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If you are taking a closer look at real estate investing as an alternative to investing in stocks, bonds and mutual funds, you are not alone. The fact is that real estate investing can be highly lucrative due to factors such as asset appreciation, cash flow, tax benefits and more. As with all types of investment options, there are risks and challenges associated with real estate investing, but the rewards for making sound investment decisions in real estate can be considerable. One of the most important steps to take to position yourself for success with real estate investing involves selecting the right property in the right market. It may be true that managing an investment property located close to your home may be easier to do, the fact is that the best markets for real estate investments may not be in your own backyard. In fact, you may consider taking a closer look at these top four best places to invest in real estate as a first step toward finding your next investment opportunity.
#4) Memphis, Tennessee
Memphis real estate is priced relatively low compared to other areas of the country, and the median list price per square foot of residential properties in the metropolitan area is approximately $50 per square foot. Current values reflects close to a three percent increase over the last year, and housing prices are expect to increase as much as two percent in the coming year. In addition, rents are relatively affordable, making the rental market strong.
#3) Kansas City, Missouri
Likewise, real estate in the Kansas City metropolitan area is relatively affordable. The median list price of residential property in the area is $112,900, and rents are also relatively affordable. In addition, investors may be able to take advantage of foreclosure deals when investing in real estate here. Approximately five percent of mortgages in Kansas City are delinquent, so you may be able to purchase a foreclosed property from a bank or make a lower-than-asking price offer to a seller who is distressed.
#2) Jackson, Mississippi
You may also be able to find a great deal on an investment property in the Jackson metropolitan area. This is because the residential housing prices declined by almost three percent over the last year, and the median home value is only about $61,900. However, residential home values are expected to rise by approximately one percent within the next year. In addition, rental rates here are affordable for consumers, meaning that the rental market may remain strong in the coming years.
#1) Birmingham, Alabama
Birmingham may be a prime market for real estate investors to consider looking at. Residential real estate prices here are affordable, with the median price per square foot for listings at $51. The home values are expected to appreciate by over two percent within the next year, and the rental rates are affordable for consumers. In addition, it is estimate that approximately 32 percent of Birmingham homeowners are behind on their mortgages, and this creates excellent opportunities for investors looking for a great deal. It also means that the rental market may continue to be strong in the coming years.
Looking Beyond the Market
While learning more about the best places to invest in real estate is a great step to take before you invest in real estate, the fact is that the market conditions are only one factor to consider. Once you have decided which market you want to invest in, you also need to find the right property to purchase within the market. Understanding real estate investing fundamentals is a great step to take to make a sound investment decision. For example, you want to analyze cash flow metrics like the rent-to-price ratio. Each property that you look at will have a different cash flow with varying expenses and income.
When you invest in real estate, you can benefit from long-term appreciation as well as regular cash flow from the property. However, your overall return on investment will be based on numerous factors that all must be carefully reviewed and analyzed by an investor. Selecting the right market to invest in may require you to look out of state, but you also want to consider other factors specific to the actual property before you settle on a specific property. While it can take some time to find the right property for you to invest in, your time and effort spent in this area may be well-rewarded with a lucrative return on your investment.