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Archives for July 2022

Passive Income Ideas 2022: Best Opportunities To Make Money

July 31, 2022 by Marco Santarelli

Passive Income Ideas For 2022 & 2023

Passive income is income that continues to generate revenue for you even when you are not actively working. Sounds intriguing? So let us talk about the best passive income ideas for 2022. There has never been a better time to explore new passive income opportunities. Your income has a big influence on your lifestyle and level of comfort. You need a passive income strategy if you've recently discovered that your salary is no longer sufficient to support your lifestyle, or if you simply want to generate extra money.

Passive income provides financial security and peace of mind without necessitating active work. With passive income, you will enjoy greater freedom. You can use this money to cover essential necessities such as rent, utilities, etc. You don't have to worry about whether you have enough money to cover your expenses or to take a holiday. It will serve as a backup in the event that you lose your normal income.

You can create passive income streams that give you more flexibility and freedom if you find the right strategy for you. Over the last decade, some fantastic passive income ideas and streams have emerged, making it even easier for beginners to generate extra cash. In the sections that follow, we'll define and outline some popular strategies you can employ.

Passive income sources

What is Passive Income?

Passive income is money that is usually (but not always) received regularly without any or only little effort. What is so fascinating about it? Everyone aspires to generate a passive income so they may retire wealthy and live their life to the fullest. There are several types and degrees of passive income, which we will discuss. Making money while you sleep is just another fancy term for passive income. By building different sources of passive income, you can earn a good amount of money regularly from work that is already completed, such as royalties from books.

However, in order to attain financial independence, you must leverage your time and effort to establish multiple passive income streams that will continue to grow in the future. In other words, you must do something to produce passive income upfront in order to rely on it for years to come. You either have to do much, in the beginning, to set up your passive income stream, or/and you regularly have to invest at least a bit of your time, effort, or money to maintain that income.

You may now get thousands of best passive income ideas for 2022 on the internet for earning monthly residual money. However, we can narrow them down to the most effective passive income ideas and strategies. As we all know, the coronavirus epidemic has lost many people their jobs. It has reignited interest in concepts for passive income. There are several classic and new passive income techniques that can provide you and your family with a consistent source of income.

Unlike the misconception, passive income ideas do require upfront work to earn, like writing an e-book or building and monetizing a blog. Some passive income ideas — like investing in stocks or renting out a property — may take some work to get up and running, but they could eventually earn you money while you sleep.

Passive income is important because it creates stability, security, and freedom in your financial life. In a time when the COVID-19 pandemic has caused many workplaces to shut down, the country is in a recession and economists still have no idea how long the economy will be in a downturn, it’s a good idea to create multiple streams of income to protect your personal finances. Good passive income streams take time to build up. Passive income has been loosely defined as money that you earn with the least or zero amount of effort.

People often associate passive income with dividends, interest as well as lottery winnings, and capital gains from real estate. Passive income or residual income can also be derived from a business where you do not have a substantial investment in terms of labor. It's easy to see why people like the idea of passive income. You can do the work once and get that passive income forever. Passive income is the opposite of how most of us earn a living. Through it, the money comes in without much work on your part.

The question for many is how to earn a real passive income. What does it take to earn passive income? What are legitimate strategies for earning a real passive income? Let us answer all these questions and discuss some of the best passive income ideas that can be used to make extra money in 2022. The difference between active and passive income – Your business associate who does most of the work will consider the income that they earn from the partnership as active income.

This is the polar opposite of passive income because the former is money earned from rendering a service. Your salary is considered as an active income, and so are tips and commissions. Let us assume that you have a 50% interest in a business venture, you have invested more than 100 working hours to make the enterprise prosper. In this scenario, you consider this as an active income whereas a passive income is earnings derived from any form of business or partnership in which a person is not actively involved.

A passive income can also be referred to as residual income. However, no type of passive income is sustainable long-term without some sort of maintenance. The best example of this is rental properties. They need maintenance as well as rental management. For e.g; your rental property will need to be repainted occasionally or may need a new carpet or an HVAC. Below, we have identified key passive income strategies you can use to build financial security.

Passive Income Ideas

28 Passive Income Ideas & Opportunities to Increase Your Earnings in 2022

This pandemic has had an incredibly negative impact on the economy and livelihoods. If you’re one of the millions of Americans who lost their jobs, it might be time to start earning passive income. Here is the list of the best passive income ideas and opportunities that can boost your income in 2022.

best passive income ideas for financial freedom

1. Passive Income Through Cash Back Websites

Earning a passive income through cashback websites is as passive an income method as any. You just need to go about your life as you normally would but with a little more focus on the things that you decide to buy. Cash-back websites combine spending money with earning money. This may not be considered as something that will help you go to early retirement.

But you can still earn money with no effort required from you. Not to mention that this is completely free. All you have to do is sign up for cashback on shopping websites. These shopping portals return to members a percentage of the total amount that they spend on their qualifying purchases.

For example, you can use Swagbucks to get cashback. Just use its shopping portal to buy items online or add the Swagbucks browser plug-in to get points automatically as you browse the web. According to the company, it has paid out over $400,000,000 to members. Countless members have earned as much as $12,000 using Swagbucks. It is even a safe way for teens to make a little pocket money.

Another example is MyPoints, which gives you a few different ways to earn points. To get cash back, you can use their shopping portal and earn points by buying anything from one of their partner stores. You can also get points by taking surveys, watching videos, playing games, and even reading emails.

TopCashback is slightly different as they give the full commission back to customers and make their money elsewhere. You’re able to earn 3% consistently, which may not sound like much, but is a high percentage to be earned across all sites. There are also coupons you can find and special offers that give higher cashback.

2. Passive Income Through Stock Investment

Owning stocks and bonds to many doesn’t seem like one of the best passive income ideas. Yet this is the very basis of private retirement accounts. You’re buying stocks, bonds, and mutual funds that contain both so that you can live off the passive income in retirement. Companies need money to finance their business so they earn it by either borrowing or sharing stocks through an IPO. An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance.

Investing in stocks of a company, you become one of its “owners”. When the market is down, this is the best time to buy stocks.  If you aggressively save money and seek good-value, dividend-paying stocks, you may be able to achieve a solid passive income before the traditional retirement age. Diversify your holdings to reduce the risk of losing everything because a company cratered.

best passive income ideas
Original Photo via Pixabay

We have separated this from investment in bonds because of the nature of the two. In the previous paragraph, it was mentioned that this is a share of ownership of a certain entity. Some entities pay their stockholders every quarter so it is an excellent way of making a living without doing anything. But you have to be careful in choosing the company to invest in.

3. Amazon FBA

Amazon has become a great source of passive income for people who want to generate extra income for themselves. If you have something to sell online, you can use Amazon's platform. Amazon is huge. It's the third-biggest website in the US. Amazon also offers a couple of different fulfillment strategies such as the “Fulfillment by Amazon” platform – also known as FBA.

Its FBA program is just like eBay, where you have something to sell and just need to find buyers. The major benefit of using FBA is that you don’t have to worry about a thing. Amazon stores your inventory at their massive warehouses and does all of the picking, packing, and shipping. Around the world, Amazon has more than 175 fulfillment centers which contain more than 150 million square feet of storage space.

With FBA, you get to store your stuff on those shelves. You also get Amazon’s world-class customer service and returns, along with other advantages (like automatic Prime eligibility and Free Super Saver Shipping) that help you scale your business—fast. The other option allows sellers to fulfill their own orders. Each method comes with its own pros and cons.

Steps to start making passive income through Amazon FBA.

  1. Find some unique/profitable products to sell.
  2. Something which has good demand but is not commonly available at offline retail marketplaces.
  3. Find the suppliers of those products.
  4. Remember that you need to buy low and sell high to have a reasonable profit margin.
  5. List these products on Amazon through your seller account and set the prices.
  6. You need to have a competitive pricing strategy to compete with other sellers on Amazon.
  7. Use the right product titles and descriptions on the listing page.
  8.  Try to think about what will best help customers find your products, discover answers to their questions, and make a purchasing decision.
  9. Ship all of the items to Amazon at one time.
  10. Amazon takes responsibility for the packaging, labeling, and shipping of products through Fulfillment by Amazon (FBA).
  11. Amazon collects payment, deducts their fees, and then sends you money twice per month.

Once you’ve launched your business, Amazon has tools in place to help you take your business to the next level. Amazon’s advertising solutions create new ways for you to reach and engage shoppers, regardless of whether they’re just starting to compare products, or ready to make a purchase. Ads show up right where customers will see them (like the first page of search results or product detail pages).

Please note that the sales are passive, the work isn't. Here are a few things to try in your first 90 days as an Amazon seller.

  • Keep an eye on your account health in Seller Central
  • Use Fulfillment by Amazon or Seller Fulfilled Prime
  • Advertise your listings or offer deals and coupons
  • Enroll in Brand Registry and create enhanced brand content
  • Expand your selection by listing more products
  • Use the Automate Pricing Tool in Seller Central

4. Selling Stock Photos Online

Stock photos can be a good passive income source if you love to take tons of pictures. You can get paid to sell photos online through stock photography websites such as Shutterstock. The photos can be from any niche such as travel, food, or any sports that you like to cover. You can put your images for sale as an independent photographer on various stock photography websites.

While this can take time to build up if you take thousands of good pictures but you would enjoy the whole process and time spent if love taking photos. After all one of the goals of financial independence is to build wealth that doesn't eat up your time, so you can enjoy life and do the things you like to do. This is a great passive income idea because it pays you to do what you want to do anyway.

Here are some of the best stock photography sites where you can sell your images and photos online for passive income. You can open an account and get started creating this passive income stream.

  • Depositphotos
  • SmugMug Pro
  • Shutterstock
  • Pixabay
  • iStock Photo
  • Etsy
  • Getty Images
  • Stocksy
  • Adobe Stock
  • Twenty20

5. Earning Passive Income As Silent Business Partner

One of the best passive income ideas most people have never heard of is becoming a silent partner in a business. Instead of lending the business money, you buy a stake in the business. Then you’re paid a percentage of the profits, and your money is backed by a percentage of the assets of the firm. There are sites where you can search for businesses seeking silent partners. Instead of giving a friend thousands of dollars for a 10 percent stake in their restaurant, you can choose from thousands of startups or small businesses for one that looks good to you. Moreover, you can reduce your risk by investing in several startups.

best passive income ideas
Original Photo via Pixabay

This is one of the best passive income ideas for those who were thinking of starting their own business but decided they didn’t want to do all the work. Know that passive income ideas like this require doing your due diligence, vetting the business’ numbers, and verifying that your rights as an investor are protected. You can also bankroll the business of your friend or family. They will then be able to run the business for you.

If this is an ongoing operation, you must study their financial statements and other aspects of their business before shelling out anything. But if you are investing in a new entity, you must know if your business partner is trustworthy. Although this does not lessen your financial exposure, you can sleep peacefully at night knowing that your money is in safe hands.

6. Lending Money To Others For Interest-Based Income

One of the best passive income ideas is to loan money to others and get paid in the form of interest. We’re not saying to loan money to a broke friend who never pays you back. As a private lender, you can lend to anyone in your social circle. For example, many home fix and flip investors need access to a source of capital they can tap into very quickly to fund the initial purchase of their properties.

You can partner with them to use your capital for the short term in exchange for an interest rate that is mutually agreed upon. You can also utilize peer-to-peer lending sites to loan money to others. The lending site collects the payments and provides more leverage when someone is late. You as a lender can lower your risk by diversification.

Simply lend money to a variety of people instead of putting all of your money, literally, in one basket. It is a wise strategy if you’re pursuing higher yields that beat stock market returns.

best passive income ideas
Original Photo via Pixabay

This is probably one of the few passive income ideas that involve high risks. But it is quite profitable. You can lend money to people who cannot qualify for conventional financing means. You could lend money with an interest of 6 to 10%. A good way to lessen your financial exposure is by investing in a company that will act as a mediator. They will ensure that you are paid back.

Another easy passive income idea through lending is called peer-to-peer lending in which you can give loans to other individuals who don't meet all requirements for conventional financing. A crowd lending website is where you become someone who loans out money and you get paid interest. You’re like a bank now, getting paid interest.

It’s an awesome feeling to be the lender instead of the borrower. You invest in portions of loans. With returns of 6-10%, investing with a company like Lending Club can get you substantially higher passive income than normal investment funds or bank interests.

7. Starting A Blog & Monetizing It

The passive income through blogging has allowed many to stop exchanging time for money. For example, as a travel blogger, you can set up a WordPress blog and share your experiences with your readers. Whenever you go to a new place, you can write about all the cool things you saw and did there. You can make money in a few different ways. You can apply for ad programs like Google Adsense and set them up on the sidebar of your site.

best passive income ideas
Original Photo via Pixabay

If any of them click through, you will get a small fee from your advertising partner like Google. You can also sign up for some of the affiliate programs. As mentioned above affiliate marketing is one of the various ways to make money online by promoting products or websites to earn a certain percentage as a commission.

8. Affiliate Marketing

Blogging is often seen as a great way to earn almost passive income. If you run a blog and get decent traffic, you can incorporate ads to your site and get paid per click or view on each ad. If you have a lot of traffic, this can add up to a decent chunk of change. Basically, affiliate marketing involves promoting products and getting a cut of sales.

