10 Cities with the highest rental profit potential. Post 191


THE BOTTOM LINE on NBCNEWS.com

Cities where homes cost less than a car

July 23, 2012

Wheels or digs? For the price of a Chrysler 300, a person could buy a house in Flint, Mich.

For many Americans, homeownership is the epitome of living the American dream. Yet, in towns with high tumbling home prices and double-digit vacancy rates, median-priced homes now cost the equivalent of new American cars — except, as investments go, they’re slightly more risky.

Call it the dark side of the American dream. But if you can only afford to buy just one, which would you choose? In hard-hit cities, why own a home when you can rent one without the risk of foreclosure if your job falls through? Or, for about the same money, you can sport new wheels, facing only the risk of repossession — a lesser credit report complication than a foreclosure. While a car is unlikely to increase in value, its depreciation is both more manageable and predictable than a home.

Much has been written about Detroit’s high misery index, and the challenges of thriving in a city with high unemployment, high crime rates, and city services under severe budgetary constraints. And yet, for those willing to take a long view of the city, Detroit also offers amazing bargains to
The city has one of the highest rental vacancy rates in America and boasts a four-month supply of homes on the market, according to a recent report in the Detroit Free Press. A buyer’s market is typically six or more months’ supply.

These are the cities where homes cost less than a car:

1. Detroit
• Median listing price: $21,000
• Comparably priced car: Chevy Malibu ($21,000)
• Housing price change (year over year): 5.2 percent
• Median household income: $29,447
• Unemployment: 9.9 percent

Unemployment is…high, population is decreasing, and in 2010, one-in-five homes were vacant. Long term, that’s a lot of downward pressure on housing prices.

2. Flint, Mich.
• Median listing price: $31,950
• Comparably priced car: Chrysler 300 ($31,950)
• Housing price change (year over year): n/a
• Median household income: $28,835
• Unemployment: 8.9 percent

Flint suffers from a significant amount of poverty with about 44 percent of the population earning less than $25,000 a year, according to Census economic data.

3. Gary, Ind.
• Median listing price: $39,900
• Comparably priced car: Ford Expedition ($39,900)
• Housing price change (year over year): – 7.5 percent
• Median household income: $27,367
• Unemployment: 8.5 percent

Much of the local population lives at some of the nation’s lowest income levels as 46.5 percent earn under $25,000 annually according to Census economic data.

4. Redford, Mich.
• Median listing price: $40,000
• Comparably priced car: Ford F-450 ($55,000)
• Housing price change (year over year): 5.2 percent
• Median household income: $52,573
• Unemployment: 9.9 percent

1-in-159 homes  [are] in foreclosure, the worst rate among cities on this list. It also has expensive homes. [that] may be expensive to maintain… prices have dropped by 38.5 percent from their peak.

5. Warren, Mich.
• Median listing price: $49,900
• Comparably priced car: Lincoln Navigator ($59,900)
• Housing price change (year over year): 6.5 percent
• Median household income: $46,247
• Unemployment: 9.9 percent

Chief among several promising housing trends for Warren is a surprisingly low homeowner vacancy rate…Still, sales prices have dropped 35 percent over the past five years…, which suggests that quite a few homeowners are underwater and perhaps holding onto their properties until things turn around.

6. Whiting, N.J.
• Median listing price: $52,450
• Comparably priced car: Chevy Corvette Grand Sport ($64,650)
• Housing price change (year over year): n/a
• Median household income: $37,397
• Unemployment: 11.9%

Whiting…is home to many retirement communities. Unemployment isn’t especially high. In fact, unlike many other towns on this list, the vacant housing unit rate of 7.8% is below the national average of 11.8%.

7. Dearborn Heights, Mich.
• Median listing price: $55,000
• Comparably priced car: Cadillac Escalade ($64,800)
• Housing price change (year over year): 5.2%
• Median household income: $48,905
• Unemployment: 9.9%

The city of Dearborn Heights is home to many workers in the auto industry. Home prices in the city have fallen by a fairly drastic 55.2% since their peak. Ford is preserving it.

