2014 Turning Out Great Opportunities for Investment Rental Properties

In a shifting real estate market, it can be difficult to know exactly where to focus your attention in order to make the most profitable decisions. Fortunately, there are some indicators and guideposts along the way. Keeping abreast of the latest trends and the most reliable studies can certainly point you in the right direction.

Currently, trends are pointing to multifamily real estate investment trusts, or REITs. Once condemned for glutting an overblown market, REITs have surprisingly come back swinging in early 2014. The market has garnered a 12.75 percent return, making it the quarter’s most profitable for commercial real estate.

The comeback truly is striking. New apartment construction is at its highest level in 11 years, and a remarkable one out of every three new housing units under construction is a rental apartment. This is the highest level of apartment construction the market has seen in 40 years. In addition, rental vacancies are decreasing, rents are increasing and properties are still appreciating – albeit slowly.

Part of the reason for this shift in the market is a pent-up demand among 18 to 30-year-olds. The 2008 recession left many people scrambling to save money by living with their parents or with roommates. An improving job market and economy will lead to an influx of people looking for a place of their own to live. And with mortgage lenders remaining tight-fisted, and many people waiting to stabilize themselves financially before buying a home, the demand for rentals has every likelihood of increasing dramatically.

So the logical next questions is: where to buy?

RealtyTrac recently released their latest analysis of gross rental yields across the country, and revealed the counties with the highest rental returns.

At the top of the list were Wayne County, Michigan, where Detroit is located; Clayton County, Georgia, which includes the Atlanta metro area; and Washington County; home to Greenville, Mississippi. Many of these top contenders have reduced prices for a reason; the rental homes available are in bad shape, or in undesirable neighborhoods. Still, these are investment that definitely hold promise for more intrepid investors.

Even if you don’t choose to invest in the highest rental yield areas, the analysis shows that there are many opportunities to make a profit across the country. Even number 20 on the list — Syracuse, New York – has a return average of 18 percent. RealtyTrac’s rental yield heat map shows a promising number of counties across the country with good or excellent return averages.

In the end, trends indicate that it would benenfit the savvy investor to do their homework on apartment rental markets. This may be the perfect time to get in on the ground floor.