Real Estate as Investment Part III: Top Cities for Renters

Nothing is truer than the cliched catchphrase”Real Estate is all about location, location, location”. And in no case is this more valid than when you’re investing in rental properties. Some states, regions and even specific neighborhoods are more ‘rentable’ than others and before you drop even a dime on a downpayment you need to know where they are.

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A recently released report from RentCafe.com ranked 150 cities where rental properties are in the highest demand. Three of the top 30 are right here in Arizona, within the Phoenix Valley area to be more specific.

Real Estate can be an investment in so many ways. The 5 of the most common Real Estate investments are:

Your primary or principal residence The home that you occupy for the majority of the year is for many of us, the most familiar form of investment in Real Estate. As you build equity over time or by virtue of market conditions, your investment grows.
Second homes or a vacation property is one that is used primarily by you periodically. With no income from rental or lease, your profit will rely solely on the accumulation of equity.
REITs or Real Estate Investment Trusts provide a way to invest in Real Estate without actually possessing physical property. This can be held in a Real Estate IRA as discussed in a previous blog, or as a limited partnership (RELP). Similarly, there are crowdfunding opportunities aimed more at investing in specific Real Estate development projects.
Flipping has become one of the more popular methods of Real Estate investment in recent years. In this scenario, you are not concerned with holding the property or building equity but instead, remodeling and reselling as quickly as possible. Market conditions do come into play here but because this is done in a most expedient way, circumstances at the points of purchase and resale are usually similar.
Rental properties, whether one or many, short-term or long, rental properties can be a great source of passive income in addition to the accumulation of capital from a future sale. You can self-manage or hire a property manager for a more hands-off approach. Renting a portion of your primary residence can also be a source of income to offset living expenses for your own home, however there may be tax implications so be sure to check with your accountant.

Home prices would appear be at a peak and it’s possible that low mortgage rates are nevermore. In light of our present Real Estate market environment, there is a monumental demand for rentals here in Arizona, indeed throughout the country.

According to RentCafe’s recent report Chandler, Gilbert and Peoria are the top three Arizona cities attracting the largest number of renters, due in part to growing job opportunities. All three “best cities” increased their ranking over just the past 3 months as many Phoenix suburbs are gaining popularity with renters. Phoenix itself ranked 38 out of the 150 cities included in the survey.

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