Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Trade News Still Relevant? - 19th Nov 19
Comments on Catena Media Q3 Report 2019 - 19th Nov 19
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

Rent Your House: The Ultimate US Real Estate Strategy

Housing-Market / US Housing Aug 21, 2018 - 07:32 AM GMT

By: Harry_Dent

Housing-Market I enjoyed two recent articles by Andrea Riquier at MarketWatch.

The first was “The new housing play: helping priced-out renters become long-distance landlords.”

It was a strategy aimed at people living in unaffordable areas – like San Francisco, Los Angeles, Miami, or New York…

By renting there to avoid both high purchase costs and a major bubble burst (when it inevitably comes), you free up your borrowing power to buy a house in an affordable area where renting for income is more lucrative, and far less risky.


These are places with high percentages of single-family rentals, like Denver, Las Vegas, or Kansas City.

https://economyandmarkets.com/wp-content/uploads/2018/08/ENM-08-13-18-Mon-Chart_One.png

With the exception of Baltimore, these cities are not on the expensive coasts. But rather more towards the center of the country.

They have more middle- or lower-income families that are struggling, and can’t afford to buy even in these less over-valued areas. With the exception of Denver – to a degree – none of these are bubble cities that are likely to crash and crucify you.

In a second article called “Pick your poison,” Riquier shows that there are two ways to make money in real estate. And they tend to be more mutually exclusive.

Look at this chart that rates areas by quality of life.

https://economyandmarkets.com/wp-content/uploads/2018/08/ENM-08-13-18-Mon-Chart_Two.png

The “A” areas appreciate the most at 21% annually. That’s about twice as much as the “B” and “C” areas.

The worst – “F” areas – have slightly negative appreciation rates at -0.4%.

Not at all the place to buy!

But the “A” areas are actually the worst at this time, as they are out of reach of most buyers and will get hit the worst when this second – and final – real estate bubble bursts.

Now, look at the average rental returns.

They’re the highest in the poorer “F” areas at 10.1%, which is damn good. Rentals don’t vary as much as appreciation, and are still good at 7.9% in the “A” areas.

But there, again, your risk is that the property falls by 30% to 50% while you own it and wipes out many years of rental gains.

The rental appreciation rates are also higher in the lower quality areas. There are now online companies – Roofstock, Home Union, Investability, and OwnAmerica – that help you identify, purchase, and manage such long-distance rentals.

One of the best sites at this point appears to be Roofstock.com. They charge a 2.5% brokerage fee to the seller, and 0.5% to the buyer.

That’s cheaper than the standard 6% commission.

Roofstock reports their clients are averaging 10.3% rental yields since its inception.

Teaming up with people you know in such areas is another way to do this.

Here’s the ultimate strategy, and you should do this now before the next crash while it’s easier to borrow.

In that crash, rentals will tend to hold up. Housing prices will fall. Use your equity and cash flow from owned rentals to buy the far cheaper foreclosures (often by just taking over the payments at a discount) then rent them out for even more profits.

This is what smart money did during – and after – the 2008 crisis.

Hedge funds and individual investors bought single family houses for cheap then rented them out for strong, positive cash flow.

And it gave them the potential to both buy more as the downturn progressed and to sell down the road when the market was better.

Single-family rentals attract older, more family-oriented renters that stay twice as long as in apartments (three years compared to one and a half years on average). They’re less likely to default or cause problems – like burning down the house…

You can choose to sell the houses in a better market later down the road, and your renters may become the buyers. Or you can just keep renting them out at stronger returns from buying them so cheap to finally buy the house of your dreams in a once-expensive city of your choice!

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2018 Harry Dent- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Harry Dent Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules