Property investors who are exploring new markets look for growth and potential. These budding markets might not be as easy to pinpoint as an already thriving market, but certain measurements can indicate an opportunity. Numbers for population growth, low unemployment rates, and below average sale prices should all draw attention from investors. Beyond the states, there are other points to consider: ease of purchase, taxes, and accessibility. To jumpstart the search, check out the markets listed below, which are all gaining momentum in 2018.
Experts are saying 2018 will be steady for the US housing market. Rental property investments in hot markets are to remain affordable while rent prices slowly climb, the ideal climate for investors.
Population and job growth are both on the rise in the Dallas-Fort Worth metro area. The metro, made up 12 counties, is home to about 6 million people. It’s split into north and south Dallas, with the north market being more established while the south market is at the beginning of an exciting revitalization. Dallas turnkey rental properties are an exciting market that is growing in 2018!
In Dallas, the unemployment rate closed October 2017 at 3.0, far below the national rate at 4.1, according to the Bureau of Labor Statistics. It’s an attractive landing place for large corporations due to the lack of income tax and easy access to interstates and international airports. The median list price (now $315,000) increased by 6.1 percent from 2016 to 2017 at year-end, and rent prices are steadily rising with an average of $1,650.
This mountain city is drawing transplants in like a super magnet. The Denver Business Journal ranked Colorado as the no. 1 for job opportunities. The population sits close to 2.8 million residents and is expected to grow to 3.3 million by 2020, according to the Economic Development Corporation, Metro Denver.
Denver supports an active lifestyle with hiking, biking, trail running and plenty of health food stores and restaurants to match. Families seek the Denver area for its proximity to downtown – most neighborhoods are only a 15-minute drive. Housing prices are moving upward and show a 4.8 percent increase in median list price 2016 to 2017. Rent prices are nearing the $2,000 average mark as unemployment rate reaches 2.1 by the end of 2017.
Also referred to as “the Golden City” or “the City by the Bay,” San Francisco jams a lot of life into 49 square miles. The Golden Gate Bridge, North Beach, and the original Chinatown are prideful parts of the city, and the metro area expands beyond this core into 12 counties. The geography of the metro doesn’t allow for a lot of expansion, but rather repurposing and innovation. Technology jobs are dominating the employment sector, bringing the unemployment rate to 3.0 percent.
The cost of living in San Francisco is higher than the average US city, yes, but many residents lead a not-so-average lifestyle. More residents are likely to use public transit or bike than own a car; although it attracts millennials, the leading age group is 45 to 60 years old; home ownership is around 53 percent, nearly 10 percent less than the national average. The city offers a unique opportunity for investors who are looking for long-term investments, especially in lower cost counties like Solano and Alameda.
A classic rust-belt city, St. Louis is proving to keep up with the times. It ranked in the top 20 for small business growth last year, according to stats from Paychex. It’s a go-to destination for educated millennials, which made up one-third of the core city’s population growth between 2010 and 2015. Although the suburbs of the St. Louis metro area aren’t growing as quickly, real estate opportunity is waiting there, too.
The metro has a tight housing market and a high homeownership population (about 68 percent). If investors can buy low, renovate and offer competitive rent, they will see quick and profitable occupancy. The median vacancy rate for 2017 in St. Louis landed at 8.1 percent, the lowest in more than a decade. Unemployment bumped to 2.7 percent by the end of 2017; education and health services, business, trade, and manufacturing sectors lead the way.
For the investor who wants to establish properties outside of the US, the options can seem overwhelming. International investment properties are typically vacation homes and require a team that handles maintenance and guest turnovers. So when looking for a property, the investor also needs to seek a qualified property management company. Most vacation rentals are located on warm beaches, like in Placencia, Belize, while others offer an urban adventure.
White sand beaches, private islands, natural wonders and ancient ruins attract vacationers time and time again. With 2-hour direct flights from Dallas and Miami, it’s an accessible location. Most residents speak English; the currency exchange is $1 US to $2 BZ; passports are a must, but visas are not required for citizens of the US and Canada.
There are no restrictions for foreign property investors, and if owners register with the Central Bank of Belize, 100 percent of the profits can be sent home – in other words, no capital gains tax. List prices are relatively low, providing quite the cushion for profit. In Belize, there’s also an opportunity to own property through fractional ownership. When focusing on locations, investors should consider southern areas of Belize, like Placencia, where tourism is quieter and thriving. Placencia is also the site for the new international airport. To learn more about the perks of investing in Belize, check out this rundown here.
This South American nation lost traction in the investment world a few decades ago when drugs governed the land. But in the last ten years, Colombia found its color again. Because most investors aren’t looking here anymore, the prices are dramatically lower than they should be. Stable population growth of the middle class, a favorable exchange rate, and high employment in technology jobs are all driving the economy to greener pastures. The World Travel Tourism Council expects investment properties to grow 4 percent annually through the next ten years. There are no purchasing restrictions for foreigners. If an investor is buying a higher-end property, a permanent residence card comes with it.
South of San Diego, the Mexican city of Tijuana, Baja is a much more affordable place to live. On average, 135,000 people cross the border daily for work. Manufacturing, startups, and tech jobs are fueling job growth – Baja maintains a 3.0 unemployment rate. On the real estate side, oceanfront vacation homes are priced at a 10-year-low. US investors should be familiar with the term “fideicomiso,” meaning bank trust. Purchasing laws in Mexico allow foreign investors to use this bank trust to purchase coastal properties as a loophole to the Mexican Constitution that states such land is for domestic owners only. There is an annual fee of about $600 to keep it going, and the property owner can do anything he or she wants to the property as an owner would. Tijuana ranked No. 8 on The New York Times list of must-visit places in the world with its flourishing culinary scene.
Cash flow, capital, and property appreciation are a package deal with down-under property investments. Urban housing is prospering, but the suburbs have the most action regarding market growth. The prices in these areas are lower, but the connectivity to the city center is strong. New infrastructure and high employment add to the city’s success. In 2017, the vacancy rate for rentals hit 2.1 percent by the end of 2017. Median home values bumped 38 percent during 2017, yet are still largely affordable. Melbourne was named the most livable city by The Economist Group magazine (Nov. 2017). It’s year-round sunshine, highly rated schools, proximity to nature and outdoor recreation position this mid-sized city as one of the top places to invest.
Real Estate Investing for 2018
Real estate investments are a lucrative and passive way to flip the cash-flow switch. With American Real Estate Investments, investors get a team of experienced professionals that streamline the entire purchasing process and follow through with a qualified management company. Streamlined property ownership maximizes profit in hot markets, like the ones listed above. To find out more about owning high-end, luxury rental or vacation homes, book with an AREI consultant today.