Looking for a great place to invest your Real Estate IRA dollars? Start right here in the Southeast. The 2017 Homeunion 2017 National Single Family Rental Research Report is out and Atlanta was named the #1 top city in its “Opportunity Ranking” metric for real estate investments in the single family home market. The number two city was Orlando, Florida.
The Opportunity Ranking indicates markets that provide a “strong balance of supply/demand fundamentals while offering favorable entry prices and limited threats,” said the study authors. The markets in this index were measured by a combination of cap rates and entry prices, as well as projected job growth in 2017.
Lots of construction activity counted against markets in this category because of the risk of overbuilding.
The remaining cities in the top ten for this metric were, in order, Seattle, Las Vegas, Chicago, San Diego, Oakland, Detroit, Dallas-Fort Worth and Memphis.
Top “High Demand” Markets for Real Estate IRAs
Southeastern cities did well in Homeunion’s “high demand” ranking, which emphasized high-growth markets with low vacancy rates, high projected rent gains, regardless of their projected 2017 returns. Orlando placed 4th in this index, while Atlanta came in 7th and Raleigh, North Carolina, took the number 10 slot.
The Pacific Coast dominated this ranking, though, with the top three cities being Seattle, Oakland and San Diego. Las Vegas came in 5th and Los Angeles was number six.
Best Real Estate IRA Markets for Income
If you’re looking to generate income in your Real Estate IRA and willing to compromise on growth potential, or even invest in a slower-growth area in order to generate a greater income yield on your rental investment now, then Cleveland is your best bet, according to Homeunion, followed by Columbia, Memphis, Philadelphia, Atlanta, Chicago, Jacksonville, Tampa, Charlotte, and Detroit.
Best Real Estate IRA Cities for Upside Potential
If you want to maximize your potential for capital appreciation without necessarily overpaying for today’s hot markets, look for cities that have not fully recovered from the last real estate recession, but who can still benefit strongly from the natural real estate cycle and the reversion to the mean. These markets will have the strongest discounts from their peak price during the 2000 real estate craze. And yes, as you might expect, Florida ranks strongly in this category.
According to Homeunion, the best markets for you are, in order, Chicago, Las Vegas, Orlando, Miami, Fort Lauderdale, Atlanta, West Palm Beach, Philadelphia, Phoenix and Minneapolis.
The good news is that no matter where you are in the country, chances are there’s a promising real estate market for your style of investing nearby.
Homeunion projects that the U.S. economy will grow 2.5 percent this year, thanks to the momentum strong growth at the tail end of 2016.
They also expect employers to add 2.5 million jobs this year, strongly benefiting the rental market – especially as renters are able to move up the value chain.
The fact that housing starts remain well below peak levels, even as the economy adds jobs by the hundreds of thousands, means a tightening rental market and strong upward pressure on rents for the year 2017. Vacancies will reach a cyclical low at 6.4 percent, project the study’s authors. Rent growth should average around 3.5 percent, with plateauing in some high demand markets.