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HomeVestors - HomeVestors and Local Market Monitor Ranking Reveals Best Markets to Invest in Rental Property
Jul 11 2011

- New Quarterly Ranking Shows Expected Performance of Single-Family Homes Maintained as Rental Properties

- No Other National Ranking Like This

- Investment Ratings for Top 100 Markets Based on Forecasted Home Price Appreciation and Rental Rate Growth

HomeVestors of America, Inc., known as the "We Buy Ugly Houses®" company, and Local Market Monitor, a leading forecaster of real estate markets, today unveiled the "HomeVestors-Local Market Monitor Best Markets to Invest in Rental Property" ranking.  In order to help inform real estate investors of current rental property investment opportunities, the "Best Markets" ranking will be updated quarterly.

HomeVestors and Local Market Monitor estimate that approximately 14% of single-family homes in the U.S. are maintained as rental properties.  The companies believe there is no other regularly produced, reliable national ranking of the expected future performance of homes maintained as rental properties, which makes this ranking particularly useful to prospective investors.

"Since 1996 HomeVestors® real estate franchises have been at the forefront of buying older houses in need of repair, and updating or rehabbing them, often in the interest of maintaining the homes as rental properties.  Until today, there's never been a reliable national performance indicator for this growing segment of the investment market," said David Hicks, co-president of HomeVestors of America, Inc.  "We're pleased to have developed this ranking system with Local Market Monitor to help investors in single-family rental property identify opportunities and gauge potential local market investment performance relative to the national average and other markets."

Top 10 Markets, Commentary and Top 100 Markets Ranking

The "HomeVestors-Local Market Monitor Best Markets to Invest in Rental Property" ranking forecasts the expected performance of rental real estate properties, specifically single-family homes maintained as rental properties.  The rankings show the extra return, or risk-return premium, that an investor must demand from rental property in a local market.  The risk-return premium can be added to the regular capitalization rate to produce a risk-adjusted cap rate at full occupancy for a local market.  The ranking is calculated based on three-year forecasts of home prices (reflecting underlying home-price appreciation potential) and gross rents (as a proxy for potential investor cash flow).

The Top 10 markets in the new ranking are: 

  • Las Vegas, Nevada
  • Detroit, Michigan
  • Warren, Michigan
  • Orlando, Florida
  • Bakersfield, California
  • Tampa-St. Petersburg, Florida
  • Phoenix, Arizona
  • Ft. Lauderdale, Florida
  • Rochester, New York
  • Stockton, California

Commenting on the local markets and the ranking overall, Ingo Winzer, president and founder of Local Market Monitor, Inc., said:

Overall, the highest ratings are in markets where home prices have fallen substantially, including Las Vegas, Detroit, Tampa and Phoenix.  Home prices in these markets also are below-average, so empty homes are easily turned into competitive rental properties.  But there is also extra risk in these markets.

Current rental vacancy rates are 12 percent in Las Vegas, 19 percent in Detroit, 9 percent in Tampa, and 13 percent in Phoenix.  

  • Las Vegas – Jobs are still being lost and home prices are down 45 percent since the peak in 2006.  Rents have dropped 10 percent.  Much of the large workforce in the casino industry consists of renters; the homeownership rate is a low 55 percent.  The current unemployment rate is 12 percent. 
  • Detroit – Although the recession bottomed out a year ago, the unemployment rate is still high at 11 percent.  The population shrank 4 percent since 2006. 
  • Tampa – Largely a retirement market, home prices fell 10 percent in the last year due to the over-supply of investment properties built during the boom. Jobs are growing again in the service industries.  Homeownership dropped a sharp 5 percent since 2007.
  • Phoenix – Jobs are growing again after a very deep recession.  Home prices dropped 40 percent since 2006, with rents decreasing just 8 percent.  Population growth since 2006 is a strong 8 percent.

HomeVestors-Local Market   Monitor Best Markets to Invest in
   Rental Property – Top 100 Markets



Risk-Return Premium Relative to National   Average
   (National Average = 5.3%)

