When my father retired in 2003, the first thing that he looked at was how he could augment his fixed income. He had spent 35+ years teaching in the Department of Defense Overseas School System, basically meaning that he spent a majority of his life outside of the United States. He was a California resident working for the government; he would come back stateside every few years for summer vacation. While he was with DoDDs he was given a housing allowance, medical coverage and a “living wage.” When he retired, all of that stopped, his fixed income had to cover his living area, his medical bills, and his every day expenses.
He moved to Los Angeles into a senior’s community, renting an apartment. Luckily over the last 35+ years with DoDDs he socked away enough money that he could purchase a house for cash if he wanted to. He decided against this because he had the “what if’s” that popped up in his mind. He and my mother decided that they needed to add to their income, they decided to purchase some rental properties in the Southern California region. At the time property values were on the rise and it was just not in the numbers for them to purchase anything that would involve a mortgage, which they were completely against. They wanted NO monthly responsibility.
It took them 5 years of researching to finally purchase their first properties. It has been incredibly beneficial to them, especially with the fact that the housing market had taken a dive. They were able to purchase a foreclosed property at a bargain rate. I suggested many places for them to look at, in state and out of state; I found some real nice places that will rebound well after the housing market starts to pick up again.
- Ann Arbor, Michigan – The University of Michigan’s home town. This city offers a very multi cultural group of people, primarily college students from around the world as the University of Michigan is one of the top public universities in the world. Many students are looking for housing around the campus, but not necessarily on the campus as it tends to be much more expensive. The population of Ann Arbor has been steadily growing over the last 30 years. Of all of the places in Michigan, Ann Arbor’s property market should rebound much quicker than the rest of the state as the city is associated with the university which is always bringing in new students. Median Home Price in 2008: $220,000. Average rent on a three bedroom house: $1175.
- Athens, Georgia – Another college town, having the same benefits as Ann Arbor with the college crowd and also young professional families, Athens, Georgia, provides large properties with a southern charm. Much like its northern counterpart, Athens, GA’s population has increased every year for the last 30 years making it one of the fastest growing cities in Georgia. Median Home Price in 2008: $212,000 Average rent on a three bedroom house: $1050.
- Sacramento, California – The state capital of California. The city has become one of the top foreclosure cities in America due to the economic downturn which makes it a ripe location for rental properties. The city itself boasts one of California’s largest growth areas, primarily from San Francisco from where the population influx is coming. The main employer of the city is the State Government itself. Median Home Price in 2008: $200,000. Average rent on a three bedroom house: $1450.
- San Diego, California – California’s southern most city, bordering Mexico, it is considered one of the United States premiere family vacation spots with family friendly attractions like Sea World, the world famous San Diego Zoo & Wild Animal Park, and Legoland to visit. Much like Sacramento, San Diego has been bitten by the foreclosure bug which has caused the property values to drop with rental properties becoming high in demand. Median Home Price in 2008: $310,000. Average rent on a three bedroom house: $2000.
- Orlando, FL – Located in central Florida, the city is within 2-4 hours of every major city in Florida, Tampa bay, Jacksonville, Miami, Tallahassee. It is the premiere family vacation spot in Florida with Disneyworld and Universal Studios taking up a large amount of the city center. Much like San Diego, it too has been bitten by the foreclosure market. Median Home Price in 2008: $225,000. Average rent on a three bedroom house: $1450.
With all purchases, please contact a financial advisor, but also look at the neighborhood that you are purchasing in as that will determine the type of tenants that you will most likely be attracting. Property taxes, schools, crime rate and the job market should also be factors that one should look into before making a purchase, either for themselves or as an investment.