacksonville, Florida | 17 | 20 | +3 | +1.7% |
| Fresno, California | 18 | 17 | -1 | +1.5% |
| Tucson, Arizona | 19 | 21 | +2 | +1.5% |
| Memphis, Tennessee | 20 | 27 | +7 | +1.4% |
Commenting on the local markets and the ranking overall, Ingo Winzer, president and founder of Local Market Monitor, Inc., said:
“A sharper than expected fall in recent home prices, which are down almost 5% in the last year, has led us to lower expectations for future prices. At the same time, however, higher inflation and slow but steady job growth should boost future rents. The desirability of investing in rental properties is therefore positive. In fact, the national average risk-return premium has ticked up ever so slightly from 5.3% to 5.4% since last quarter.”
“The Future Relative Returns for large markets suggest that Las Vegas and Detroit are still very risky, highly speculative markets that could have a big payoff only if the local economy rebounds faster than we expect. Safer but still advantageous markets include Dallas, Fort Worth and Atlanta. The most interesting markets are in Florida and Arizona, where home prices have still not bottomed out but rents will eventually be supported by renewed population growth; investors in these markets must take a long-term view but will be rewarded if they can tolerate high vacancies for a few years.”
David Hicks, co-president of HomeVestors of America, Inc., added: “What we’re seeing in the marketplace reinforces the results of the latest ranking. Our franchises in West Palm Beach, Atlanta, Phoenix, Dallas, Fort Worth and Tucson all report a marked increase in investor interest in rental property opportunities. Investors are recognizing the potential for homes in these markets to produce above-average financial returns.”
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HomeVestors-Local Market Monitor Best Markets to Invest in |
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Rank |
Market |
Risk-Return Premium (+/-) Relative to 5.4% National Average |
| 1 | Las Vegas, Nevada | +5.0% (above national average) |
| 2 | Detroit, Michigan | +4.3% |
| 3 | Orlando, Florida | +3.1% |
| 4 | Warren, Michigan | +3.1% |
| 5 | Ft. Lauderdale, Florida | +2.9% |
| 6 | Bakersfield, California | +2.7% |
| 7 | Tampa-St. Petersburg, Florida | +2.6% |
| 8 | Phoenix, Arizona | +2.5% |
| 9 | Stockton, California | +2.4% |
| 10 | West Palm Beach, Florida | +2.2% |
| 11 | Atlanta, Georgia | +2.1% |
| 12 | Bradenton-Sarasota, Florida | +2.1% |
| 13 | Rochester, New York | +2.0% |
| 14 | Fort Worth, Texas | +1.9% |
| 15 | Dallas, Texas | +1.8% |
| 16 | Syracuse, New York | +1.7% |
| 17 | Jacksonville, Florida | +1.7% |
| 18 | Fresno, California | +1.5% |
| 19 | Tucson, Arizona | +1.5% |
| 20 | Memphis, Tennessee | +1.4% |
| 21 | Wichita, Kansas | +1.4% |
| 22 | Riverside-San Bernardino, California | +1.3% |
| 23 | Grand Rapids, Michigan | +1.3% |
| 24 | Miami, Florida | +1.3% |
| 25 | Dayton, Ohio | +1.3% |
| 26 | Omaha, Nebraska | +1.2% |
| 27 | Houston, Texas | +1.2% |
| 28 | Sacramento, California | +1.2% |
| 29 | Tulsa, Oklahoma | +1.1% |
| 30 | Akron, Ohio | +1.0% |
| 31 | El Paso, Texas | +1.0% |
| 32 | Minneapolis-St. Paul, Minnesota | +1.0% |
| 33 | Austin, Texas | +1.0% |
| 34 | Cleveland, Ohio | +1.0% |
| 35 | Toledo, Ohio | +0.9% |
| 36 | Colorado Springs, Colorado | +0.8% |
| 37 | Kansas City, Missouri | +0.8% |
| 38 | Oklahoma City, Oklahoma | +0.8% |
| 39 | San Antonio, Texas | +0.7% |
| 40 | Buffalo, New York | +0.7% |
| 41 | Gary, Indiana | +0.7% |
| 42 | Camden, New Jersey | +0.6% |
| 43 | Columbia, South Carolina | +0.6% |
| 44 | Little Rock, Arkansas | +0.6% |
| 45 | New Haven, Connecticut | +0.6% |
| 46 | Edison, New Jersey | +0.5% |
| 47 | Columbus, Ohio | +0.5% |
| 48 | McAllen, Texas | +0.5% |
| 49 | Chicago, Illinois | +0.4% |
| 50 | St. Louis, Missouri | +0.4% |
| 51 | Albuquerque, New Mexico | +0.3% |
| 52 | Richmond, Virginia | +0.3% |
| 53 | Indianapolis, Indiana | +0.3% |
| 54 | Poughkeepsie, New York | +0.3% |
| 55 | Tacoma, Washington | +0.2% |