1 Las Vegas, Nevada +4.7%
2 Detroit, Michigan +4.4%
3 Warren, Michigan +3.1%
4 Orlando, Florida +3.0%
5 Bakersfield, California +2.5%
6 Tampa-St. Petersburg, Florida +2.4%
7 Phoenix, Arizona +2.3%
8 Ft. Lauderdale, Florida +2.3%
9 Rochester, New York +2.1%
10 Stockton, California +2.1%
11 Bradenton-Sarasota, Florida +2.0%
12 Fort Worth, Texas +1.8%
13 Dallas, Texas +1.8%
14 Syracuse, New York +1.7%
15 Tulsa, Oklahoma +1.6%
16 Atlanta, Georgia +1.5%
17 Fresno, California +1.5%
18 West Palm Beach, Florida +1.5%
19 Dayton, Ohio +1.5%
20 Jacksonville, Florida +1.4%
21 Tucson, Arizona +1.4%
22 Grand Rapids, Michigan +1.3%
23 Wichita, Kansas +1.3%
24 Austin, Texas +1.3%
25 Houston, Texas +1.3%
26 Toledo, Ohio +1.2%
27 Memphis, Tennessee +1.1%
28 Sacramento, California +1.1%
29 Miami, Florida +1.1%
30 Cleveland, Ohio +1.1%
31 Omaha, Nebraska +1.0%
32 Oklahoma City, Oklahoma +1.0%
33 Akron, Ohio +0.9%
34 Little Rock, Arkansas +0.9%
35 Riverside­-San Bernardino,   California +0.9%
36 Kansas City, Missouri +0.8%
37 San Antonio, Texas +0.8%
38 Indianapolis, Indiana +0.8%
39 Buffalo, New York +0.7%
40 El Paso, Texas +0.7%
41 Gary, Indiana +0.6%
42 Colorado Springs, Colorado +0.6%
43 Edison, New Jersey +0.6%
44 Minneapolis-St. Paul, Minnesota +0.6%
45 Camden, New Jersey +0.5%
46 McAllen, Texas +0.5%
47 Columbia, South Carolina +0.5%
48 Columbus, Ohio +0.4%
49 Poughkeepsie, New York +0.4%
50 Hartford, Connecticut +0.4%
51 Baton Rouge, Louisiana +0.4%
52 New Haven, Connecticut +0.4%
53 Chicago, Illinois +0.3%
54 St. Louis, Missouri +0.3%
55 Greensboro, North Carolina +0.3%
56 Allentown, Pennsylvania +0.3%
57 Richmond, Virginia +0.3%
58 Albuquerque, New Mexico +0.2%
59 Albany, New York +0.2%
60 Tacoma, Washington +0.2%
61 Cincinnati, Ohio +0.2%
62 Nashville, Tennessee +0.2%
63 Raleigh, North Carolina +0.2%
64 Denver, Colorado +0.2%
65 Bridgeport, Connecticut +0.2%
66 Portland, Oregon +0.1%
67 Philadelphia, Pennsylvania +0.1%
68 New Orleans, Louisiana 0.0%
69 Washington, DC 0.0%
70 Knoxville, Tennessee 0.0%
71 Springfield, Massachusetts 0.0%
72 Pittsburgh, Pennsylvania 0.0%
73 Charlotte, North Carolina 0.0%
74 Milwaukee, Wisconsin 0.0%
75 Wilmington, Delaware 0.0%
76 Louisville, Kentucky -0.2%
77 Birmingham, Alabama -0.2%
78 Virginia Beach, Virginia -0.3%
79 Baltimore, Maryland -0.3%
80 Greenville, South Carolina -0.3%
81 Charleston, South Carolina -0.4%
82 Seattle, Washington -0.5%
83 Salt Lake City, Utah -0.5%
84 Boston, Massachusetts -0.6%
85 Worcester, Massachusetts -0.7%
86 Oxnard, California -0.7%
87 Lake County, Illinois -0.8%
88 Nassau-Suffolk, New York -0.8%
89 San Diego, California -0.9%
90 Providence, Rhode Island -0.9%
91 Oakland, California -1.1%
92 Anaheim, California -1.2%
93 San Jose, California -1.3%
94 Peabody, Massachusetts -1.3%
95 Honolulu, Hawaii -1.4%
96 Los Angeles, California -1.4%
97 Newark, New Jersey -1.4%
98 Bethesda, Maryland -1.6%
99 New York City, New York -1.7%
100 San Francisco, California -2.4%

About HomeVestors

Dallas-based HomeVestors of America, Inc., the #1 buyer of houses in the U.S., was incorporated and began franchising in 1996.  The first franchise real estate investment company, HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying older homes in need of repair, and updating or rehabbing them.  Most commonly known as the "We Buy Ugly Houses" company, HomeVestors strives to make a positive impact in each community.  In 2010, for the fifth consecutive year, HomeVestors was among the prestigious Franchise Business Review's "Top 50 Franchises," a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information visit www.HomeVestors.com.  HomeVestors has franchise opportunities available in 98 of the 100 markets listed on the current ranking.  To learn more about the HomeVestors franchise, visit www.HomeVestorsFranchise.com.

About Local Market Monitor

Local Market Monitor, the premier real estate forecasting solution, offers investors in homes and home mortgages the local market risk intelligence they need to make informed decisions.  Using a proprietary formula called the Equilibrium Home Price, Local Market Monitor determines if markets are currently over or under valued, equipping users with a long-term risk and investment perspective.  Covering over 300 local markets, Local Market Monitor also presents key investors with a 12, 24 and 36-month home price forecast.  The solution includes sorting capabilities allowing subscribers to view and compare real estate markets along various metrics, including an Investment Suitability Ratings to identify opportunities based on individual investing goals.  To learn more visit www.LocalMarketMonitor.com or call 800-881-8653.