All you have to do is put a link to a product on your blog, website, or social media page and then start earning money This isn’t completely passive income; you have to create content that will attract enough viewers for the ad revenue on the blog to be worth the effort. You have to write content, but you can hire others to write content for you, as well.

You can use software to schedule posts to be published when your readers expect new content. General ad revenue for blogs has been declining due to sheer competition. The alternative for bloggers is affiliating the blog. For example, a Mommy blogger could be paid to review various baby products, though she’s legally required to disclose the relationship.

You could mention sponsors and post a link to their site or products for sale. On the other hand, you could do it yourself, doing product reviews, and sharing affiliate links to the product on Amazon. Then you receive a few percent of every sale as a commission. This is one of the best passive income ideas for those blogging consistently about a topic for which they can recommend related products.

This is one of the passive income ideas that do not require any investment from you. This would be an excellent money-making venture especially if you already have an existing website and a band of loyal followers. In this scenario, you post a link that will send the viewer to a certain website where they can buy the item. If they do purchase, you get a commission.

best passive income ideas
Original Photo via Pixabay

A lot of new things have come up in affiliate marketing. For example, you could promote or run ads in an app you create. Or you could mention sponsors that helped pay for your blog or provided expert advice for your online course. That’s aside from the classic approach of putting affiliate links in a blog or emailed newsletter.

One of the new passive income ideas is using various tools to set up affiliate programs on a one-to-one basis, whether you’re referring people to someone else’s online course or sending leads to a real estate agent.

Then there are the relatively classic passive income ideas like promoting books and products via an Amazon affiliate link. This is an option even if the app exists solely to connect your audience with you as an influencer. Promote your blog posts or podcast, and you can occasionally send out a link to your ebook or someone else’s book offered through the Amazon affiliate program.

You can also buy blogs/websites that already have a good amount of traffic and generate revenue every month. Thousands of websites are created every year and put for sale by the owners. If you can buy them with a reasonable amount of web traffic — as well as a demonstrated cash flow — it could be a perfect passive income source. Most blogs employ Google AdSense, which provides a monthly revenue stream based on ads that Google places on the site.

There may also be affiliate programs like Amazon Affiliate generating additional revenue. Both income sources will be yours once you purchase the blog. From a financial perspective, blogs usually sell for 24 times their monthly income. So if the site generates $250 a month in income, you can likely buy it for no more than $3,000. You can buy money-making websites/blogs from sites such as Flippa.com and EmpireFlippers.com.

9. Money Making Websites

Many blogs earn revenue from Google ads. Some may have affiliate income as we described above. What most don’t know is that you can buy blogs from the owners and take them over. The ideal cases have evergreen content that generates passive income for years. Add some fresh content, and you’ll increase traffic and monthly revenue. This also raises the possibility of earning money with site flipping.

Alternatively, you can build a niche blog that targets a small subset of the blog’s audience, increasing its value to the audience and advertisers. You can even increase traffic to all of your blogs by cross-linking to each of them. This is one of the better passive income ideas for those who want to do more than a blog on the same subject every day.

10. Renting Your Car

You can make passive income from renting your secondary car on popular car rental apps that put car owners in touch with car renters. You can offer a slight discount to increase your car’s demand and set a minimum amount of rental days to ensure you make get more money for your time. So, this is one of the most passive ways you can make an extra income online at the moment if you have a car you can rent for cash.

You can make several hundred dollars a month renting your car on those platforms. For example, Getaround is a car-sharing app that allows car owners to connect to people who need to rent a vehicle. Similarly, you can cover your monthly car payments or simply earn some extra cash by sharing your primary car on Turo whenever you’re not using it.

That is a pretty good return since you can recover the entire cost of your car over a period of several months. Note that there are many things you can monetize this way. Not just a car. Depending on where you live, you could rent out your parking space for the money. You may be able to rent out tools that you own. The questions you have to ask are what you’re willing to lend out and what demand for these items is like in your area.

11. Writing Books

best passive income ideas
Original Photo via Pixabay

Selling books can be an incredible way to create some genuine passive income in the form of royalties.  In today's day and age, once your book is accessible on a site like Amazon, you could get a check every month for doing nothing. The more time you spend promoting your books, the more cash you'll make online and offline.

12. Drop-Shipping

With the blast of eCommerce, drop shipping has turned out to be extremely famous. Here is how it works: you make an online store that offers items from certain manufacturers. A person visits your site, orders an item, and your system sends the order request to the manufacturer of that product.

The maker at that point completes the order by shipping it directly to the person who had placed the order on your site. A cool aspect concerning this kind of business is that you don't have to stock products that you are selling – No inventory is required from your side. The customer pays for the item; you collect the commissions and the manufacturer or seller of the items stores and ships the items to the customer.

13. Selling Online Courses

One of the best passive income ideas is selling access to courses or guides to an audience that needs such content. If you have expertise on any subject, this can become of the best passive income streams for you. This can be a lot of work upfront, but once an ebook or an online course is created and marketed it can provide you with a passive revenue stream for years.

Variations of it date back to the “Four Hour Workweek”. However, this method of building passive income has evolved over the years. The money from the online course comes straight to you, and you can use it to promote your blog on the online learning platform.

You could also promote your current business with the online courses, whether you’re a home decorator, real estate agent, attorney, or building contractor. Furthermore, you could use the course to promote other content you’ve created, be it a blog or book. Or encourage them to sign up for your subscription-only newsletter.

Content creation can be one of the better passive income ideas if you connect with services that can write quality content on-demand that you simply add to the newsletter. Note that there are plenty of tools for handling the marketing and distribution side.

For example, you could set up newsletters to automatically send content to your email list. Once you identify a need and can create a decent online course that fulfills it, you’ll have people paying you for the content. If it is good, they’ll refer it to their friends, generating more revenue. You only have to create the content once and post it on a site where they pay to access it.

If you create an online course, you can sell a companion “guide” or e-book to the students. If your online guide is selling well, then you can create audiobooks or courses for them as long as it provides additional value.

You can also use online courses to promote your expertise and promote books you’ve already written. This is one of the better passive income ideas for writers since it allows you to monetize content you already have in a new way that can even raise your profile. You can either sell the ebook on your website or offer it as an affiliate arrangement with other websites that provide content related to your ebook.

14. Buying Bonds

This is often included in most passive income ideas because you can just sit back as the money rolls in. Buying bonds are considerably safer compared to investing in stocks because bonds are considered liabilities by the company that issued them. Bonds are loans offered by corporations, cities, and governments. In exchange, there is a written and signed promise to pay a certain sum of money on a certain date and condition.

On the other hand, stocks are considered equity. If ever that company files for bankruptcy, they have to settle their liabilities first before anything else. Governments can also issue bonds but not stocks. To build a large enough passive-income stream you can invest in tax-free municipal bonds, government treasury bonds, and corporate bonds.

15. Vending Machine Business

This is one of the often underestimated passive income ideas. But it is a great way to make money especially if you have found the right place to install your vending machine. Consider the number of people going in and out of that place, you will stand a big profit if you have placed the machine in a strategic area. A well-placed vending machine can potentially earn $100 per week or even hundreds of dollars per day.

For example, if one vending machine in a prime location can bring in $50 to $100 per month. If you buy 100 vending machines, all in prime locations, you may be able to hit an average of $1000 per day. Like any business, most states require vending route operators to obtain the proper permits and licenses required by their local ordinances. When planning to start a vending machine business, it's important to check your local ordinances.

16. Time Deposit

You can earn passive income by investing money in fixed deposit accounts. This is one of the best passive income ideas that present very minimal risks. Unlike other savings account, a time deposit has a stated date of maturity. You cannot withdraw such a deposit before the maturity date. The interest rate of this type of savings account is considerably higher compared to other accounts, but it depends on the term and amount placed. Once you will withdraw your savings, you have to notify the bank at least 30 days before the said date. The higher and longer you park your money, the higher the interest rates will be.

17. Podcasting

Even small podcasts can make money through a variety of different income streams such as advertisements. A podcast is an episodic series of spoken word digital audio files that a user can download to a personal device for easy listening. Podcasting doesn’t make any money until people choose to watch you.

It takes time for listeners to decide you have value. So if you’re looking to start a podcast because you need a paycheck this week, you should find another way to earn income. However, if you've made thousands of subscribers who listen to your podcasts, then it can be monetized. Just like with a blog, you can earn passive income from affiliates, or advertisers, or by selling your products and services.

For example, you can get sponsorships and plug an ad a few times in every episode. You can also opt for affiliate programs like Audible that a lot of podcasters and YouTubers take advantage of. They give you a special affiliate link to promote. When someone uses your link, you get credit for the sale and earn $15. To start a podcast, make sure you purchase the best podcasting headsets in your budget. The quality of both your audio and content matters a lot.

18. Start a YouTube Channel

When you join the YouTube Partner Program, you have the ability to earn money through YouTube. You need to be at least 18 years old or have a legal guardian older than 18 years of age who can handle your payments via AdSense. You need to create content that meets their advertiser-friendly content guidelines.

Google will review your channel before you’re accepted into the YouTube Partner Program. They also constantly review channels to ensure you’re meeting all their policies and guidelines.

YouTube channels can be monetized even if they don’t have millions of subscribers. Your earning potential isn’t determined solely by the number of subscribers and views you have, but also by the level of engagement you generate, the niche you cater to, and the revenue channels you explore. Popular YouTubers build their audiences in millions and then launch their own merchandise.

They also partner with different brands that are looking to target specific audiences. Brands are now spending their typically large advertising budgets on influencers who’ve already won the loyalty of their audiences. This creates a massive opportunity for you as a creator if you can negotiate the right deals.

You can make passive income on YouTube through the following features:

  • Advertising revenue: Get ad revenue from the display, overlay, and video ads.
  • Channel memberships: Your members make recurring monthly payments in exchange for special perks that you offer.
  • Merchandise shelf: Your fans can browse and buy official branded merchandise that’s showcased on your watch pages.
  • Super Chat & Super Stickers: Your fans pay to get their messages highlighted in chat streams.
  • YouTube Premium Revenue: Get part of a YouTube Premium subscriber’s subscription fee when they watch your content.

19. Become a Social Media Manager (WFM Job)

You can work from home and manage a few social media accounts of different brands. Many small business owners do not have the time to keep up with social media, so they like to hire freelancers who can work from home. A career in social media manager management is always in demand as companies fighting for online presence and recognition continue to grow.

If you have a knack for social media, you can help local businesses maintain basic social media pages for contracted monthly fees. You need to have a creative mindset, writing skills, and an understanding of how content works on social media. These skills can be learned through online courses even if you do not have a degree or diploma.

You need to stay informed about trends and tools in social media, marketing, technology, and advertising. Facebook and Instagram are the two most popular social media platforms for local businesses. Full-time social media managers are paid a heft salary. They are responsible for planning, implementing, managing, and monitoring the company's social media strategy to increase brand awareness, improve marketing efforts, and increase sales.

20. Passive Income From Airbnb Business Model

best passive income ideas
Original Photo via Pixabay

You can partner with Airbnb and earn passive income as an Airbnb host by renting your room. If you have a spare bedroom, you can find a roommate or list the space on AirBnB for travelers. Airbnb provides a passive income generation system to monetize living space. Airbnb makes it easy to earn passive income from renting a room, an apartment, or an entire house. Their systems handle the bookings and the payments while the hosts handle all the rest.

If you have a spare room in your house, then you can put it on rent. This is one of the passive income ideas where the risks are quite minimal. All you have to do is put up an advertisement online that such a room is available for rent. You will just have to wait for people to check your spare room and rent it.

The sharing economy is based on people renting out assets they aren’t fully utilizing to earn income. This can be a rather passive income, or you can be an active player. It may almost require no physical efforts from you, such as when you rent out your vacation home on Airbnb while the property manager maintains it as they always do.

There are also many turnkey AirBnB management companies out there that can make your short-term rental passive income hassle-free. Renting out a spare room in your house is a little more work, but it is open to almost everyone.

21. Investing in Mortgage Notes

Mortgage notes are also known as real estate lien notes and borrower’s notes. They have become a popular asset class over the past few years. Investing in mortgage notes has many benefits such as — rates of return that are higher than the bank's traditional low yield bonds; and higher than most stock dividends. A real estate mortgage note is a promissory note secured by a mortgage loan.

This is one of the best passive income ideas for those who want to secure steady and substantial income, though you have to hunt for it. Real estate mortgage notes may allow you to get a regular stream of passive income without the hassles of a landlord, or you can buy the note and sell it later to another investor.

It is possible to buy loans or “notes” from others. Then you are the one that receives the payments. Every person who offered lender financing to the person who bought his or her home has such a note. Besides, some of them may be willing to take a discount on the note to get most of their cashback.

Know that this requires doing your due diligence and drafting the right legal documents to protect your investment. If you’re looking for passive income ideas, know that you should stay away from tax liens unless you know what you’re doing. Real estate mortgage notes are a good way to invest in real estate with relatively little work beyond the initial search and purchase.

22. Passive Income Through Real Estate

There are many ways to make passive income in the real estate industry. One of the most common ways is to create rental properties. A rental property is one in which you either rent out rooms or the whole house to earn extra income. If this sounds like an investment strategy you’d like to try, read on for seven smart ways to increase the profitability of your rental properties. This probably falls more in the category of semi-passive income, since an investment in real estate is always at least a little bit of an active venture.

