The 10 Highest-Yielding Rental Markets for Real Estate IRAs

Real Estate IRAIn a past blog, we looked at the top ten most promising real estate markets for Real Estate IRA owners according to a recently updated report from AllPropertyManagement.com.

That ranking was based on a broad set of criteria, including job growth, costs of carry, housing availability, property appreciation and others.

Today I wanted to zero in on an important metric for you income-focused Real Estate IRA investors, or for those of you with a decided value-investing bent: Rent yields. AllPropertyManagement looked at rental prices and home prices and came up with a very reasonable metric to estimate average cap rates in these markets – and the results are clear: If you want to get the most income bang for the buck, stay away from the coasts. In fact, for the stone-cold value-focused investor, the Buckeye State is the place you want to be.
[tweetthis twitter_handles=”@iraexpert” hidden_hashtags=”#RealEstateIRA” url=”http://www.americanira.com/?p=18667″]Great info for income-focused investors-Top Ten Cities for Rent yields…[/tweetthis]
Here are the top-yielding markets in the country for Q1 2015, as ranked by Cap Rate, according to the most recent All Property Management Rental Ranking Report.

  1. Akron OH – 11.73%
  1. Dayton OH – 11.35%
  1. Cleveland OH – 10.08%
  1. Toledo, OH – 9.97%
  1. Rochester, NY – 9.85%
  1. El Paso, TX – 9.51%
  1. Poughkeepsie, NY 9.49%
  1. Memphis, TN 9.26%
  1. Indianapolis, IN – 9.98%
  1. Syracuse, NY – 8.91%

So what do we know about these markets? They aren’t high-glamor markets. None of them are particularly well known as tourist attractions, other than Graceland in Memphis. El Paso has a great song named after it. Well, so does Toledo, for that matter. But none of them are marquee names.

They are, however, moderately priced. It is generally possible to find so-called ‘cash-flow positive’ IRA properties in these markets, if you do a bit of digging – even with a mortgage on the property (You can usually borrow up to two thirds of the value of a property held in an IRA).

For those of you who own Roth Real Estate IRAs or other Roth accounts, these ten markets all offer attractive capitalization rates that may generate substantial income for you and your families, tax free.

That said, sometimes property is cheap for a reason. Looking at vacancy rates, Syracuse, NY is reporting 12.10 percent, on average, for the first quarter of 2015. They’re also reporting a small decline in rental revenue of 1.08 percent, on average.
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Likewise, Toledo, OH is also reporting a very high vacancy rate of 11.50 percent. So you could have a nice monthly rent coming in, but it doesn’t mean too much if it takes you a month or more to find a tenant.

Looking at rental trends – and throwing a bone to the income growth-oriented investors, the top 10 markets were led by Memphis, sporting rents that are climbing by 6.74 percent. By contrast, the number-one market nationwide for rental income growth for the first quarter is Seattle, Washington (up a huge 27.12 percent by AllPropertyManagements’ figures), followed by Denver (+12.77 percent) and Bridgeport, Connecticut (+ 11.63 percent).

American IRA, LLC is a nationally recognized leader in self-directed strategies for IRAs, Solo 401(k)s, SEPs, SIMPLE IRAs and similar types of accounts. Want more information about real estate IRAs? Visit us online at www.americanira.com, or call us at 866-7500-IRA(472). We look forward to serving you.

 

 

 

 

 

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