| 56 | Cincinnati, Ohio | +0.2% |
| 57 | Wilmington, Delaware | +0.2% |
| 58 | Denver, Colorado | +0.2% |
| 59 | Nashville, Tennessee | +0.2% |
| 60 | Greensboro, North Carolina | +0.2% |
| 61 | Albany, New York | +0.2% |
| 62 | Portland, Oregon | +0.2% |
| 63 | Allentown, Pennsylvania | +0.1% |
| 64 | Hartford, Connecticut | +0.1% |
| 65 | Pittsburgh, Pennsylvania | +0.1% |
| 66 | Baton Rouge, Louisiana | +0.1% |
| 67 | Raleigh, North Carolina | 0.0% (equivalent to national average of 5.4%) |
| 68 | Charlotte, North Carolina | 0.0% (equivalent to national average of 5.4%) |
| 69 | Springfield, Massachusetts | -0.1% (below national average) |
| 70 | Bridgeport, Connecticut | -0.1% |
| 71 | Virginia Beach, Virginia | -0.1% |
| 72 | Knoxville, Tennessee | -0.2% |
| 73 | Louisville, Kentucky | -0.2% |
| 74 | Birmingham, Alabama | -0.2% |
| 75 | Washington, DC | -0.2% |
| 76 | Philadelphia, Pennsylvania | -0.2% |
| 77 | Milwaukee, Wisconsin | -0.2% |
| 78 | New Orleans, Louisiana | -0.2% |
| 79 | Seattle, Washington | -0.3% |
| 80 | Salt Lake City, Utah | -0.4% |
| 81 | Baltimore, Maryland | -0.4% |
| 82 | San Diego, California | -0.4% |
| 83 | Oxnard, California | -0.5% |
| 84 | Boston, Massachusetts | -0.6% |
| 85 | Greenville, South Carolina | -0.6% |
| 86 | Worcester, Massachusetts | -0.6% |
| 87 | Charleston, South Carolina | -0.7% |
| 88 | Oakland, California | -0.7% |
| 89 | Lake County, Illinois | -0.8% |
| 90 | Providence, Rhode Island | -1.0% |
| 91 | Nassau-Suffolk, New York | -1.0% |
| 92 | Anaheim, California | -1.2% |
| 93 | Los Angeles, California | -1.3% |
| 94 | Peabody, Massachusetts | -1.4% |
| 95 | San Jose, California | -1.5% |
| 96 | Honolulu, Hawaii | -1.5% |
| 97 | Newark, New Jersey | -1.6% |
| 98 | Bethesda, Maryland | -1.7% |
| 99 | New York City, New York | -1.9% |
| 100 | San Francisco, California | -2.4% |
About HomeVestors
Dallas-based HomeVestors of America, Inc., the #1 buyer of houses in the U.S., was incorporated and began franchising in 1996. The first real estate franchise investment company, HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying older homes in need of repair, and updating or rehabbing them. Most commonly known as the “We Buy Ugly Houses” company, HomeVestors strives to make a positive impact in each community. In 2010, for the fifth consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction. For more information visit www.HomeVestors.com. HomeVestors has franchise opportunities available in 97 of the 100 markets listed on the current ranking. To learn more about the HomeVestors franchise, visit www.HomeVestorsFranchise.com.
About Local Market Monitor
Local Market Monitor, the premier real estate forecasting solution, offers investors in homes and home mortgages the local market risk intelligence they need to make informed decisions. Using a proprietary formula called the Equilibrium Home Price, Local Market Monitor determines if markets are currently over or under valued, equipping users with a long-term risk and investment perspective. Covering over 300 local markets, Local Market Monitor also presents key investors with a 12, 24 and 36-month home price forecast. The solution includes sorting capabilities allowing subscribers to view and compare real estate markets along various metrics, including an Investment Suitability Ratings to identify opportunities based on individual investing goals. To learn more visit www.LocalMarketMonitor.com or call 800-881-8653.
Media Contact
THIRD QUARTER 2011 UPDATE – September 19, 2011 – (RealEstateRama) — HomeVestors of America, Inc., known as the “We Buy Ugly Houses®” company, and Local Market Monitor, Inc., a leading forecaster of real estate markets, today released the Third Quarter 2011 update of the “HomeVestors-Local Market Monitor Best Markets to Invest in Rental Property” ranking that was initially published in July. The ranking is intended to help inform real estate investors of current rental property investment opportunities based on their potential future relative returns. The ranking is updated quarterly.