Still, once you have a property that is established and fully rented, it's mostly a matter of managing the property and keeping it performing well. The standard approach for would-be landlords is to buy a property, make the necessary renovations, find tenants, and rent it out. Buying turnkey properties skips the middle two steps. You are buying a property that already has to pay tenants. We won’t say this is among the brand new passive income ideas for 2020, but the real estate investment approach is coming back into style.

And several factors are making it more attractive for those seeking passive income. Banks and other institutions will loan you money at affordable rates to buy properties like this. You can generate passive income almost immediately. You inherit the tenant, and you might be able to inherit the property management firm that does all the work.

You don’t have to fix up the property. Yet the seller is obligated to inform you of major problems and upcoming repairs. You can choose not to buy a house that needs a new roof, new air conditioner, or foundation repairs. There is less risk of buying a property and being blindsided with major unplanned expenses.

You can also find a growing number of properties up for sale as retiring Baby Boomer wants to sell their assets and just retire, while others hit the market as part of an estate. This does demonstrate that owning and holding rental real estate is among the most successful passive income ideas.

23. Own Rental Properties Indirectly For Cash Flow

There are several ways you can own rental properties indirectly. One is to be an investor in a rental house, owning a share of it while someone else handles the maintenance and collects the rent. This is truly a passive income. The downsides include lower returns than if you owned the property outright, illiquidity, and potential problems if your business partner makes mistakes.

If they choose bad tenants, there’s no income and you have limited say. If they are sued or go into bankruptcy, you’re joined at the hip as their business partner. One alternative is owning shares of a real estate investment trust or REIT. The shares are often as liquid as shares of stock. The rates of return are lower than if you owned the apartment buildings they built and manage, but you don’t have any liability, either.

You can invest in REITs in a variety of different ways, including purchasing shares of publicly traded REIT stocks, mutual funds, and exchange-traded funds. REITs generally own and/or manage income-producing commercial real estate, whether it’s the properties themselves or the mortgages on those properties.

You can invest in Retail REITs, Residential REITs, Healthcare REITs, Office REITs, and Mortgage REITs. REITs will provide you high dividend yields along with moderate long-term capital appreciation. Investing in REITs is one of the best passive income ideas for investors.

24. Fixing & Renting Property

There are many ways to make passive income in real estate. Many people get involved in house flipping to make more money because it seems straightforward. Buy a run-down house, make repairs, fix it up, and sell it for a profit. This approach can yield 50,000 to 150,000 dollars a year in income if you handle several houses a year, earn the standard 15,000 to 30,000 profit on a property and nothing goes wrong.

There are several problems with this approach, especially in the down housing market due to the economic impact of the coronavirus and related shutdown. It is very difficult to sell a house when people are afraid to tour it. Yet you’re legally obligated to pay the carrying costs such as the payments on a hard-money loan, mortgage, and insurance.

Why is “fix and rent” one of the best new passive income ideas? It is a solution for those who’ve fixed up a property but don’t think they can sell it for a profit in the down housing market. They can find renters because real estate is an essential activity and people still need a place to live. Renting out the property gives you a source of income to pay bills like the mortgage and insurance.

A potential side benefit of this approach is that you may hold the property so long that the tax bill on capital gains is dramatically reduced. Alternatively, you could buy houses from struggling fix-and-flip professionals to serve as rental properties. The odds you’ll get a bargain to go up the longer the housing market is in the doldrums.

Some people chose the fix and flip approach because they don’t want to find tenants or maintain properties. You can solve this problem by outsourcing that works to a good property management company.

What if your end goal remains selling the property? Putting in a tenant allows you to generate passive income until the housing market recovers. It also increases the value of the property if you choose to sell it to another investor. For example, turnkey investors will love to buy an affordable property that already has a paying tenant in it.

25. Real Estate Crowdfunding

Among the rather new passive income ideas is crowdfunding rental real estate. We are not suggesting using crowdfunding instead of applying for a mortgage. Instead, we’re suggesting you loan money to other real estate investors through crowdfunding sites. What are the benefits of this passive income approach? You can vet each investor’s project individually, but you aren’t dealing with individual investors personally.

This eliminates high-pressure sales by investment groups and the emotional appeal of aiding a friend who wants to buy a house. You can diversify your holdings, loaning several hundred or thousand dollars to each would-be investor. You get a higher interest rate than you would if it sat in a money market account.

The crowdfunding platform takes a slice of every loan issued. However, they also administer the loan payments. If someone doesn’t pay the payment, you don’t have to call them up demanding payment. The crowdfunding website will pressure the person to pay up. Lending money through the crowdfunding site eliminates the need to have a detailed contract with the borrower or having an equity stake in the property itself.

You can choose the loan duration, whether they’re using crowdfunding to save money on hard money loans or in place of a mortgage. You can choose which lending platform you go through, too. Furthermore, those seeking passive income ideas will appreciate the low cost of entry. For example, you could join a crowdfunded real estate project for just a few thousand dollars.

If you wanted to join private developers in property investment groups buying houses or apartment buildings, multiply that by a factor of ten. If you’re looking for new passive income ideas, know that crowdfunding sites allow you to diversify in other ways, as well. While you might invest the bulk of your money in real estate projects, you could put some money into someone’s new restaurant or debt consolidation loan.

Pros

  • You can invest in properties that you otherwise wouldn’t be able to access such as hotels.
  • You can find crowdfunding deals that let you put relatively small amounts of capital to work.
  • Portfolio diversification: You can take $100,000 and invest it equally in $20,000 increments across five different investments.
  • Risk Mitigation: Portfolio diversification also helps in spreading that risk across numerous investments.

Cons

  • The biggest drawback of crowdfunded real estate deals is that they are illiquid investments. They cannot be readily sold if you need the money.
  • You have to complete the target period before liquidating your investment.
  • You get lower returns than what you would receive if directly invested in real estate through ownership.
  • That is because the developer or operator with whom you are investing needs to make money too.
  • No control over your investments as the development of the crowdfunded property will be managed by someone else entirely.

26. Become a Social Media Influencer

A popular social media marketplace like Instagram can help you generate a strong and steady passive income stream. Did you know that the highest-paid social media influencer to date is 22-year-old social media mogul and makeup business owner Kylie Jenner? She can make more than $1 million per sponsored post shared with her 185 million followers on Instagram.

Social media influencers are creating a new class of celebrities and they can make hundreds of thousands of dollars depending on their follower count and outreach success. Affiliate links are often a bit more passive than most forms of brand partnerships on social media platforms like Instagram, Facebook, or Youtube.

These links allow followers and audiences to purchase featured products, download apps, visit specific web pages, or sign up for services. Becoming a social media influence will take some time and does not happen overnight. You need to select your niche, optimize your social media profiles, understand your audience, and create and post relevant content.

You also need to be regular and consistent in posting engaging content. Engaging with your audience is a must to build followers organically. Once you have a large social media following, you can earn money by promoting a product or advertising for a company. You can even combine this with different marketing campaigns if you are an influencer and have your blog (advertisement + affiliate income).

This is how many bloggers make money! Again, it is not 100% passive income but once set up correctly and then scaled, can be surprisingly lucrative. According to an article by Foxbusiness.com, the average influencer can take home anywhere from $30,000 to $100,000 per year by promoting products like clothing, food, hotels, and even vitamin supplements on their pages. Users with more than 1 million followers can make more than $100,000, or even up to $250,000, per sponsored post, according to a 2018 Vox report.

27. Mortgage Refinancing

If you're unknowingly paying way more for your mortgage than you need to, then this is something you should consider. The number one benefit of refinancing your mortgage is to obtain a loan at a lower rate of interest and also to decrease the monthly mortgage payment amount.

It is also that refinancing provides the borrower with fresh money at lower interest rates due to which the homeowner can lower his/her monthly payment amount. Most individuals take out loans for financing their studies, homes, vehicles, etc., and added to this; they also accumulate loans on credit cards.

On average, most households spend almost half or more of their earnings towards loan repayment and the escalating rates of interest to ensure that the term of repayment keeps on growing. By refinancing your mortgage, you can take back the portion of your income going towards your interest rate and reinvest it. When your debt is reduced, your cash flow increases. This money can then be reinvested or boost your overall savings.

28. Transcription

If you're looking for a flexible job that allows you to work from home, requires little to no prior experience, then you can opt for transcription. It is a useful skill and a great way to make money online. This job gives you the freedom to set your own hours and, in many cases, work as much or as little as you want each week.

This job typically pays per audio hour. This means that if the audio file is one hour long, you are paid for one hour of work. Also, transcription jobs are usually broken into general, medical, and legal categories.

You can choose the one you're most comfortable with.  Most companies like to hire newbies after passing a transcription test. If you want to earn big money, you need to have experience and work directly with the clients.

You can also join various freelance platforms that offer transcription jobs. Just Google it. Transcription requires equipment like headphones, a foot pedal to pause clips (this leaves your hands free to type), software to enhance the sound, a computer, and a high-speed internet connection.

Are These Passive Income Ideas & Sources Effective?

Yes, all of these passive income options are viable and can augment your current income. Better still, you could make some of them your primary source of income. You get to earn without having to exert a lot of effort. All you have to do is find the right one for you. The best passive income ideas combine decent returns with little effort on your part once you’ve sealed the deal. You aren’t left worrying about the state of the financial market or struggling to manage a small business. You’re free to search for the next deal, but you don’t have to, and that’s the point of passive income. While there are many ways to generate passive income, it is important to further diversify your portfolio and look for alternative vehicles to earn more money. We've shortlisted some of the best passive income ideas & strategies which are apt for beginners who want to make more money or build wealth.

passive income for financial freedom

The coronavirus has not been the major killer they feared it would be. This is in part due to the massive government-mandated shutdown of most of the private economy and stay-at-home orders. This unprecedented near-total quarantine of the healthy is going to weigh on the economy for months if not years. For example, unemployment has already surpassed 15 percent due to the shutdown and could hit the Great Depression levels.

This has proven the importance of building multiple sources of passive income. After all, those who lost their job due to a government-ordered shut down out of fear of a future Chinese virus-like COVID or SARS don’t want to deliver pizzas or stock grocery store shelves to make ends meet. Here are a few new passive income ideas for 2020.

What does it take to earn passive income? The best passive income ideas require little to no work on your part after you’ve set up the deal. They certainly require far less work than trying to day-trade stocks, manage your own small business, or work for a large firm.

The best passive income ideas will generate revenue while you’re asleep or on vacation. This includes ad revenue from a blog, royalties from a book or online course, and rent from a rental property. People promoting passive income systems or frauds will tell you that it is so easy that you’ll earn money while you sleep.

In reality, it may do so, though you’ll always want to check in on things periodically, and there will be work to do at the very beginning. One of the misconceptions about passive income is that you can do so by trying to game the stock market or another financial institution. Day trading stocks, trying to trade cryptocurrency, and other methods are touted as the best passive income ideas, but in reality, they require work on your part and put your money at far greater risk than most investors are willing to take.

Considering the nature and benefits of passive income, a lot of people are attracted to it. A passive income can be very rewarding because you become your boss. This equates to the ability to manage your time. You can still financially gain on a business transaction while you spend time with your loved ones.

Even better, you can go on vacation and still earn money. Although you earn paid leaves in a regular job, the vacation time is counted. As you probably know, this carries a lot of risks because you are not actively doing something to ensure the success of the endeavor.

But you can lessen such risk by investing in passive income ideas that have been tested and proven to be successful. Passive income will give help you in making a safer retirement plan. Creating passive income streams means you have cash flow. Cash flow is different from savings because you’re getting an amount regularly. Something is coming in and it’s not much different from getting a paycheck. Except you’re not actively working.

Passive income in most incidents is taxed at a lower rate or can be easily deferred for a later date. Getting taxed at a lower rate means you can leverage your cash flow better, which is an important benefit of passive income. You can create multiple streams of passive income.

If you can successfully build a blog from scratch and earn through Adsense or affiliate marketing commissions, you can surely repeat and add multiple blogs to your portfolio. The effort for building successive affiliate blogs or websites is gonna be much easier than before. Similarly, after breaking even on your first rental property you buy another, and so on.

These are some of the best passive income opportunities we have listed for your knowledge. They could help you to get started in making more money and maximizing your wealth, especially in a time of economic crisis like the current one emanating from this pandemic.  Achieving financial freedom via a passive income route requires some effort but is certainly doable. Also, if you truly want an early and quality retirement life, multiple streams of passive income are a great thing to have. Do you have any better passive income ideas that you would like to share? Let us know in the comments below.


