The Best Markets For Investing In Single Family Homes Right Now

 

There is more to buying real estate than finding a home to live in. Investing in real estate has become popular recently, even though this type of investment is a bit more complicated than investing in bonds or stocks.

Why Genesee County?

Interestingly enough, Genesee County is an excellent choice if you are seeking to purchasse real estate. According to RealtyTrac, a housing data firm based in Irvin,Genesee County is No. 1 when it comes to single-family home growth markets. How is it possible for a place with lead contamination problem (Flint water crisis) to become a good rental market?

RealtyTrac analyzed counties with wage growth of at least 5% and rated counties based on their annual return. With low home sale prices, in Genesee County rents are still relatively high which is partially due to financial subsidies by the government. In the first quarter of 2016 in Genesee County, the average home sales price was $80,000 with an average of $1,018 per month. That means an annual gross revenue of 15.3% which is the highest revenue rate among 448 counties analyzed by RealtyTrac.

The calculation is simple, however there are factors which are difficult to calculate. An investor who pays $80,000 for a real estate gets $12,216 within a year.  15.3% of the cost of buying the real estate will be paid off fairly quickly. However, there are expenses to have in mind as you are investing in real estate; property maintenance, taxes, insurance, including the risk of overdue rents, safety, pest control, etc. In the best case scenario, the homeowner sets the price that can cover all of the costs, but landlords usually try to cover the monthly payment until the mortgage has been paid off, when most of the rent becomes profit.

What Is Important To Consider?

When it comes to renting single-family homes, it is necessary that we take into account what kind of tenants will be interested in it (income stability), neighborhood safety and how desirable is the location (and rent). On the other hand, after purchasing the first real estate and paying it off, purchasing the second one is twice as easy as the first one, as the homeowner can use the rent from the first and second home to pay off the second mortgage relatively quickly.

According to Daren Blomquist, senior vice president of RealtyTrac, “There’s going to be higher expenses in certain markets. The cost of collecting the rent, that can be tougher in some areas than others. You’re going to have higher delinquency rates in some areas versus others. The cost of vacancy is another big one. And just in general, turnover–some areas have much higher areas than others.” He also said that around 40% of gross revenue will cover the expenses. Comparing potential rent to the purchase price of the real estate can give review of cost-benefit ratio: http://www.reuters.com/

Given all this, investing in real estate in Genesee County seems to be a good idea nowadays.

 

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