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Three New Cities Where You Should Invest
Though
real estate has boomed in the last eight years - particularly in
California - being cash-flow positive is still a reality elsewhere.
By Melissa Barbagallo
December 19, 2005
The
median home price in California has now surpassed $568,000, making
affordable investment properties scarcer than ever before. It’s enough
to send some investors running for the hills, or at least toward the
stock market. But just because you’re struggling to turn a regular
profit on a property in the Golden State doesn’t mean real estate is
hopeless everywhere. In fact, if you act quickly, you could hit the
jackpot in Texas, North Carolina or Oregon.
Not convinced? Just ask Anthony Marguleas, owner of one of Los Angeles’ most reputable independent real estate companies, AM Realty.
“[My clients] were getting frustrated that they could not find any
deals in Los Angeles because it has been a seller’s market for eight
years,” says the certified residential specialist. “They were looking
for other options and asked if I knew of any other areas that were good
to invest in outside of California.”
Marguleas did indeed, and in a two-day October seminar he explained how
to find low-risk “cash-cow” properties in Austin, Raleigh and Portland.
He recruited three leading realtors to speak at the event: Peter
Sajovich of Re/MAX Austin Advantage of Austin, Tex.; Tim Burrell of
Prudential Carolinas Reality in Raleigh, N.C.; and Rob Levy of
Prudential Northwest Properties in Portland, Ore.
“The seminar is a fantastic opportunity for local homeowners to
make the most of their equity and help their nest egg grow,” Marguleas
remarked in a press release before the event.
One great place to start is Austin, which in September boasted an
average home price of just $158,600. But despite its low cost of
living, the city is no one-horse town: it’s the 16th largest city in
the nation, the home to corporate powerhouses such as Dell Computers, a
b proponent of public education and the recipient of several “Best
Places to Live” awards. It also boasts a high median income for
residents, thanks in part to the absence of income tax.
Austin is a smart choice for investors because rents tend to be high –
whereas in southern California, landlords too often have to shell out
extra bucks to cover mortgage payments when rents fall short. Further,
the city’s appreciation rates are steady: rather than skyrocketing as
they have on the coasts, those in Austin have plugged along slowly but
steadily. Simply put, there is plenty of money to be made there in the
long run.
“Next year, they may be up to 6 percent, as Austin continues to create
jobs,” Sajovich says of the appreciation rates. “And it’s predicted
that in 25 years, Austin will overtake San Antonio [in terms of size
and prestige], which will cause real estate values to go up.”
He also points out that a major reason Austin is so hot is that in the
1990s, it was designated one of the 20 fastest-growing cities in the
country. Most builders specializing in apartments went to Austin and
immediately started working on new projects. But soon after, thanks to
the dot.com bust, the city plummeted into a major downward spiral while
the rest of the country boomed. Today Austin is gradually recovering,
and investors are likely to yield big bucks when the bubble bursts.
“It is our affordability index coupled with our median income that puts
us in the top five cities to live in in the U.S.,” says Sajovich, who
grew up in southern California but relocated to Austin in 1993. “Austin
is poised to become the absolute best place to invest.”
Raleigh – near top-rated Duke University – is no slouch, either.
According to Burrell, one of its biggest attractions is its diversified
economy, supported by a slew of government agencies, medical
facilities, and tech and pharmaceutical industry headquarters.
“We have all that sexy stuff that gets us the press,” he says. “But it
also makes us bubble-proof. It’s not like we have just one plant.”
That fruitful job market paired with stable growth is exactly why Raleigh is becoming ever more popular.
“We have a steady level of appreciation, and every builder in the U.S.
is trying to build in Raleigh. Soon they are going to run out of
space,” says Burrell, noting that many Raleigh residents do not want to
drive too far to work. “The properties closer in are going to become
more and more expensive, because people will pay more to commute less.
It’s smart to get in now.”
The same rings true for Portland, which, like Austin, is expected to
experience exponential growth in the near future but is still home to a
wealth of affordable investment properties.
“Mainly our powers to be are predicting approximately 1,000,000 more
residents moving here in the next 15 years. The reason that is so
important is people think that we have lots of room and can expand at
will, but the opposite is true,” says Levy, a Portland resident since
1984. “We all know that limited supply and lots of new residents mean
higher prices.”
Until then, however, investors would be smart to buy up properties in
this “bargain” city, widely recognized for its highly ranked public
schools, nearby mountains and beaches, and a growing job market.
“The other main drive for investors to consider is we have the sixth
fastest-growing economy in the U.S., but the new jobs in this cycle are
mostly lower paid jobs,” Levy says. “So a lot of those people can’t
afford to purchase – but they will be renters.” And that’s exactly what
investors – looking to be a landlord – need to hear.
Melissa
Barbagallo is a freelance writer and an employee of the University of
Maryland. She lives in the Washington, DC Metro area. She can be
reached at mdbarbagallo@hotmail.com.
Copyright
2005 The Working Investor. All rights reserved. This material may not
be published, broadcast, rewritten, or redistributed.
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Still
need more evidence before you start looking outside of California for
investment properties? Or are you hoping to attend a seminar in your
area?
Contact Anthony Marguleas:
(800) 769-3332, ext. 100
www.amrealtyla.com
________________________
Looking to invest in Austin, Raleigh or Portland? Visit one of these websites for the latest tips and tidbits from our experts:
Austin
Austin, with its stellar public education, low cost of living, and
absence of income tax, could become one of the top 10 largest cities in
the United States.
http://www.homesofaustin.com/
Raleigh
This city has by far more PhDs per capita than most other American
metropolises, not to mention some of the largest corporations (read:
jobs) in the South.
http://www.timburrell.com/
Portland
Thanks in part to its lush landscape and laid-back attitude, Portland
will become home to an astonishing 1,000,000 more residents over the
next five years. Will you be one of them?
http://www.investinportlandrealestate.com
http://www.roblevy.com
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