References:

  • Active and Passive Income
    https://www.investopedia.com/terms/p/passiveincome.asp
    https://www.investopedia.com/terms/t/timedeposit.asp
  • Benefits of Passive Income
    http://www.wealthylovelife.com/benefits-of-passive-income.html
    https://wellkeptwallet.com/24-great-passive-income-ideas
  • Crowdfunding
    https://www.landlordology.com/real-estate-crowdfunding
    https://www.freshbooks.com/hub/startup/passive-income-ideas
    https://www.moneyunder30.com/should-you-invest-in-real-estate-crowdfunding
    https://www.investopedia.com/articles/investing/072514/real-estate-and-crowdfunding-new-path-investors.asp
  • Peer to Peer lending
    https://www.financialsamurai.com/how-i-earn-over-10-passive-income-with-p2p-lending
  • Real estate / Landlord
    https://www.quickenloans.com/blog/5-ways-earn-truly-passive-income
  • Stocks and bonds
    https://investorjunkie.com/16179/cashflow-quadrant
  • Affiliated blogging
    https://www.affilorama.com/introduction/how-does-affiliate-marketing-work
  • Online Courses
    https://www.entrepreneur.com/slideshow/299914#4
    http://www.mymoneydesign.com/passive-income-ideas
  • Income Through Various Forms of Real Estate Investing
    https://www.quickenloans.com/blog/5-ways-earn-truly-passive-income
    https://www.goodfinancialcents.com/passive-income-ideas/#rent
    https://smartasset.com/mortgage/pros-and-cons-of-buying-turn-key-homes
    https://www.forbes.com/sites/jrose/2019/02/22/real-estate-investing-without-buying-property

Filed Under: Passive Income

Real Estate Notes Investing: Should You Buy Notes in 2022?

July 28, 2022 by Marco Santarelli

Mortgage note investing is one of the most profitable real estate investment strategies accessible, yet it receives little attention. We will explore the many forms of mortgage notes and how to invest in them in this article. Mortgage note investing is the process of owning real estate without managing it or becoming a landlord, in which the homeowner pays the investor rather than the bank. It is a low-cost method of investing in real estate.

Note investing can be an incredible vehicle for building passive income but there are many things that you should be aware of. Mortgage notes are also known as real estate lien notes and borrower’s notes and they have become a popular asset class over the past few years. Investing in mortgage notes has many benefits such as — rates of return that are higher than the bank's traditional low-yield bonds; and higher than most stock dividends.

Notes are available through note exchanges, note brokers, and organizations. Both performing and non-performing notes are almost always sold at a discounted price, although non-performing notes will likely sell for steeper discounts, and real estate investors can realize significant profits. Consider using a mortgage broker or an investment advisor to help you find the best options. If you are experienced enough, you can potentially find and purchase your mortgage notes. 

What is a Mortgage Note?

real estate mortgage note investing

A real estate mortgage note is a promissory note secured by a mortgage loan. It’s a way of saying promissory notes secured by a piece of property. That security instrument can be either a mortgage or a Deed of Trust. It depends on what state you’re doing business in or which security instrument you’re using.

So, you’ve got a note, which is the promise to pay, or a promissory note. Then that is piggybacked with another document which is the security instrument, and that’s either a mortgage or a Deed of Trust depending on what state you’re in. It’s a two-part instrument and they move together.

The promise to pay is called a promissory note, which states how big the loan is, the interest rate, and the terms of the loan. That security instrument which is the mortgage note or the Deed of Trust, that’s the thing that ties that note to the piece of property, and what makes that promise to pay have much strength.

It’s either the borrower pays you as agreed or you get to foreclose on that property, and ideally foreclose on that property for pennies on the dollar. The difference between a mortgage and a Deed of Trust is that a Deed of Trust is what’s called a non-judicial foreclosure action. If someone doesn’t pay you, then you file a notice in the public record that it’s such and such a date.

On the courthouse steps, this property will be auctioned for sale. That’s it. As long as you comply with the timing and the noticing, then that sale goes through. A mortgage is different from a Deed of Trust in that you have to go to court to get the court to foreclose on the property for you. As an example, when you take out a home loan, the lender will probably require you to sign both a promissory note and a mortgage.

Suppose you want to buy a property worth $150,000 but you don't have enough cash. In this case, you can apply for a loan whereby you can pay part of the purchase price as a down payment and borrow the remaining amount from a lender. Normally, you need to pay 20% as a down payment.

Therefore, the loan amount would be $120,000. In exchange for $120,000, the lender would make you sign a promissory note and a mortgage. Here a promissory note is being signed by you as a borrower, and it is a promise to repay the debt incurred by you in the purchase of your property.

The note will state who borrowed money from whom, the loan amount, the interest rate, the tenure of repayment, and what happens in the event of a default. A mortgage is a separate document that collateralizes the lender and is secured by the property. It is a contract that hypothecates a lien on the property, or the mortgage deed may be updated to specifically give the lender foreclosure property if contractual terms aren’t met. It will say who is personally responsible for the debt, whether it is an individual, a couple, or a corporation.

The Contract For Deed vs Mortgage

A contract for deed is an agreement to buy a home from a seller, while the seller keeps ownership of the home. It is not the same as a mortgage loan. The buyer agrees to pay the seller monthly payments, and the deed is turned over to the buyer when all payments have been made. Buyers make their payments directly to the seller for a certain number of years and then a balloon payment (or remaining balance) is due.

One major difference is you do not have the same protection rights, since the seller retains ownership. The seller determines the
interest rate and how much of your payment is used to pay the principal (or balance). Generally, you pay the seller directly for property taxes and insurance. Unlike a traditional mortgage, a defaulting buyer in contact for deed may only have 30-60 days to cure the default or move out.

With a mortgage note secured by the mortgage deed, sellers don’t have to go through foreclosure proceedings to seize the property. A seller can terminate the contract right away without going through all of the legal procedures required for a mortgage holder to foreclose on a home.

If the seller cancels the contract you have 60 days to resolve the reason. If the contract is not reinstated, you are required to leave the home. You also lose any money you have paid the seller.

Different Types of Real Estate Mortgage Notes

There are both commercial and residential mortgage notes, and both are open to investors. They’re both promissory notes secured by a certain property. All mortgage notes should specify the roles and responsibilities of all parties and what qualifies as a breach of the agreement. One of the major differences between real estate mortgage notes is the loan terms.

Fixed-Rate Mortgage Loans

A fixed-rate mortgage or FRM is a loan that has a fixed interest rate and set payments. This is the most common type of mortgage offered by banks, but it can be offered by private individuals. The greatest benefit of this loan is that the borrower has the same payment every month.

The Graduated Payment Mortgage

The graduated payment mortgage or GPM has a fixed interest rate with adjusting payments. It typically has a low initial monthly payment that increases over time. These loans are sometimes used for student loans, but they can be found in real estate, too. This is a type of negative amortization loan. There is a risk that the person who purchased the home will be unable to make the later, higher payments.

An Adjustable Rate Mortgage

An adjustable-rate mortgage or ARM has an interest rate tied to some third-party indices. Banks will tie the interest rate on the adjustable rate to the interest rate offered by the Federal Reserve, and the interest rate on the mortgage will rise and fall with it. This is why they’re sometimes called variable-rate mortgages. For consumers, the ARM may result in lower payments when interest rates are low.

However, it brings the risk that they can’t afford their house payment when interest rates rise. Lenders are protected from losses if interest rates rise. Private lenders have to deal with more complicated loan administration. Buyers have the option of sending in the same monthly payment, but the amount of principle applied to the loan with each payment varies.

A Balloon Payment Mortgage

A balloon payment mortgage is generally a fixed-rate mortgage with a large payment due at the end. This is in contrast with traditional mortgages where the final payment pays off the debt entirely. Balloon payments may be accepted by a borrower who can’t manage the monthly payments without them.

They may hope to qualify for a conventional home loan at the end of the private mortgage to get the money to pay off the balloon payment. The occupant runs the risk of losing the home if they can’t make the balloon payment. This is separate from the mortgage acceleration clause that makes the entire amount due after a payment is missed.

The Interest-Only Loan

An interest-only loan is a mortgage where the person only pays interest on the loan. Some people take out an interest-only loan because they can’t afford to pay on the principle. This borrower demographic is very high risk. Yet interest-only loans are attractive because of the low monthly payments. This is a popular loan for property developers. You get the money to buy the property. You expect to sell it for a profit and pay off the mortgage note.

Interest-only loans were commonly used in hot real estate markets before the Great Recession, but they’ve almost disappeared from the residential real estate market because people aren’t making progress on the loan balance. This left many people underwater, owning more than their home was worth.

In these cases, people are expected to be able to refinance the interest rate mortgage into a fixed-rate mortgage once the home’s value has appreciated. The interest-only mortgage had the benefit of allowing them to get into a home now before prices went up further. These loans often became negative amortization loans, because financially stressed people missed payments and saw the total loan balance increase.

Minimum payments that didn’t even cover the full interest payment led to an accrued interest to compound, as well. We consider interest-only loans to be a high risk unless you’re dealing with a real estate developer. Interest-only hard money loans would fall into this category. You can issue an interest-only loan with a recast period, where you force them to refinance the loan or pay off your loan with a third-party mortgage after a set period of time.

Real Estate Mortgage Note Investing

Mortgage notes can be a good real estate investment for people seeking passive income. When you buy a mortgage note, you receive monthly payments that include both interest and principle. It is a steady stream of income like you’d receive from a rental property, but there is no need to maintain the property like a landlord.

It is far easier to invest in real estate located around the country because you don’t have to deal with local rules regarding real estate licensing or taxes. The mortgage note spells out the loan duration. You know how long you’ll receive loan payments, and it may be 10 to 30 years. You may be able to increase the value of the mortgage note by buying from a distressed note holder. For example, you may find a farm or family property sold via owner financing.

The person sold their home, but now they have to manage the loan. They may require the money, whether it is to allow them to buy a new home or simply get cash to fund their retirement. In these cases, you might offer 80,000 dollars to buy a 100,000-dollar note. If they accept, you receive the interest and principal on a 100,000-dollar loan but only paid 20,000 dollars for it.

Another class of desperate sellers is the private lender with a slow or non-paying borrower. They’re not getting the income they expected. They may be reluctant to foreclose on a slow-paying family member. Or they may not want the property back.

You can buy these notes for far less than their face value. However, you’re going to either need to ramp up collection efforts or foreclose on the property. Only buy notes like this if you have a plan for how to monetize the property, whether you rent it out, sell it to someone else or redevelop the property.

Advantages of Buying a Real Estate Mortgage Note

  • High Yield Returns – Rates of return that are higher than the bank's traditional low yield bonds; and higher than most stock dividends.
  • Monthly Income – If you are looking for additional monthly income for retirement, for living expenses, or to build your savings account, we can help.
  • IRA Friendly – This investment provides investors with a way to put to use their self-directed traditional IRA or Roth IRA.  We can recommend several custodian companies that handle the paperwork and hold your IRA while the funds are invested with us.
  • Rollover Option – Option to automatically roll over your investment so you don’t miss out on earning interest or future investment opportunities.

How To Buy To Real Estate Mortgage Notes?

It is hard to find the farmer who sold their property to an up-and-coming farmer or family member who wants to sell the note so they have the money they need to pay for long-term care. This is why many investors go through brokers to find mortgage notes for sale. These brokers specialize in locating both private and public deals.

There are even online marketplaces like NotesDirect to help you find, vet, and buy notes. You can try to find deals through real estate investor groups. In this case, you’re buying notes from people who trade future income for liquid funds. Mortgage notes are often associated with owner financing.

You might find mortgage notes for sale by going through for-sale-by-owner groups and making offers to former property owners who are desperate for cash. Furthermore, mortgage notes may be sold by real estate investor groups or real estate investment trusts.

In the latter case, you could even buy a mortgage for a multi-family apartment building. If you are buying a nonperforming mortgage, investing in real estate notes is one of the cheapest ways to acquire such properties.

how to invest in mortgage notes

Buying a Non-Performing Note vs Performing Mortgage Note

A non-performing note is a note where the borrower is not paying as agreed. The borrower who is behind on their loan payments or regularly made late payments is the reason why you have non-performing notes. Performing notes are those where the payments are made on time and in full. Performing notes sell for 75 to 100 percent of their current value. Sub-performing notes can be found for 50 to 80 percent of their current value.

That lower price tag is what attracts some investors. They’re also priced to factor in the risk of someone who hasn’t paid their mortgage in the past 15 to 60 days or has had missed payments in the past.

Non-performing notes are notes that are already in default. They are attractive to investors because you might buy the property for 10 to 30 percent of its actual value. It can be a cheap way to buy a real estate investment property. It does come with the hassle of renegotiating the deal (rarely done) or foreclosing on the property.

If you’re considering buying a mortgage note for a multifamily property, you cannot consider the property without doing detailed research. It doesn’t matter if they have almost every unit full if only half the tenants are paying their rent. What is the property’s condition? You don’t want to buy a multi-family property that is falling apart.

The Risks of Investing in Mortgage Notes

These notes are not FDIC insured. Instead, it is secured by a property whose condition may not be great. And you’re not responsible for its upkeep. Yet you want to verify the condition of the property before you buy it, or else you’re paying less than the property is worth. You run the risk of having to pay money to get what you’re owed.

You will have to pay various legal fees to foreclose on the property. You may have to sue to get back mortgage payments, too. Know the foreclosure laws for the area where the property is located, especially if you’re considering buying a non-performing loan. Non-performing assets also depreciate because while your expenses continue the property is most likely not be well kept. Even if there is some appreciation in the property value, it is usually offset by the expenses you are spending. They have a high risk of default which is bad for your cash flow.

The mortgage note investing industry is not very regulated as of now. Before entering the mortgage note investing space know the fact that this is a risky business. You can buy a mortgage note without the permission of the person who lives in the property. When you buy a note and mortgage from the lender, you're buying the debt that remains to be paid on the note, secured by the asset outlined in the mortgage.

You're not buying the property. Sometimes, you do run the risk of property owners initially refusing to pay you because they don’t think they owe you the money. The solution to this is good communication, including the initial note holder informing them that the loan is being transferred.

