done before the cycle is over, go ahead. If you are buying and holding, I wouldn’t want to buy in these markets.”


Low Values Equals High Rental Returns But the best rental returns for buy-and- hold investors can also be found in some of the lowest-value markets. The top 10 zips with the highest potential gross annual rental yields all had median home sales prices below $20,000, according to the RealtyTrac Q1 2016 Single Family Rental Market Report . “The fact of the matter is when prices go up, the yields go down. There always seem to be a group of investors who are interested in buying in that $50,000 to $100,000 range because the yields are better,” said Dennis Cisterna, chief revenue officer at Investability Real Estate , an online marketplace for investors of single family properties. “And you can buy more properties at the lower end, especially with leverage. … I think you have people starting to aggregate more in these markets, partly because of the availability of financing.” Among the top 22 zip codes where institutional investors (those purchasing at least 10 properties in a calendar year) accounted for at least one in five home purchases so far in 2016, 20 of those zip codes (91 percent) have median sales prices below $150,000, according to data from ATTOM. Markets with the highest share of institutional investor purchases so far in 2016 included zip codes in Hudson County, New Jersey, Birmingham, Alabama, Lakeland, Florida, St. Louis, Memphis and Atlanta (see page3).

Click to view interactive map.

Every housing market in the country is a good investment for somebody.” Greg Rand | CEO at OwnAmerica Charlotte, North Carolina “

Planning for When the Party is Over The strategy of targeting lower-value neighborhoods works as long as flippers get out before the music stops on the upward real estate cycle, according to Bartlett, who said he has been flipping single family and multi-family properties in Southern California since 1996. “In some of these neighborhoods it’s strictly cyclical ... and when the cycle ends the party is over in these bad neighborhoods because there is a flight to quality,” he said. “If you can get the project

the state average in 2015 in three of those five L.A. zip codes.

Median home sales prices were below $150,000 in 20 of the top 28 home flipping zip codes nationwide (71 percent), and the median sales prices in the five Los Angeles-area zip codes on the list were all below the metro-wide median sales price of $560,000 in the second quarter of 2016. The lowest median sales price among the Los Angeles-area zip codes was $279,750 in zip 90044, located between Inglewood and Compton south of downtown.



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