Want to find great potential Self-Directed Real Estate IRA investment opportunities? Concentrate on finding places that are simply great cities to live in. That’s a great driver of long-term investment returns, and helps prevent big market downturns, because great communities always have people who want to live in them, and that generates long-term demand for housing, as well as commercial real estate.
Of course, you want to concentrate on cities with substantial economic diversification: If you invest in houses in a company town, and the company goes under, or just decides to move its operations somewhere else, it will be landlords left holding the bag.
U.S. News and World Report just released its annual “Best Places” list of top 25 cities to live in, and the results read like a who’s who of great Self-Directed Real Estate IRA markets.
U.S. News ranked cities by affordability, job prospects, quality of health care, school districts, low crime rates and median household income, along with a number of other factors. Here’s what they came up with:
- Austin, Texas (for the third year in a row!)
- Denver, Colorado
- Colorado Springs, Colorado
- Fayetteville, Arkansas
- Des Moines, Iowa,
- Minneapolis-St. Paul
- San Francisco,
- Portland, Oregon
- Seattle, Washington
- Raleigh-Durham, North Carolina
- Huntsville, Alabama
- Madison, Wisconsin
- Grand Rapids, Michigan
- San Jose, California
- Nashville, Tennessee
- Asheville, North Carolina
- Boise, Idaho
- Sarasota, Florida
- Washington, D.C.,
- Charlotte, North Carolina
- Dallas-Fort Worth, Texas
- Greenville, South Carolina
- Portland, Maine
- Salt Lake City
- Melbourne, Florida
Austin was ranked number 1 for the third year in a row, proving that it pays to be weird. However, we are getting reports that it’s becoming pretty pricey for the people who live there. It’s certainly expensive compared to other nearby real estate markets. But the lively arts, culture and emerging technology scene make Austin worth the price.
We were pleased to see several cities from the Southeastern United States named, including our own Asheville and Charlotte, where American IRA has offices, as well as Raleigh-Durham and Greenville. Winston-Salem also did really well, clocking in at #31 on U.S. News’s list. Jacksonville, Florida was #52, and Charleston came in at #45. Knoxville was #46. Chattanooga was #55 and Tampa was #56.
Many of our own clients are naturally here in the Southeastern United States, and our region has done well for Self-Directed Real Estate IRA investors in recent years, and should continue to do well, as the region continues to balance natural beauty, a pleasant climate and affordability.
You can still buy Self-Directed Real Estate IRA properties at very favorable rental yields (capitalization rates) throughout the region – especially as you get 20-30 minutes out from the major cities like Miami and Atlanta.
In contrast, Northeastern cities have not been fairing as well. “Our Northeastern cities, which are epicenters of higher education and economic development, are not growing nearly as much as places in Florida, California and Texas,” said U.S. News real estate editor Devon Thorsby. “They are expensive to live in. Top-ranked places have the characteristics people are looking for, including steady job growth, affordability and a high quality of life.”
New York City was #90.
We were curious about how San Jose, CA made the top 20 in any index that ranked affordability, but it turns out that the epicenter of Silicon Valley also has the highest average salary in the country.
Huntsville, Alabama took the top honors for housing affordability, so this could be a great market for value-focused Self-Directed Real Estate IRA investors.