Do your research. Don’t buy a multi-family property note before you know the percentage of the units that are occupied by rent-paying tenants. Know if you have a say in the property manager in charge of the property because putting a good one in could increase occupancy rates, payment rates, or even the average monthly rent.

Know how to get a copy of the original note along with all amendments and assignments. You don’t want to buy a mortgage note and get sued by someone else who had the title. You may want to pay a title search company to do such a search before you buy the note, though this is an expense you have to pay out of pocket even if you don’t buy it. Know your lien position, so that the house isn’t sold to pay a different creditor while you get less than you’re owed.

Summary

Real estate mortgage notes may allow you to get a regular stream of income without the hassles of a landlord, or you can buy the note and sell it later to another investor. Or it can be a way to secure properties for less than their market value. But real estate mortgage notes are a good way to invest in real estate with relatively little work beyond the initial search and purchase.


References

  • https://en.wikipedia.org/wiki/Mortgage_note
  • http://www.differencebetween.net/business/finance-business-2/difference-between-mortgage-and-note
  • https://www.fool.com/millionacres/real-estate-investing/articles/complete-guide-investing-real-estate-mortgage-notes/#
  • https://www.realtor.com/advice/finance/what-is-a-mortgage-note/
  • https://www.multihousingnews.com/post/6-things-to-consider-before-purchasing-non-performing-notes
    https://money.usnews.com/investing/real-estate-investments/articles/why-buying-mortgage-notes-are-good-real-estate-investments
  • https://www.multihousingnews.com/post/6-things-to-consider-before-purchasing-non-performing-notes
    https://www.biggerpockets.com/blog/2011-02-09-differences-performing-and-non-performing-notes
  • https://noteinvestor.com/how-to-buy-mortgage-notes

Filed Under: Financing, Real Estate Investing, Real Estate Investments

21 Best Cities to Invest in Real Estate 2022 | Norada

July 28, 2022 by Marco Santarelli

Best Places To Invest In Real Estate

We will look at some of the best places to invest in real estate in 2022 in this article. Real estate remains an appealing asset class for investors because of the opportunity to earn recurrent income from rentals. If market conditions are favorable, your monthly rental income can fully offset the costs of mortgage servicing. Interest rates remain low, so debt remains affordable. Record-low mortgage rates and a scarcity of available inventory kept the US housing market strong in terms of buyer demand in the past two years. The strong housing demand is still driving prices insane despite the higher mortgage rates in 2022.

The US housing market remains a hot seller's real estate market, with annual price growth reaching record highs and inventory continuing to fall. Because it's a seller's market, expect a bidding war if you're looking for a new house in 2022. If you are an investor, you must crunch the numbers to determine the best cities to invest in real estate in 2022. During the pandemic, prospective homebuyers around the United States are paying top dollar for homes, with remote employees and their desire for more lavish homes fueling the market.

And, while home values in the United States are expected to rise by only 2.9 percent in 2022, at a notably more moderate pace, buyers will continue to face a seller's market, according to Realtor.com. For as long as there is a lack of homes for sale, the balance of would-be owners unable to find affordable entry-level housing will be predisposed to transition into single-family rentals. That means rental demand will continue to increase in 2022.

Affordability challenges will keep prices from advancing at the same pace we saw in 2021 even as ongoing supply-demand dynamics mean prices continue to grow nationwide. Zillow’s home value forecast expects annual home value growth to begin a gradual cooldown late this spring. It forecasts 14.9% growth over the next 12 months.

Many regions of the country are experiencing huge booms in demand and the price of homes is rising sharply as a result — higher than the rate of inflation. That has made many homes unaffordable for their potential buyers. All these factors are influencing more and more people to choose to rent a home instead of buying one or to stay in their rental longer than they had originally hoped. This has resulted in favorable data in the single-family rental market, which is primed for investment opportunities in 2022.

According to the National Home Rental Council's market index, the single-family rental market remains robust as renters flock to the suburbs. If you can access credit, or otherwise have money to invest, consider real estate and purchase a single-family rental property. However, you must do thorough research to choose the best places to invest in real estate in 2022. All real estate is local so you much understand the local factors that can affect your investment in the future. Choosing single-family rental homes for investment is a great option. They provide an affordable and flexible option to meet the needs of families and individuals in search of quality housing.

“The single-family rental sector is having its moment,” according to Arbor's newly-released Q3 2020 Single-Family Rental Investment Trends Report. The pandemic boosted outward migration from big cities to suburbs, which further boosted the demand for single-family homes. Rent collections have remained stable, new demand has hit generational records and rents have seen upward pressure, according to the report.

That's good news for the future of single-family rental investors. Single-family rental starts totaled 40,000 units in the last 12 months. While down slightly from pre-pandemic levels, it shows the activity in the market. SFRs offer a 6% to 8% cap rate, much higher than a typical apartment investment. SFR cap rates ticked down to 6.5% in the third quarter of 2020, down 18 bps from the prior quarter. However, Arbor's report has a positive outlook on the sector for 2022.

It says that the asset class was the best positioned to grow through the pandemic. However, it also warned that landlords still have hurdles ahead in terms of rent collections and the ongoing pandemic that has hurt the economy. According to the Census Bureau, in the third quarter of 2020, single-family rentals had an average 95.3% occupancy rating, a 100 basis point increase from the first quarter of the year. This is the highest occupancy rate since 1994 for single-family rentals. The data reflects both rising user demand and landlords prioritizing tenant retention.

For comparable owner-occupied single-family housing units, occupancy rates sat at 99.1% in the third quarter — the second-highest reading on record, topped only by the immediately preceding quarter, measured at 99.2%. This demand could lead to a shortage of single-family rental homes. However, recently investors and developers have shown a renewed commitment to operating and developing these properties. Invitation Homes and Rockpoint Group recently formed a $1 billion joint venture to acquire and operate single-family rentals in the Western US, Southeast US, Florida, and Texas.

Through the joint venture, Invitation Homes will provide investment, asset management, and property management services. In addition, RangeWater just launched an $800 million platform to build and operate single-family rental communities in the sunbelt region. It shows that the interest of investors in single-family rental homes has risen to a great extent during this pandemic.

Large investors are gravitating toward it. As of now, institutional investors account for only 2 percent of the 90-million unit market, according to NHRC. This is meager as compared to the US multifamily sector, where more than 50 percent of ownership is held by institutional investors. Hence, the single-family rental market remains an emerging market for both individual and institutional investors.

How To Choose Best Places To Invest In Real Estate In The World?

You may be located anywhere in the world, but the basic principles of the real estate business remain unchanged – you want to choose those places for your investment properties where the return on investment is high. To maximize the returns from your real estate investment you want to buy property in places with the following features:

  • High rental occupancy: Check how much of the available housing stock in an area is vacant;
  • High rentals relative to your mortgage repayments: The more of your mortgage you can cover from rentals, the better; and
  • A low tenant default rate: The last thing you want is to buy property in an area when tenants frequently miss rent payments.

Real estate investing requires in-depth research. Market timing also matters as some cities have exceptional rental income prospects, but a very tight inventory. In that scenario, it becomes very difficult to find and close a deal that fits your investment criteria. Therefore, you need to act fast and wisely.

Don't take any uninformed decision without evaluating the fundamentals of the real estate market you intend to purchase in – is it growing, stable, or declining? Are you planning for the short-term capital gains or the long-term buy and hold? To make it easy for you, we recommend contacting an investment counselor who can help you to invest in some of the best real estate markets in the United States.

Here Are the 21 Best Places to Invest in Real Estate in 2022

Best Places To Invest In Real Estate

If you're considering a real estate investment in the coming year, there are a few markets worth investigating further due to anticipated price increases. We looked at data and examined trends from across the US to bring you this list of the 21 best places to invest in real estate in 2022. Here are the best places to invest in real estate and buy rental properties. They all have their own set of qualities and disadvantages, but many of them are less expensive than the national average.

1. Boise, Idaho

Bosie stands at the 1st position for real estate investment. It has a record of being one of the best long-term real estate investments in the U.S. The supply and demand dynamics continue to drive home prices up in Boise. The Boise housing market was ranked as the #1 in the U.S., by Realtor.com’s metro level housing forecast for the year 2020. Their main criteria were based on the combined yearly percentage growth in both home sales (0.3%) and prices (8.1%) expected in 2020 among the top 100 largest markets in the country.

Home prices are soaring and breaking records despite the coronavirus pandemic. Persistently tight inventory in the entire Boise Metro Area housing market, coupled with historically low 30-year fixed mortgage rates are keeping the demand high, which in turn is pushing home prices up in this region. Housing prices in Boise have risen sharply as Ada County's median home sale price exceeds $500,000. The real estate appreciation rate in Boise in the latest quarter was around  4.53%, which equates to an annual appreciation rate of nearly 20%.

Top Reasons Why Boise is One of The Best Places to Invest in Real Estate

  • Population and Job Growth Triple Than National Average.
  • Strong population growth.
  • Job growth is 2-3 times the national average.
  • Low cost of doing business.
  • Low unemployment rate at 3.5%.
  • Forbes ranked #6 for most job growth.
  • 1-year appreciation forecast of 15-20% (Boise Metro).
  • Despite high appreciation, home values are expected to hold because demand for the market appears to be strong.

    2. Houston, Texas

    Houston is one of the all-time best places to invest in real estate. This city is the home of the US oil and gas industry and offers perennial employment opportunities. Greater Houston is Texas' fifth-largest metro region, with over 7 million residents, and its population continues to expand at a rate nearly double that of the rest of the country. It is home to 53 Fortune 1000 businesses, putting it in third place behind New York and Chicago as the most concentrated city.

    These strong macroeconomic factors continue to power the Houston housing market. The average home is valued at $412,000. The rental income of $1,550 is relatively low given the property valuations. However, what makes Houston a strong investment destination is that it has a very active real estate market. Volumes of trade are high and housing stock moves fast. This means it is fairly easy to exit investments and find a buyer for your home. You may also take a look at – Top Reasons To Invest in Houston Real Estate.

    Top Reasons Why Houston is One of The Best Cities to Invest in Real Estate

    • Houston is the #1 Market in the US for Job Creation.
    • Housing real estate is affordable.
    • 4th largest city in the US.
    • 5%-20% below the current fair market value.
    • 12 Month ‘No Vacancy’ Guarantee.
    • 12 Month Home Warranty.
    • $75,000 average purchase price.
    • Median rental per month: $1,550.
    • 1-year appreciation forecast of 10-15% (Houston Metro).
    • Its unemployment rate is far below the national level.
    • It’s home to more Fortune 500 headquarters than anywhere in America except for New York.
    • Massive international trade gives another big job boost to the rapidly growing city.

    3. Dallas, Texas

    Dallas is another good place to invest in real estate in 2022. The strong availability of housing stock and high rental rates relative to the house price make it an accessible market to invest in. The Dallas real estate market offers a wide range of investment properties; you just have to find your tenants to rent out the property. Hiring a local property management company can help in finding tenants for your rental property in Dallas.

    You should think of investing in Dallas real estate because it has a very diverse economy so there is a niche for people of every income level. It is estimated that 340 people move to Dallas-Fort Worth every day. Dallas has the lowest homeownership rate in the country, with renting more affordable than buying. The demand for rental units has increased 14% over the last year, so it’s the perfect opportunity to invest in Dallas real estate. The Metro area is growing and it's expected that at least 20000 new homes in this area and Dallas a total of 50000 new single-family homes and 50000 apartments.

    Top Reasons Why Dallas is One of The Best Places to Invest in Real Estate

    • Population Expected to Double in Next 15 Years
    • Dallas is one of the leaders in the U.S. for employment and population growth.
    • 52.9% of Dallas rents vs. 33% nationally.
    • Newly remodeled REOs (2004 or newer).
    • Properties 5% – 15% below market value.
    • 3-year appreciation forecast of 10-15%.
    • Demand for housing has surged over the last year.

    4. Las Vegas, Nevada

    How can we miss Las Vegas on our list of best places to invest in real estate? Las Vegas has experienced several booms in its history. And it saw an incredible real estate bust during the Great Recession. Las Vegas’ recovery hasn’t made the same headlines as the 50% or greater declines in home values did a decade ago. Yet its recovery shouldn’t keep investors away. For savvy investors, the Las Vegas real estate market is both stable and predictable. Throughout 2019, the Las Vegas housing market was the hottest in the United States.

    The Las Vegas real estate market is entirely brimming with new businesses. Its friendly business environment is propping up the economy and helping toward the positive Las Vegas real estate market trends for 2021. The new businesses are propping up at a much faster rate than the national average. Las Vegas home values reported the highest year-over-year gains in home values, totaling a 13 percent increase, according to the S&P’s Corelogic Case-Shiller Index in 2018 (the leading measure of U.S. home prices). Now is a great time to invest in Las Vegas rental properties.

