Why You Should Buy Investment Property In This Booming City

0

My investments are concentrated in the Atlanta area, where I live, and I’ve been lucky enough to ride the Atlanta wave for years. It’s still a good investment area, but word got out and Atlanta is getting expensive. So what’s the hot new area of ​​investing?

Three words: the Rust Belt

Cities in the Midwest and Northeast of the United States, where most of the nation’s manufacturing takes place, are known as the Rust Belt. We’re talking about cities like Detroit, Cleveland, Pittsburgh, and Syracuse, New York.

These once thriving towns fell into decline as factories closed, prompting people to migrate to other parts of the country in search of better opportunities. After the pandemic, people are starting to come back to this area. Home prices are low, many people can work from home, and many of these towns are near attractions such as rivers and lakes, including the Great Lakes.

Source of images. Getty Images.

How to choose a good place to invest

One of the goals of real estate investing, especially buying single-family homes for rent, is to buy in a place that is just starting to appreciate, a booming city. You want to find such a place using what I call the Goldilocks approach: find an area that is neither too hot nor too cold, but just right.

If the area is too hot, it will cost you more to enter. If the area is too cold, it might be too low to generate demand for your product, which in this case is a rental property. Ideally, you want an area that has been cold but is warming up.

The risk is buying in a cold area that stays cold or gets colder. You probably don’t want to do that. However, here are some characteristics of a neglected (cold) area on the rise:

  • Low entry price
  • Investor interest
  • Net migration to the region
  • Close to amenities (green spaces; river, lake or ocean; transportation hub; city features)
  • Strong or reinforcing use
  • Good payment to income ratio (income is enough to afford housing)

A look at Youngstown

Youngstown, Ohio is located in the Rust Belt, with one of the lowest admission prices in the country. While a low entry price alone isn’t necessarily a good investment, it’s worth looking into and, in this case, it could pay off.

The median home price today in America is around $350,000, but the median home listing price in Youngstown is a reasonable $115,000. And that’s just the median. Forbes reports that investors are buying homes priced at $60,000 to $80,000 and renting them out. Many investors buying into an area is another sign of an area in transition.

So far we have low prices and investor interest in Youngstown. Also, the Youngstown location is good. It’s only a few miles from the Mahoning River, about an hour’s drive southeast of Pittsburgh, and an hour’s drive northwest of Cleveland.

Personal income per capita is lower than other cities in Ohio, such as Toledo, Akron, Cleveland, and Dayton, so that’s a bit of a risk factor. But people are starting to buy there because of the low real estate prices. Lots of younger buyers are moving to Youngstown (pun intended), where they can get more indoor and outdoor living space.

Other Rust Belt Options

Other Rust Belt towns where the median home price is below $200,000 include:

  • Toledo, Ohio: The median listing price is $128,400. This college town (University of Toledo) is popular with Gen Z tenants.
  • Akron, Ohio: The median listing price is $147,450. It offers a small community feel and a low crime rate.
  • Cleveland: The median listing price is $169,450. Investors are already buying here, especially on the east side.
  • Scranton, Pennsylvania: The median listing price is $182,400. Scranton gets mixed reviews as to whether it would make a good place to invest. The entry price seems to be its most attractive feature.
  • Syracuse, NY: The median listing price is $184,900, making it the cheapest place to buy a single-family home in New York. Renters who want to stay in New York are interested in Syracuse.
  • Pittsburgh: The median listing price is $197,000. People are leaving Pittsburgh, which isn’t a good sign, but wages are up, which is. The city is also becoming a technology hub.
  • Dayton, Ohio: The median listing price is $197,450. It hasn’t been a hot spot for investors, but the single-family rental market is strong.
  • Buffalo, New York: The median listing price is $199,450. The city is in decline and hasn’t fared well during the pandemic, but low prices are attracting out-of-town buyers.

There are always risks when it comes to investing. You can reduce yours by familiarizing yourself with your investment area. The more signs of life you see returning to a once thriving city, the better. You might want to put such an area on your radar.

Bottom line: If you don’t live in the Rust Belt, maybe it’s time for a road trip.

Share.

About Author

Comments are closed.