Top USA Markets for Buying Rental Property

I was just taking a look at a couple of properties in Zillow and found it interesting how big the real estate tax bite can be. I have 2 rental properties and the real estate tax cost is 15% and 12% of the rental income. At least for my area Zillow underestimate rent rates (the vacancy rate is very low and properties in general rent within days or weeks – at rates 10%+ higher than Zillow estimates on average -based on my very limited sample of just what I happen to notice).

The extremely low interest rate environment created by the too big to fail financial institution bailouts has severely harmed savers. Most severely harmed those in retirement that didn’t count on irresponsibly regulators and bankers creating a situation where to avoid a depression they had to punish savers to favor large banks (and others).

The national occupancy climbed 110 basis points during the year, and effective rents jumped 4.7% according MPF Research. Occupancy rates increased to 94.6% at the end of 2011, up from 93.5% a year ago and from 91.8% when the occupancy rates bottomed in late 2009. MPF Research predicts occupancy rates to increase another 50 basis points, and rents to rise 4.5%.

On the surface, it seems out of kilter: a U.S.-headquartered real estate manager raising capital from Canadian pension funds and using the proceeds to invest in Canadian real estate assets. But that’s the state of play at the Canadian arm of LaSalle Investment Management, a Chicago-based global firm that has been engaged in the process of raising investment dollars from Canadian institutions, spending them and then harvesting the investments for more than a decade.

Large corporate investors are gobbling up thousands of distressed homes nationwide, in isolated cases squeezing out first-time buyers, but lifting the weak housing market on the road to recovery.   Banks and private equity firms started adding single-family houses to their portfolios five years ago at the height of the real estate collapse, but became even more aggressive when Fannie Mae decided bulk sales of foreclosures were the best way to help stabilize metropolitan areas hardest hit by the crisis, according to both statistics and participants in the industry.

US Zillow Rent Index

A statement by Lawrence Yun, chief economist for the National Association of Realtors as listed in a report on existing home sales caught my eye today. "From a consumer's perspective, only the local market information matters and there are no changes to local multiple listing service data or local supply-and-demand balance, or to local home prices" said Yun.

Most businesses use some kind of commercial real estate. Leasing property has been a bargain in the past year. Prices for buyers are very favorable, though commercial mortgages are still subject to pretty tight underwriting. Many commercial tenants have renegotiated their leases to lower their rents. Going forward, though, good deals are going to be more difficult. 2011 is the year to lock in current rents. If you are going to need more space in the future, you might want to commit this year while landlords are still feeling desperate.