    Top Reasons Why Las Vegas is One of The Best Cities to Invest in Real Estate

    • Las Vegas is the most populated city in the state of Nevada and the 28th-most populated city in the United States.
    • The current metro area population of Las Vegas is 2,699,000, a 2.98% increase from 2019 – Macrotrends.net.
    • The Las Vegas Valley as a whole serves as the leading financial, commercial, and cultural center for Nevada.
    • A diversified economy is driven by health-related, high-tech, and other commercial interests.
    • The primary drivers of the Las Vegas economy are tourism, gaming, and conventions, which in turn feed the retail and restaurant industries.
    • Mining constitutes the mainstay of the region’s industrial sector.
    • Most of the manufacturing plants are concentrated in the communities of Henderson and North Las Vegas.
    • No state tax for individuals or corporations, as well as a lack of other forms of business-related taxes, have aided economic growth.
    • Construction is also a significant component of the economy.
    • The government is the metropolitan area’s single largest employer.
    • The low unemployment rate of 3.5% as of Dec 2019 – U.S. Bureau of Labor Statistics.
    • Rising rents.
    • The average rental income from an apartment in Las Vegas is $1,107, a 5% increase compared to the previous year.
    • The average condo or townhome costs nearly 200,000 dollars, and their prices increased 11 percent.
    • Currently, Las Vegas is a sizzling seller's real estate market in the United States.

    5. Atlanta, Georgia

    Atlanta, GA is also one of the best places to invest in real estate.  Atlanta offers attractive buying prospects for savvy rental property investors. The city’s population has grown by over 14 percent in the last decade. This increasing population is driving the housing demand. Should you buy investment properties in the Atlanta Real Estate Market? Located in the state of Georgia, the city of Atlanta is a hotspot for any type of real estate investment. Atlanta has shown promising population growth and employment, which are two signs of a healthy real estate market.

    Atlanta is Georgia’s capital and economic center. It is considered one of the 10 most productive states that contribute to the USA’s GDP annually. As the city continues to go through an economic boom, prices of properties in Atlanta are forecasted to increase in the following years. People will want to beat out the competition and purchase soon if they’re looking to develop a successful career, surrounded by a diverse community, especially for today’s youth.

    Top Reasons Why Atlanta is One of The Best Places to Invest in Real Estate

    • Atlanta is one of the Top Rental Markets in the U.S.
    • Newly rehabbed properties with tenants.
    • Properties start at $70,000.
    • Median rental per month: $1,500.
    • Up to $750/mo in cash flow.
    • 500 people move to Atlanta every day!
    • 2 million more people are expected by 2030.
    • 1-year appreciation forecast of 10-15% (
    • Atlanta has a growing economy that is 8th in the nation for GDP and is home to a wide variety of businesses that includes Fortune 500 companies. 
    • The relocation of payment processing giant NCR is expected to bring more than 3,500 jobs to the metro Atlanta region.

      6. Orlando, Florida

      Orlando, FL is a tourism and entertainment favorite, because of this, it remains a strong real estate investment destination. Investors have a choice of targeting the long-term residential or holiday markets with their properties. Both offer strong returns. While improving the Orlando real estate market and flourishing tourism are two of the most important reasons behind Orlando’s economic stability, these two industries have a lot to gain from the successful economy. This expansion is related to the growing population and job opportunities in this city, this translates to more rental income and tourism leading to a better economy for the city.

      Top Reasons Why Orlando is One of The Best Places to Invest in Real Estate

      • Orlando is the fourth-largest city in Florida and the state's largest inland city.
      • It is the center of the Orlando metropolitan area, with a population of about 2.5 million.
      • Third-largest metropolitan area in Florida.
      • Ranked #2 In America’s Fastest-Growing Cities – Forbes.
      • Orlando's real estate has been one of the best long-term investments throughout the last decade.
      • It has appreciated by 43.67% over the last 10 years.
      • The median home value is around $260,000.
      • Strong renter’s market.
      • Median rental per month: $1,599.
      • Over 60% of the population rents.
      • Strong economic and job growth.
      • Orlando is a major industrial and hi-tech center employing thousands of people.
      • The low unemployment rate of 2.5% in Dec 2019 – U.S. Bureau of labor statistics.
      • Currently, Orlando is a sizzling hot seller's real estate market in the United States.

      7. Tampa, Florida

      Tampa, FL is also on the list of best places to invest in real estate in 2022. With a population of more than 4 million, Tampa, FL is not only an attractive metropolitan area but is also one of the most frequently visited tourist destinations. There are several economic and development prospects attached to this market and Tampa was described as one of the hottest real estate markets in the US in the past year. There’s a tremendous amount of pent-up demand for entry-level single-family homes in Tampa. The median home value is $251,287 (on Zillow).

      The Tampa housing market is growing steadily, prices are still low and properties have a good chance for a strong appreciation in the coming years. Home values have gone up 5.3% over the past year. There is less than 2-month of the available inventory in the entire Tampa metro area – down almost 21.4% over last year. This is one of the key factors in rising home prices. The benchmark for a balanced market (favoring neither buyer nor seller) is 5.5 months of inventory. Anything lower than 5.5 months of inventory is traditionally a sellers’ real estate market.

      Top Reasons Why Tampa is One of The Best Places to Invest in Real Estate

      • The prices of residential properties in Tampa are growing at a fast pace.
      • Affordable Real Estate.
      • Median Home Price in Tampa is around $250,000.
      • Median Rent is $1,600.
      • Currently, Tampa is a red-hot seller's real estate market in the United States.
      • Tampa, Florida’s cost of living is 5% lower than the national average.
      • Investors can buy properties at lower rates right now and rent them out to new residents of the city to improve their cash flows.
      • Tampa has the headquarters of four Fortune 500 companies which makes it a moderately attractive city for work and economic growth.
      • The influx of people into Tampa is especially occasioned by the fact that it is one of the fastest-growing job hubs in the country.
      • The healthcare, education, and transportation facilities in Tampa are also impeccable.

      8. Spokane, Washington

      Spokane stands at the 5th position. With a population of only 213,000 people, Spokane is small, but it is a rising real estate hot spot. House prices are relatively cheap compared to much of the country at a median price of around $265,000 that offers fantastic mortgage coverage. Data from Zillow shows that Spokane’s housing market is hotter than Seattle’s for the first time in six years. Spokane homes are selling faster than Seattle homes. For renters in Spokane, the good areas are mostly on the north side (north of Garland street). Perry District is growing faster than many other parts of Spokane. Spokane Valley and Liberty Lake are also desirable neighborhoods and are growing rapidly.

      One reason to invest in Spokane real estate now instead of waiting is that prices are appreciating so fast. For example, home values increased by more than 13% in 2019. According to Neighborhoodscout.com, single-family detached homes are the single most common housing type in Spokane, accounting for 65.75% of the city's housing units. Real estate appreciation rates in Spokane's have tracked to near the national average over the last ten years, with the annual appreciation rate averaging 0.23% during the period.

      Top Reasons Why Spokane is One of The Best Cities to Invest in Real Estate

      • It is the economic and cultural center of the Spokane metropolitan area.
      • The second second-largest city in Washington by population.
      • It is a beautiful city to live in.
      • Spokane has a system of over 87 parks and includes six neighborhood aquatic centers.
      • It has several trendy, walkable, and revitalized neighborhoods with good walkability and local shops.
      • Spokane's diversified economy includes mining, forestry, agribusiness, high-tech, and biotech sectors.
      • Affordable real estate.
      • Buyers are giving up on pricey markets like Seattle and Portland and heading to Spokane where the median listing price is $220,000.
      • Rising Rents in Spokane.
      • Median rental per month: $1,295.
      • Owners of both single-family homes and rental property are seeing good returns.
      • It is fast becoming a popular choice for homebuyers looking for a nice & attractive place to live.
      • Currently, Spokane is a red-hot seller's real estate market in the United States.

      9. Chicago, Illinois

      Chicago is also on our list of the best places to invest in real estate. Chicago is the third-largest metropolitan area in the U.S, with almost three million in Chicago and another ten million in the surrounding metro area. Chicago has a large population, a diverse economy, and a stable market. It is home to 32 Fortune 500 companies. It has high private sector employment. And due to several factors, Chicago is one of the best real estate markets for investing in rental properties for sale.  Over 50% of the population rents.

      The large population of renters means that rental income from a Chicago investment property is far better than you’d see if you invested elsewhere in the country. The average rent for a one-bedroom apartment is roughly a thousand dollars. Two-bedroom apartments in Chicago cost an average of 1300 dollars a month. Rental rates for Chicago rental properties are appreciating more slowly than average, increasing at 0.9 percent a year. This is one-third less than the 1.5 percent rental rate increase in 2019 for the country as a whole. The average house in Chicago sits on the market for 50 to 55 days. However, hot homes can sell in just two weeks.

      Top Reasons Why Chicago is One of The Best Places to Invest in Real Estate

      • Chicago was ranked first in the 2018 Time Out City Life Index (Time Out Group).
      • Strong Rental Market – Over 50% of the population rents.
      • Fully renovated single-family homes with great ROI.
      • Solid blue-collar areas with high rents.
      • High private sector employment.
      • On the UBS list of the world’s richest cities.
      • Often rated as having the most balanced economy in the United States.
      • Ranked seventh in the entire world in the 2017 Global Cities Index.
      • Home to 12 Fortune Global 500 companies and 17 Financial Times 500 companies.
      • Strong economic and job growth.
      • Affordable Real Estate.
      • Rising rent prices.
      • The median rent per month is $1,761.
      • 2% increase in Chicago’s government employment between November 2018 to November 2019 (Bls.gov).

      10. Austin, Texas

      Austin, TX is also on our list of best places to invest in real estate. The Austin housing market has gained a lot of steam, with home values almost doubling since 2010. The Austin real estate market isn’t as big as Dallas, San Antonio, or Houston. Austin is only the fourth largest city in the state. However, the Austin housing market is sizable – it is the eleventh largest city in the U.S. as of this writing, and it is the center of a large metro area. Austin has come up as another tech hub in the last 5 to 6 years.

      There are tons of high-paying tech jobs moved to Austin in the last couple of years. As Austin is a young city by many standards, Millennials will be the largest buying force in Austin in 2021, and this trend should continue in the coming years. This is going to be more attractive for the areas being close to neighborhood amenities and close by shopping & hang-out spots. Real estate industry experts think that there is no bubble. Austin’s economy is strong and varied. Overall there is a huge scarcity of homes for sale in Austin. It just hasn’t kept up with the pace of people moving here.

      Top Reasons Why Austin is One of The Best Cities to Invest in Real Estate

      • Austin has a strong economy.
      • The low unemployment rate of 2.7%.
      • Growing population.
      • It is the 11th most populated city in the U.S. and the 4th most populated in Texas.
      • Affordable Real Estate.
      • Rising rents.
      • The median rent per month is $1,750.
      • Currently, Austin is a red-hot seller's real estate market in the United States.
      • You can get investment properties in the price range of $200,000 to $250,000.
      • Austin has a record of being one of the best long-term real estate investments in the U.S. over the past 10 years.
      • Last December, the median home price increased 8% year-over-year to $405,093.
      • The Austin real estate appreciation rate in the last quarter was around 1.7%, which amounts to an annual rate of 6.8%.

        11. Columbus, Ohio

        Columbus is also on the list of the best places to invest in real estate. The residential property in Columbus sells for a median price of $174,109. This means that the rental yield is high. The cost of buying a home is well within the reach of an average household income. The Columbus Ohio housing market is seeing steady growth due to slow population growth. Between 2013 and 2018, property values have increased. In the past year, they increased a whopping 8.4%. There is a great demand for older, renovated homes in established, walkable neighborhoods. The limited supply of family-friendly homes in these areas is driving up their prices.

        Buyers should choose their neighborhoods carefully though as the $1,250 rental is not distributed evenly across the city. Some neighborhoods remain economically depressed, and so will attract lower rental incomes and make poor investment choices. You can find great deals in neighborhoods like Franklinton,  Near East Side, Olde Towne East, Downtown Columbus, Italian Village, Upper Arlington, North Linden, and Grandview Heights.

        Top Reasons Why Columbus is One of The Best Cities to Invest in Real Estate

        • Currently, Columbus is a red-hot seller's real estate market in the United States.
        • Very affordable real estate.
        • The median price in Columbus is $174,109.
        • Large rental market.
        • The median rent is $1,250, which is lower than the Columbus Metro median of $1,300.
        • Ohio is landlord-friendly, so that's good for owning a rental property.
        • Columbus, Ohio is considered a “Rust Belt” city that’s unique for a rebound.
        • It enjoys unemployment rates of around 4%, but this is phenomenal compared to the surrounding area.
        • The lower cost of living attracts residents who earn just as much here as in Chicago but don’t have to pay as much for things.
        • The sheer variety of colleges in the area means that investors can rent to the large population of students in Columbus without worrying about their property values rising and falling based on the popularity of a flagship school.

        12. Lakeland, Florida

        Lakeland, FL also enters the list of the best places to invest in real estate in 2022. The Lakeland FL real estate market was ranked fifth among major metro areas in early 2018. In the past year, it moved into the number-one position in the Realtor.com ranking. While the Lakeland FL real estate market is cheaper than Orlando and Tampa, it is not a good overall value given the lower average wages of its residents. That explains why U.S. News and World Report gave the city an index score of 5.5 out of ten.

        This is due to the average resident earning around $23,000 a year, several thousand less than the U.S. average. Median household incomes are no better. The median household income in Lakeland, Florida is around $40,000, more than ten thousand dollars below the national average. This creates a strong demand for Lakeland rental homes, especially those that low-income residents can afford.

