Market South Management Rental: Fill & Download for Free

When I moved away from South Louisiana in 1990, the housing market there was weak, so I decided to rent out my house.A friend of my wife managed rental property, and we hired her to manage ours, as we were moving over 300 miles away.Shortly after the tenants moved in, the AC unit stopped working, and the property manager gave me a call. “I have a trustworthy heat and air guy that I use all the time, and I will call him to look at it.” I agreed.The next day, I got the verdict: “It needs a new compressor that will cost $800.” I asked her to get another service guy to look at it, but the result was the same, this time with a $900 price tag.That evening, I called a former neighbor who had previously worked as an AC technician before moving on to another career. He went down to the house and called me back a half-hour later. “The breaker is bad, and it will cost $40 to replace it.”When I told the rental agent about the real problem, she became defensive, but was at a loss for words. She didn’t object when I asked her to tear up the management agreement.For the neighbor who saved me a lot of money and trouble, I sent the payment for the breaker and his time along with a bottle of his favorite whiskey.The AC unit was still running fine when I sold the house a couple of years later.

Great question. Our company manages 2,200 homes in 26 different states so I'll try to share based on our findings. Below are just some thoughts from our experiences.Certainly, returns will very by state, but more specifically by the individual city you are looking at. We break properties out into categories of A, B and C property.With each step up you will get lower rental returns, but nicer properties in better areas. This is just our own system -A Property -- great school system www.greatschools.org rates a 9 or 10.- low crime well below the averages- higher median income- new single family homes would be 400k and up-returns will be 3 to 5 percent CAP rates- appreciation is percieved to be 8 to 12 percent per year.B Property-decent schools - rated in the 6 to 8 range on great schools.- low crime- higher median income/ working class.- new single family homes in the 250's and up- returns will be 5 to 7 percent CAP rates.- appreciation perceived to be 5 to 8 percent a year.C Property- lower then average schools 3 to 5 rating on great schools- crime rates higher- lower then average incomes (under 40k/yr average)- new single family homes not being built, or in the low 130k's to $170k.- returns will be 8 to 12 percent CAP rates.- appreciation perceived to be 3 to 5 percent a yearD property.(We will not touch this, but I often find foreign investors that buy into this because the CAP rates appear to be great, but the reality is they are priced low for a reason)Schools - 1 or 2Crime - badIncome - very lowNo new homes being built, homes can be $10k to $50kCAP rates - 15 to 25 percentAppreciation - you will never be able to sell. Possibly falls 5 to 10 percent a year.Nearly every major market in the US has property that fits into each category. So you need to determine if you are looking for appreciation or a rental return.Our suggestions on good rental markets.1) Atlanta Metro Market - south east- fast growing area. Still good values in some areas, although many pro investors will compete against you to buy homes. Sprawling suburbs offer good investments.2) Phoenix Metro Market - very well priced homes compared with California and strong rental market. Good job growth and great weather.3) Raleigh North Carolina - fast growing area, lots of higher paying jobs. Good weather. Nice smaller sub market.4) Houston Texas - 3rd largest metro market in US, recently experiencing a bit of a pull back due to lower oil prices. This is creating a good buying moment in a good rental market. Check out the Woodlands as Exon just let thousands of jobs go in this area making for good buying moment.5) St. Louis, MO If you want good C properties, you can find them at $50 to $80k and not much competition. Lighter appreciation, but no competition. No institutional money invests here, that could be good opportunity or scarry depending on your view. Can get 12 percent CAP rates in nice brick ranch style homes from the 1950's.6) Miami FL - everyone talks about Miami, but we like some of the out laying suburbs, not the higher priced Miami Beach for investment. Very high rental rates compansate for higher property values. Great weather and fun to visit. If you want lower priced homes, try more northern Jacksonville Florida. They provide higher CAP s and lower funds to buy inFeel free to up vote if this helps.Regards,MikeWww.marketplacehomes.com

Back around the early 1970s it was cheaper to live in San Francisco than in L.A. At that time the economy of the city still revolved around the port. Until the spread of suburbia into the south bay in the late ’50s and ‘60s, its economy was mainly based on food processing (canneries) and military production.High tech originally developed in the South Bay out of the federal military subsidized production. As late as the ’70s at least half the jobs in the San Jose area industry were military related. By the 1980s with the huge development of chip making and consumer electronics in the San Jose area, there were 1,500 manufacturing operations in the South Bay. This means there was back then a huge blue collar workforce in the South Bay.When I moved to San Francisco in 1981, there was no high tech industry in the city. The basic character of high tech in the Bay Area underwent a massive change in the 1990s. A massive shift to offshore the actual production work, mainly to Asia, but also rural areas of USA and Mexico, gained hold in early ‘90s. This happened for two reasons: 1. to avoid the unions which were becoming more successful in their organizing, and 2. the discovery that solvents from the electronics industry had destroyed the groundwater in the South Bay. this led South Bay cities to pass all kinds of enviro regulations. The offshoring to Asia was an attempt to escape the unions and enviro regulation.So this changed the composition of the jobs in high tech in the Bay Area. What remained was the marketing, management, engineering and software sectors. These sectors employ a very high proportion of college-educated professionals and middle managers making very high salaries.This completely shifted the demand side in the housing market. Anyone who merely talks about “supply and demand” doesn’t know half the story. Supply of housing always grows only slowly in urbanized regions that are already well developed. It’s easier and less expensive for developers to do “greenfield” sites out on the agricultural fringes of an urban region — like say Fairfield or Tracy. But in the existing urban areas the developers have to go through the annoying and expensive process of getting permissions. In upper middle class suburban jurisdictions — most of south bay — the professional-managerial class homeowners will be mostly concerned to exclude working class people so as to not share their school systems and not diminish the value of their houses. Hence little rental housing will get built.In San Francisco there are limits to land and, again, that annoying process of getting permissions. This led in the 1990s to lots of illegal building and conversions in industrial areas — since these areas have the least expensive land. And in the USA the conservative political structure has always underfunded social housing which might provide housing affordable to those with middle to lower incomes.By the late ’90s the South Bay’s unwillingness to build housing meant growing commuters to the city from the South Bay — since the city had cheaper housing at that time. The freeways became packed at all hours. Eventually with the dot-com boom of the late ‘90s, high tech began to gain a foothold in the city itself. And now very large high tech firms are rooted in the city. So you have this huge buildup of people making very high salaries, who can outbid working class people for housing.In this situation to say, “Well they don’t build enough housing” is simplistic at best.