Real estate investors should consider that property investments require a careful and balanced approach. This business involves a high level of risk, and the buyer needs to be well-prepared and to conduct the through-out research of the market.
Recently, real estate experts distinguish the Ukrainian property market as one of the most prosperous in terms of investments. The low cost of apartments and the high cost of renting them out have attracted foreign investors. Besides, Ukrainian companies create high-quality multifunctional complexes that will be relevant and popular among tenants for a long time. In construction, developers use innovative technologies, implement the stylish design of apartments, choose the convenient infrastructure for the projects, etc. As a result, the investor has the opportunity to buy a premium-class residential apartment that will bring stable revenue in the long run.
However, there are a lot of factors that influence the choice of a place for real estate investment. Therefore, in this article, we define the criteria for a perfect investment market and outline the best places to buy rental properties in the United States and abroad.
Investing in real estate may be a tricky and dangerous venture when the buyer of the property is not familiar with the rules of the game. This business involves a high degree of risk, and sometimes there is too much at stake.
To avoid getting into trouble, the investor needs to conduct thorough research of the market. In this article, we will define the criteria of the impeccable market for investing and describe top places to buy the rental property in the U.S. and abroad.
What to Check While Choosing Where to Buy Rental Property
Further, we will list the most important factors the investor should take into consideration before purchasing the property for rent.
- Housing affordability. Affordability is a key factor that determines the success of a future investment. Firstly, the affordable price of the property is a perfect chance for beginner investors to start their business. Secondly, the initial value of the property affects the cost of the rent. If the rental price is too high, in comparison with the real estate in the neighborhood area, then it would be difficult for the homeowner to find tenants fast.
- Rate of employment. The analysis of the real estate market is crucial when choosing the place to buy a property for rent. The appropriate market will have high employment rates which accordingly, have a direct influence on the tenants’ ability to pay rents.
- Appreciation. Investing in a rental property in a long-term perspective implies choosing the property with high appreciation potential. The increase in the property’s value depends on the average growth of the real estate value percentage in the city per year.
- Increase in the population. The main characteristic feature of the top real estate market is the growth in the population of the city year over year. The population growth is inextricably linked to the above-mentioned factors – the rate of employment and affordability of housing. People are moving into the city due to job opportunities and accessible rental prices.
- Average wage growth. Wage growth is the indicator of the real estate market worth investing in. This is the increase in the wage percentage in the area year over year. The ideal balance is when the wage and market appreciations increasing at the same rate.
- Return on investment. The return on the investment, or rental yield, is the ratio of the income from the property and its value. To calculate the rental yield, take the rental income per year, divide by the value of the property and multiply the resulting number by 100. You will receive the percentage of the return on investment.
Top 3 Places to Buy Rental Property in the USA
Amarillo, or “The Yellow Rose of Texas”, has evolved from a small city with a population of 200,000 residents to the largest city in Panhandle. Due to economic growth, the various job sectors in Amarillo are rapidly developing. These are hospitality, retail, mining, construction and health services. One of the key factors that drive the process of economic growth in Amarillo is the natural gas and oil industry.
Nowadays, the city is spending over than $900 million to facilitate the growth of the infrastructure and improve the existing facilities which makes the city a more convenient place to live and a good market for investing.
Tampa is a fast-growing city with a population of 392,890 residents and an annual growth rate of about 1.63% ( in 2018).
Tampa is located on the west coast of Florida, near the Gulf of Mexico. Tampa Bay area has favorable climatic conditions – humid subtropical climate zones that border with the areas with tropical monsoon climate.
The stable increase rates of market appreciation and employment growth make real estate in the city of Tampa a profitable investment.
Oklahoma City, Oklahoma
Oklahoma City has experienced a rapid increase in population in recent years – 5.11% since 2010. The rate of personal income in Oklahoma State took the third position among the fastest-growing in the USA. Moreover, the State of Oklahoma has one of the lowest indexes of the cost of living.
Also, Oklahoma is a major producer of natural resources – oil and gas – and the manufacturer of various agricultural products.
Top 5 Places for Real Estate Investment in the World
Brazil offers a large selection of various markets for investing. Due to the economic crisis, Brazil now has a buyer’s market which means that the number of properties exceeds the demand for them. This factor creates favorable conditions for the buyers of real estate. Furthermore, there is plenty of undeveloped lands, owing to the past three decades of recession.
The affordability of the property is the main reason why Panama is a top place for investment. If to compare with the United States, the price of real estate in Panama is three times lower. Another benefit of investing in Panama’s real estate is the local laws that protect foreign investors.
In recent times, the real estate of Thailand has become a profitable option for investment due to the rapid growth of the country’s economy. The other advantages of purchasing the real estate in this country are low management and taxation fees, a great demand for rental properties from the tourists and retirees, and growing industrial sectors.
Mexico is one of the most popular places for retirement abroad. That is why many investors consider this country to be the top real estate market. The main benefit of investing in Mexican properties is legislation that allows foreigners to buy property on a legal basis. Some of the top vacation destinations are at affordable prices, for instance, Playa del Carmen, Tulum and Puerto Aventuras.
France is one of the largest Europian investment markets. The major reasons for the popularity of France among the property buyers are the legal system – no restrictions of foreign ownership of the property – and stable economy, along with the rich history and culture. In addition, the rental sector in this country is now showing continual growth, especially in Paris, Lyon, and Bordeaux.
The listed criteria that make a certain market appropriate for investing are worth considering but despite this, it is vital to rely on the individual factors – financial goals, investment strategies and personal willingness to take the risk.
The novice investor may seek assistance from skilled professionals in the real estate industry, reach out to real estate agents or financial advisors.
In some cases, the intuition is helpful – it is often difficult to predict or calculate the appreciation of the property over time, especially if the investor is applying a long-term strategy.