        Top Reasons Why Lakeland is One of The Places to Invest in Real Estate

        • Lakeland is a principal city of the Lakeland–Winter Haven Metropolitan Statistical Area.
        • It is the largest city on Interstate 4 between Orlando and Tampa.
        • Lakeland is a transportation hub.
        • In the past few decades, tourism, medicine, insurance, transportation, and music have grown in importance.
        • More than 22,000 people moved to the Lakeland-Winter Haven metropolitan area from July 1, 2017, to July 1, 2018, according to the U.S. Census Bureau.
        • The 3.2% annual population increase earned it the fourth spot on U.S. Census's Top 10 Metropolitan Areas in Percentage Growth list.
        • Affordable Real Estate.
        • Single-family detached homes are the single most common housing type in Lakeland.
        • Studio apartments are the smallest and most affordable for rental rates.
        • With a median house value of $155,796, house prices in Lakeland are solidly below the national average.
        • Lakeland's appreciation rates in the latest quarter were at 1.45%, which equates to an annual appreciation rate of 5.94% (Neighborhoodscout.com).
        • The average rent for an apartment in Lakeland is $1,084, a 4% increase compared to the previous year (RENTCafe).
        • Currently, Lakeland is a red-hot seller's real estate market in the United States.

        13. Ocala, Florida

        Ocala, FL finds itself on the list of the best places to invest in real estate in 2022. Ocala is home to around sixty thousand people, though the real Ocala housing market includes the broader metropolitan area that’s home to more than three hundred thousand people. Ocala is interesting for its population density given how rural the surrounding area is. The Ocala real estate market is buoyed by several nearly recession-proof industries. A large number of retirees here creates significant demand for medical professionals and caregivers.

        The horse-centered community offers several good-paying jobs to trainers, veterinarians, and animal caregivers. There are several manufacturers in the area such as mobile home manufacturers and EMS vehicle makers. This is why Ocala not only has a 4% unemployment rate but a much more stable job market than cities in Florida dependent on tourism. Another factor affecting the demand for Ocala rental properties is that half the people who live in the county commute to more expensive surrounding areas to work.

        Top Reasons Why Ocala is One of The Best Cities to Invest in Real Estate

        • As of the 2019 census, Ocala's population, estimated by the United States Census Bureau, was 60,786, making it the 49th most populated city in Florida.
        • It is the principal city of the Ocala, Florida Metropolitan Statistical Area.
        • In the last decade of the twentieth century, the greater Ocala area had one of the highest growth rates in the country for a city of its size.
        • The median household income is around $37,442.
        • Ocala is also a great city to live in for families. The median age is about 38.7.
        • When you buy real estate in Ocala you are investing in an area that is situated between three huge cosmopolitan centers, namely Tampa, Orlando, and Jacksonville.
        • With a median house value of $162,607, house prices in Ocala are solidly below the national average.
        • The average annual real estate appreciation rate over the past decade has been around 2.28%.
        • The average rent for an apartment in Ocala is $1,071, a 4% increase compared to the previous year when the average rent was $1,032 (RENTCafe).
        • Currently, Ocala is a red-hot seller's real estate market in the United States.

        14. Birmingham, Alabama

        Birmingham, AL also ranks in our list of the best places to invest in rental real estate in 2022. The Birmingham AL real estate market continues to take steps in the right direction. Single-family rental homes are the single most common housing type in Birmingham AL real estate, accounting for about 60% of the city’s housing units. Property appreciation rates are so strong in Birmingham real estate market that despite a nationwide downturn in the housing market, Birmingham AL real estate has continued to appreciate much faster than most other top performing real estate markets in the US.

        There has been a distinct trend of people moving to the largest metropolitan area in the region to find the greatest opportunities. The Birmingham area is home to more than 1.2 million people. LendingTree ranked the Birmingham area as one of the least competitive real estate markets in the country. There were more potential buyers than sellers, forcing many would-be homeowners to rent instead.

        Top Reasons Why Birmingham is One of The Best Places to Invest in Real Estate

        • With an estimated 2019 population of 209,403, it is the most populous city in Alabama.
        • Birmingham is the seat of Jefferson County, Alabama's most populous and fifth-largest county.
        • The Birmingham-Hoover Metropolitan Statistical Area is the most populous in Alabama.
        • Being home to several colleges and universities, Birmingham has a large pool of student renters.
        • Strong and diversified economy.
        • Birmingham is a leading banking center and a powerhouse of construction and engineering companies.
        • Very affordable real estate.
        • With a median home price of $64,840, house prices in Birmingham are solidly below the national average.
        • The average rent for an apartment in Birmingham is $968, a 3% increase compared to the previous year (RENTCafe).
        • Currently, Birmingham is a red-hot seller's real estate market in the United States.

        15. Durham, North Carolina

        Durham, NC  is also one of the best places to invest in rental real estate in 2022. The Durham housing market has made considerable improvements since the housing bubble burst. Only two years after the market crash in 2008, Durham was considered as one of the few favorable locations to invest in real estate. With strong population growth and a solid economy, the rental demand in Durham, North Carolina is continuously increasing.

        Durham real estate typically performed stronger than the U.S. average due to the popularity of the Triangle area among new and out-of-state residents, as well as investors. Rents in downtown Durham grew by 10% or more in 2016 and 2017, though an influx of new apartments in the area helped it cool down to the single digits. Rent for the average one-bedroom apartment in Durham hit $1100 a month in January 2019. This is a 7% increase over 2018 figures. Two-bedroom apartments increased by about 6% to $1350 a month. Single-family homes, of course, rent for much more.

        Top Reasons Why Durham is One of The Best Cities to Invest in Real Estate

        • Durham is one of the best places to live in North Carolina.
        • It offers residents a dense suburban feel and most residents (about 52%) rent their homes.
        • With a median home price of $256,993, Durham real estate prices are well above average cost compared to national prices.
        • The U.S. Census Bureau estimated the city's population to be 278,993 as of July 1, 2019, making it the 4th-most populous city in North Carolina,
        • Also, the 79th-most populous city in the United States.
        • Durham is also a national leader in health-related activities, which are focused on Duke University Hospital and many private companies.
        • Duke University and Duke University Health System are also Durham's largest employers
        • Being home to several colleges, universities & research centers, Durham has a large pool of student renters.
        • The median household income is $54,284 and per capita income is $32,305.
        • The average rent for an apartment in Durham is $1,181, a 3% increase compared to the previous year (RENTCafe).
        • Durham has a track record of being one of the best long-term real estate investments.
        • Average annual home appreciation rate of 4.03%.
        • Currently, Durham is a seller's real estate market in the United States.

        16. Charlotte, North Carolina

        Charlotte is also one of the best places to invest in rental real estate in 2022. The Charlotte metropolitan area or Metrolina has experienced rapid population and job expansion. One reason for this is the city's business-friendly environment. The homebuyers in the Charlotte area have dealt with a persistent seller’s market, which has shrunk inventory and driven up home prices.

        Last year was the fifth consecutive year of home price gains in the Charlotte real estate market. However, record-low unemployment and low-interest rates have led the buyers to still find a home in this region. Until March 2020 the real estate sales were going steady in the entire Charlotte Metropolitan Statistical Area. 3,630 homes were sold in March, which is a year-over-year increase of 4.9%.

        As you can see the Charlotte real estate market isn’t cooling off as yet. Charlotte is a hot market for investors whether they want to renovate and flip, buy to hold and rent or invest in multi-family properties. Charlotte’s real estate appreciation rate in the latest quarter was around 0.52% which equates to an annual appreciation rate of 2.10%. You can choose to market your home to potential buyers. Any homeowner looking to cash out and sell off their property should do it in the current phase. It is better to avoid the price decline phase that will accompany the coming correction.

        Top Reasons Why Charlotte is One of The Best Places to Invest in Real Estate

        • Affordable real estate.
        • The median home price is $252,438.
        • Charlotte's home values have gone up 5.3% over the past year.
        • Charlotte's appreciation rates in the latest quarter were at 0.52%, which equates to an annual appreciation rate of 2.10%.
        • The average rent for an apartment in Charlotte is $1,259, a 6% increase compared to the previous year.
        • The Median household income of a Charlotte resident is $53,274 a year.
        • It is one of the best places to live in North Carolina.
        • Ranked one of the best places to live in the United States for 2019, according to U.S. News & World Report.
        • The Queen City is 34th in the best places to retire.
        • It offers residents an urban-suburban mix feel and most residents own their homes.
        • The city has a mixture of owners and renters, with 52.07% owning and 47.93% renting.
        • The city is the cultural, economic, and transportation center of the Charlotte metropolitan area, whose population ranks 23rd in the U.S.
        • Charlotte has become a major U.S. financial center with the second-most banking assets after New York City.
        • Between 2018 and 2019, Charlotte saw a 2.3 percent increase in jobs.
        • Currently, Charlotte is a seller's real estate market in the United States.

        17. Colorado Springs, Colorado

        Colorado Springs is also on the list of the best places to invest in rental real estate in 2022. Colorado Springs real estate has continued to appreciate faster than most of the markets in the US. Conditions in the Colorado Springs real estate market seem to be in a sustainable, upward direction and show no signs of slowing down. The single-family home market in Colorado Springs is stabilizing a little bit. Inventory is rising and prices are increasing at a slower pace. The local economy is strong and mortgage rates remain low.

        The Colorado Springs real estate market is notable for how affordable it is compared to many other cities in the Rockies. The median home price is around $320,000, and the median rent is roughly $1,600 a month. The average price of a home in Denver passed half a million dollars in 2018. In short, you can buy two homes in Colorado Springs for the price of one in Denver. The double-digit price gains in Denver will push people to Colorado Springs, as well, since relatively very few earn $90,000 a year, which is the income needed to afford the average Denver home.

        Top Reasons Why Colorado Springs is One of The Best Cities to Invest in Real Estate

        • The median home price is $323,194.
        • Home values have gone up by 7.6% over the past year.
        • Currently, it is a red-hot seller's real estate market in the United States.
        • Single-family detached homes are the single most common housing type in Colorado Springs.
        • Colorado Springs's appreciation rates in the latest quarter were at 1.18%, which amounts to an annual appreciation rate of 4.80%.
        • The average rent for an apartment in Colorado Springs is $1,191, a 6% increase compared to the previous year.
        • The Median household income of a Colorado Springs resident is $54,228 a year.
        • Colorado Springs had a 5.5-percent gain in nonfarm jobs between December 2017 and December 2018, which ranked fourth out of 388 metros, according to a survey from the U.S. Bureau of Labor Statistics.
        • It was ranked as the fifth-best city in the United States to find a job in 2019, according to a survey released by Wallethub.com.
        • In 2018, U.S. News & World Report ranked Colorado Springs and the most desirable place to live in the U.S.
        • Currently, Colorado Springs is a sizzling hot seller's real estate market in the United States.

        18. Denver, Colorado

        Denver also makes the list of the best places to invest in real estate in 2022. Rentals in this city have been gradually increasing over the years. This consistent growth has been driven by a buoyant economy creating jobs. Tourism is also high, driving strong returns in the holiday rental market. Jobs are a major reason why people move to Denver in the first place. The area’s unemployment rate is less than 3%. Denver’s unemployment rate has been well below the national average for years.

        That explains why Denver is one of the top cities for in-migration, attracting people from all over the state as well as the country. You don’t want to invest in the Denver investment properties and end up losing money because the neighborhood is going downhill. Conversely, areas slated for redevelopment will almost certainly go up. And Denver has known and planned for areas of redevelopment. Downtown Denver saw multiple infill projects downtown ten years ago. Redevelopment is planned around Elitch Gardens today.

        Top Reasons Why Denver is One of The Best Places to Invest in Real Estate

        • Growing population – It is the 19th-most populous city in the nation.
        • The current metro area population of Denver in 2020 is 2,827,000, a 1.33% increase from 2019 – Macrotrends.net.
        • Ranked as a Beta world city by the Globalization and World Cities Research Network.
        • In 2016, Denver has named the best place to live in the United States by U.S. News & World Report.
        • Denver is in the top 10% nationally for real estate appreciation.
        • 3.8% 1-yr forecast till Feb 2021.
        • The average number of days on market is 83.
        • Colorado has had the lowest rate of mortgage delinquencies in any state.
        • A third of the Denver metro area rents.
        • Denver South is home to 7 Fortune 500 companies.
        • Denver was named 6th on Forbes Magazine’s “Best Places for Business and Careers.”
        • A low unemployment rate of 2.3% as of Dec 2019 – U.S. BLS.
        • The average rent for an apartment in Denver is $1,674, a 3% increase compared to the previous year.

        19. Raleigh, North Carolina

        Raleigh is also on the list of best places to invest in rental real estate in 2022. The Raleigh metropolitan area – the city and its surrounding suburbs – account for about one and a half million people. Recent forecasts and predictions for the Raleigh housing market suggest that home prices will continue rising in 2021. To consider the prospects of investing in the Raleigh NC real estate market, we’ll focus on factors that matter to investors instead of citing the many high quality of life metrics and awards the city receives that draw new residents to the area.

        About a third of Americans rent their homes. In the Raleigh NC real estate market, the rate is 43%. This is partially due to the large student market, but it is also fueled by young people moving here for work. That explains why downtown Raleigh rents grew 9% in 2018. It also explains why you can rent out a studio for $900 a month and one-bedroom apartments for a thousand dollars a month.

