HomeVestors has 230 franchises in 35 states and has bought more than 35,000 homes in the past 12 years. They just released their Top 10 markets for the 2nd quarter of 2008. How do they choose those markets?
Mark Hagen, a vice president of HomeVestors, said the top markets share certain common characteristics. "We call them rational markets," said Hagen. "Real estate fundamentals make sense in these areas."
They all have:
- Moderate home prices relative to the national average, and never participated in the wild inflationary spirals of the boom years….or the rapid deflation after 2006.
- Solid local economies, producing new jobs, even in the face of a national slowdown.
- Strong local demand for both single family rental units and "starter" homes for renters looking to buy.
- Prevailing rent levels strong enough to produce positive cash flows for investors.
OK, so their first rule alone means the Top 10 foreclosure areas would never make it onto their lists. They want stable areas where prices remain steady (predictable). This allows them to buy distressed properties from people who lose jobs, get divorces, or face foreclosure at very low prices ... but still have an excellent chance of flipping the property for profit. So what are these markets?
- Dallas, Texas
- Houston, Texas
- Atlanta, Georgia
- Denver, Colorado
- Fort Worth, Texas
- San Antonio, Texas
- Charlotte, South Carolina
- St. Louis, Missouri
- Milwaukee, Wisconsin
- Chicago, Illinois; Kansas City, Kansas (two cities tied for tenth place)
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