Dallas emerged as the best place for real estate investors to buy a rental property in the U.S, according to a HomeUnion analysis.
The online residential property management firm named the city as the best place among the top 13 cities in the U.S., which are expected to outperform other markets through 2017.
Residential real estate acquisitions have long been a common way for investors to receive a lucrative return for their money, although recent figures suggest that it is not always the case. A typical home only provided a 0.17% inflation-adjusted return between 1890 and 2012.
For those with investments in the stock market over the same period, the return on investment amounted to 6.27%. This growth should not convince you to shun real estate entirely and put your money in the stock market instead.
Rental property in Dallas, for instance, provides a 5.6% annual return after operating costs, including taxes, insurance and maintenance. The median investment price in the city amounts to $199,300 with a mortgage payment of $856.
The median rent worth $1,630 would likely cover the mortgage, which is one reason why investing in rental properties is a good option.
Demand for rental properties in the U.S. has been on the rise, as evidenced by the higher number of households that rent today compared to any time in the last 50 years, according to a Pew Research Center analysis.
Many Americans have now realized that leasing a property could be more beneficial than buying a home, as it rules out the need for them pay home insurance and real estate taxes.
For investors, some multifamily lending companies such as Bonneville Multifamily Capital offer attractive rates to lure new clients. The growing rental population has caused tighter competition for lenders to provide the best deal for builders, which are interested in dabbling with rental assets.
Rental properties make more sense, only if you know that the market’s location aligns with your investment objectives.