8. Youngstown, Ohio
• Median listing price: $57,550
• Comparably priced car: Chevy Suburban ($68,900)
• Housing price change (year over year): n/a
• Median household income: $25,002
• Unemployment: 7.4%

…new construction rates, speaks volumes about the sturdiness of a city. In the U.S., only 14.4% of homes were built before 1940; in Youngstown, it’s more than 40%. New home construction is at a standstill. Nearly 19% of homes stand vacant.

9. Holiday, Fla.
• Median listing price: $59,900
• Comparably priced car: Tesla Model S ($69,900 with 85 kwh battery)
• Housing price change (year over year): -0.1%
• Median household income: $37,240
• Unemployment: 8.6%

Holiday’s 22.2% vacant housing rate, [is] nearly twice the national average…housing prices have also plummeted 48% from their peak.

10. Port Richey, Fla.
• Median listing price: $59,900
• Comparably priced car: Cadillac CTS-V ($71,000)
• Housing price change (year over year): -0.1%
• Median household income: $31,016
• Unemployment rate: 8.6%

Port Richey was clearly devastated by foreclosures, job losses and builders who overestimated demand for new homes. That’s evident in its whopping 24.7% vacant housing rate. Housing prices in the area have fallen 48% from their peak, according to Federal Housing Finance Agency (FHFA) data.

Read the entire article: Cities where homes cost less than a car

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Coach Mitch’s REFLECTIONS™

 

The part of the article that made the most impression was the 2nd paragraph:

“Call it the dark side of the American dream. But if you can only afford to buy just one, which would you choose? In hard-hit cities, why own a home when you can rent one without the risk of foreclosure if your job falls through? Or, for about the same money, you can sport new wheels, facing only the risk of repossession — a lesser credit report complication than a foreclosure. ”

A bad message

Media feels its function is to create friction, and this negative take on the market is typical. NBC News might as well foment, “Housing market collapses, but stocks of companies making tents rise.”

The right message

However, a positive view could have been, “10 Cities where investors can make the best rental profits.” Which headline do you think would better serve the population and the interests of Detroit?

Michigan is the place to be

Michigan might even be the best place to seek investment real estate. I recall back in 1990, during the last “Savings and Loan” crises, that, because of its big run-up, Boston was now way down in value and disaster was foretold; but Boston did not fall into the bay and neither with Michigan fall into the lake.

Michigan has a strong, smart, able-bodied and capable work force (and those homegrown corn fed gals are healthy and beautiful). There is a significant inventory of factories, universities, roads and other infrastructure. People in the Midwest are solid and don’t quit. All these qualities are winners.

Look to the future

As a site catering to real estate investors, it should come as no surprise that the best time to buy at FIRE SALE pricing is when the market is low and going lower. The best way to insure future profits is to buy well under the current market so that you will be well placed no matter what happens.

A significant percentage of housing in these cities is delinquent in property taxes. Over the years, having utilized many different real estate investing systems, I have found that consistently, tax delinquents are “The most motivated of all motivated sellers”™

These tax delinquent property owners are seeking a way out because many have no mortgage or low mortgage homes, yet they still cannot pay their high property taxes.

This is the opportunity

Because of the overwhelming stress, owners of tax delinquent property are often willing to give their equity away – just so that they can move on with their lives. You, the observant investor, can help them move on, while helping yourself and your family, a real win-win.

Because you have such a strong potential to get a rental property for well under the current market value, it enables you to offer a rental at under the current market rate, thus ensuring that you will be full even while your neighbor might be empty. You have cash flow, he does not.

Incidentally, if purchasing at FIRE SALE, your rental rate can be under the market but your margins remain, allowing a high rental profit potential.

I have dealt in tax delinquent properties for a long time. This is the best market for this particular type of real estate investing strategy. You can set yourself up for the rest of your life with only a few well chosen purchases.

Forward

Ignore the naysayers and professional pessimists. Be strong, be smart, use the tools you have and prosper!

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

G-d Bless US

Mitchell Goldstein - Coach Mitch
518-439-6100 until midnight EST
www.CoachMitch.com

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