        Top Reasons Why Raleigh is One of The Best Cities to Invest in Real Estate

        • Raleigh is considered one of the best cities to live and work in the US.
        • The median home price is $290,270.
        • Raleigh home values have gone up by 2.9% over the past year.
        • Currently, it is a seller's real estate market in the United States.
        • Single-family detached homes are the single most common housing type in Raleigh.
        • Raleigh's appreciation rates in the latest quarter were at 1.31%, which amounts to an annual appreciation rate of 5.34%.
        • The average rent for an apartment in Raleigh is $1,238, a 6% increase compared to the previous year.
        • Between 2017 and 2018 the population of Raleigh, NC grew by 1.19% and its median household income grew from $64,660 to $65,695, a 1.6% increase.
        • The Raleigh, North Carolina area is the highly-rated area in the country for information and technology job opportunities. It is second to Austin, Texas, which ranks #1.
        • Raleigh & Durham have lower unemployment rates than the national average and the region's annual average income is above the national average.

        20. Phoenix, Arizona

        Phoenix is also on the list of best places to invest in rental real estate in 2022. It is becoming a top destination for people living in high-cost areas like Los Angeles & Seattle. The Greater Phoenix area was also predicted to be among the top housing markets in the year 2020. Phoenix's housing market started so strong in 2020 that only something as drastic as the ongoing pandemic could have impeded the real estate sector. The year started with an extreme shortage of houses for sale, and an increasing number of sales over the asking price of property owners.

        In January, many experts expected moderate growth and moderate price appreciation in 2020. In March, Metro Phoenix’s median home price hit a record of $302,500. The median sales price in Maricopa County for Q1-2020 was $309,990, up by + 12.7% from last year. Even in the times of the Covid-19 pandemic, the sales prices in the Phoenix housing market are not declining. The favorable living conditions have, furthermore, comforted real estate investors and buyers to invest in Arizona real estate market.

        Top Reasons Why Phoenix is One of The Best Places to Invest in Real Estate

        • There are several other reasons to consider investing in Phoenix real estate.
        • Affordable real estate.
        • The median home price is $269,175.
        • Phoenix home values have gone up 8.0% over the past year.
        • Currently, it is a red-hot seller's real estate market in the United States.
        • Phoenix's housing market has been one of the highest appreciating communities not only in Arizona but in the nation as well.
        • Its more reasonably priced housing, lower cost of living, available workforce, and stable climate forecast a growing economy and stronger housing growth.
        • Prices are up 17.8% since two years ago and 145% since prices bottomed out in May 2011.
        • The national economy is super strong and the number of people moving into Phoenix is finally strong again after tanking during the Great Recession.

        21. Seattle, Washington

        Seattle too makes our list of one of the best places to invest in real estate for those who can afford it. Seattle offers strong economic prospects and a buoyant labor market. This means that rental occupancies are expected to remain high. The city’s population has grown consistently over the last few years with families drawn to the city’s lifestyle. The housing prices have doubled in the past five years, growing twice as fast as the national average since 2016.

        Seattle’s tech landscape and real estate market are rapidly evolving. Google just upped the size of its new Seattle campus. Facebook has been on a hiring spree in the Seattle area, particularly for its virtual reality arm Oculus, which is growing fast in Microsoft’s backyard of Redmond.

        GeekWire reported on new HQ leases for top Seattle startups Rover and Outreach. Other companies continue to grow and that will pick up any slack. Tech has blown up Seattle. For the past 5 years, we have seen 50% price growth in this market which has priced out many middle-class buyers.

        Seattle has long been second to Silicon Valley, but its strong economy, diverse population, and better regulatory climate are bringing refugees from California and migrants from around the country and world to live here. Regardless of the area’s weather, the Seattle housing market’s outlook can only be described as sunny.

        Top Reasons Why Seattle is One of The Best Places to Invest in Real Estate

        • Ranked as 10th in the nation in overall prospects of the “Emerging Trends in Real Estate 2020” – By Urban Land Institute.
        • They describe Seattle's real estate as “in expansionary mode” and the report was jointly produced with PwC consultants.
        • According to Mashvisor, the decreasing home values in Seattle demonstrate the real estate market is restoring balance and returning to a healthy state.
        • The average rent for an apartment in Seattle is $2,169, a 6% increase compared to the previous year – RENTCafe.
        • 176,400 or 54% of the households in Seattle, WA are renter-occupied while 147,046 or 45% are owner-occupied.
        • According to many experts, Seattle remains one of the top places to invest in real estate.
        • It may be very expensive, but Seattle's demographics & economy make sure that it remains a profitable and popular real estate market in the nation.
        • More people move to Seattle each year.
        • The U.S. Census places Seattle fourth for growth among the 50 biggest U.S. cities.
        • Seattle is a great city for families to start and grow, with a lot of quality public schools and lush green scenery.
        • It has a diverse mix of neighborhoods to choose from  – from tree-lined streets to urban condos and townhomes.
        • Seattle's one of the greenest cities in the U.S.

        Now that you know where to invest in real estate, it's time to figure out how to do it properly. One of the best investments you can make is in income-producing rental properties, but only if you know what you're doing. We can help you succeed by avoiding risk and boosting profit by researching top real estate growth markets.

        Contact us if you're seeking the best real estate investment opportunities in 2021. We are a provider of turnkey real estate – with properties as far south as Florida to as far north as Michigan. Here is a link to some of the best real estate markets where we have investment properties for sale. 

        Foreign Investment In US Real Estate 

        Foreign individuals and corporations are free to purchase residential or commercial real estate in the United States. In 2013, foreign buyers made up about 7% ($92.2 billion) of transactions in the $1.2 trillion U.S. real estate market (Source: Wikipedia). The annual survey of the Association of Foreign Investors in Real Estate ranked San Francisco, which had been one of the top five global cities since 2011, at 11th place, and Washington, D.C., at 25th from 15th place last year. Furthermore, the survey revealed that New York City is no longer the only No. 1 city in the US that appeals to foreign investors; that title is now shared with Los Angeles, which is tied with New York in this latest survey.

        5 Best Cities For Foreign Investment In United States Real Estate

        According to an old survey of the Association of Foreign Investors in Real Estate (AFIRE), the United States was deemed the number one country for planned real estate investment and the 5 best cities for foreign investment in United States real estate (CRE) are:

        • Los Angeles (tied with New York)
        • New York (tied with Los Angeles)
        • Seattle
        • Washington, DC
        • San Francisco

        With 58% of respondents’ votes, the US remains the country considered the most stable for real estate investment, and 86% said they plan to maintain or increase their investment in US real estate.

        Residential Properties Purchased by Foreign Buyers in the United States

        According to a report published in 2017 by NAR, Chinese buyers have been the top foreign buyers of U.S. residential property for three straight years, hitting a record high.

        The below data has been taken from the report published by NAR (National Association of Realtors).

        2017 Profile of International Activity in US Residential Real Estate

        • Foreign buyers purchased $153.0 billion of residential property from April 2016—March 2017,
          an increase from $102.6 billion during the previous 12-month period (April 2015—March 2016).
          The dollar volume of foreign buyer purchases accounted for 10 percent of the dollar volume of
          existing-home sales, an increase from the eight percent share during the previous period.
        • Foreign buyers purchased 284,455 residential properties, an increase from 214,885 during the
          previous 12-month period. The number of units purchased made up five percent of existing
          home sales, an increase from the four percent share during the previous period.
        • Foreign buyers who primarily reside outside the United States (non-resident foreign buyers)
          accounted for 42 percent of all foreign buyers, while recent immigrants and foreign buyers who
          reside in the United States on work, student, or other visas (resident foreign buyers) accounted
          for 58 percent. This composition is about the same as that of the previous 12-month period.
        • The average price of properties purchased by foreign buyers was $536,852, more than the
          average price of $277,733 of all U.S. existing home sales.3 The median price of properties
          purchased by foreign buyers was $302,290, also more than the median price of $235,792 of all
          U.S. existing home sales.4
        • China remained as the top origin of foreign buyers ($31.7B), followed by Canada ($19.0B), the
          United Kingdom ($9.5B), Mexico ($9.3B), and India ($7.8B). The bulk of buyers from China,
          India and Mexico were resident buyers, while most buyers from Canada and the United
          Kingdom were non-resident buyers.
        • Although foreigners purchased property nationwide, five states accounted for 54 percent of total
          residential property purchases: Florida (22 percent), Texas (12 percent), California (12 percent),
          New Jersey (four percent), and Arizona (four percent).
        • Nearly half of foreign buyers purchased the property as a primary residence.
        • Most non-resident foreign buyers made an all-cash purchase (72 percent), while a smaller
          fraction of resident foreign buyers paid all-cash (35 percent).

        For the new foreign real estate investors, it is important to know that in the United States, real estate listing information is shared by agents using multiple listing services, and consumers can access that same information using real estate sites such as Zillow. Each state in the US has its own set of rules regarding the purchase of real estate, including the type of purchase contract used, the method of closing the sale, and even the duties and titles of the individuals involved.

        Make the most of your investment dollars in 2021 by investing in real estate. Our analysis of the 20 best cities to invest in real estate was based on the most recent housing market trends, rate of appreciation, rent prices, job growth, economy dependencies, quality of life, etc. Please note that real estate prices are deeply cyclical because their demand side is impacted by economic cycles. Much of it is dependent on factors you can’t control. A recent example is COVID-19 which has impacted our economy. Therefore, many variables can potentially impact the value of the real estate and some of these variables are impossible to predict in advance.


        References:

        • https://www.zillow.com
        • http://www.afire.org
        • https://www.neighborhoodscout.com
        • https://www.rentcafe.com
        • https://en.wikipedia.org
        • https://fortress.wa.gov/esd/employmentdata/reports-publications/regional-reports/county-profiles/spokane-county-profile

        Filed Under: General Real Estate, Growth Markets, Housing Market, Real Estate Investing, Real Estate Investments

        SF Bay Area Housing Market: Prices | Trends | Forecasts 2022

        July 27, 2022 by Marco Santarelli

        Bay Area Housing Market

        This page has been updated to reflect the most recent trends in the San Francisco Bay Area housing market. Despite the fact that homes in the Bay Area housing market continue to sell for record prices, some real estate experts believe the market is leveling out. According to C.A.R., the number of house sales in the state plummeted a shocking 21 percent in June compared to the same month last year.

        With the exception of the early pandemic decline in 2020, this decline is the largest since 2008. The Bay Area housing market also continues to decelerate from the frenetic levels of the last two years, offering advantageous conditions for purchasers who lost bids or waited out the intensely competitive market. The huge decline in sales occurs as mortgage rates increase, discouraging purchasers. In June 2022, home sales in the Bay Area were 26.8 percent lower than last year and 4.4 lower than in May 2022.

        The interest rates are beginning to have an effect on prospective buyers hoping to enter the market. There is slightly more inventory, which is a positive development because the inventory is still historically low. But the more inventory there is, the less competitive the housing market will become for buyers. The cost of purchasing a property in San Francisco has not yet decreased. The median sales price in Bay Area topped $1 million for the sixteenth month in a row.

        The median sale price for a Bay Area home last month was $1.4 million. It is the price in the very middle of a data set, with exactly half of the houses priced for less and half-priced for more in the Bay Area real estate market. The rising prices show that the Bay Area housing market is distinguished by high demand and a scarcity of available inventory. Due to growing demand from the state's high-income residents, home prices are skyrocketing in this market.

        Is the housing market in the Bay Area cooling in 2022? No, most likely not. According to Zillow statistics, the average price of a single-family house in the city was $1.91 million in June, up 11.5% from $1.74 million in June 2021. And, while inventories may grow in the fall, anticipate plenty of competition from buyers. According to current trends, housing prices in the majority of Bay Area communities will continue to climb over the next twelve months.

        A significant number of purchasers led home prices to increase over the previous year in June. The median sales price of this region, which includes all nine counties of Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma, was $1,400,000 ($797 per Sq Ft). According to C.A.R., this is a 3.7 percent increase over the last June. The Bay Area median home price was 7 percent less than the previous month's median price of $1,505,000.

        Sales of existing homes were down in all the major regions of the California housing market in June. The Southern California region continued to have the sharpest decline of all regions, with sales dropping 27.1 percent from a year ago. The San Francisco Bay Area (-26.8 percent) had the second largest drop of all regions, followed by the Central Coast (-26.3 percent). May was much better than June as sales of homes declined by 8.4% percent on a month-to-month basis.

        The inventory is quite low. As of June 2022, the months of supply for existing single-family houses in the Bay Area is 2.0 months, a significant increase from last year when it was 1.4 months. Homes are selling for more than the asking price because affluent home buyers are ready to spend more to win bids. Sales Price to List Price Ratio = 104.4%. Only those who do not have enough money for a down payment are delaying their purchases. Looking at the low supply of homes, high-interest rates, interested buyers may have a difficult time finding available properties in the Bay Area in 2022. Hence, sales are expected to decline further in the coming months.

        Bay Area Housing Market Trends 2022

        Only 6 out of 9 counties of the Bay Area posted gains in home prices as compared to last year with Alameda County at the top of the list (+9.2% YoY). San Francisco County recorded a price decline of 2.6% from last year as the median price decreased from $1,950,000 to $1,900,000. Last month's median price in SF County was $2,015,000, a decline of 5.7%.

        No county posted a price growth of more than 10%. The second-highest price rise was seen in Solano (8.7%). It was followed by Marin (5.1%), Santa Clara (4%), Sonoma (3%), and Napa (2%). The prices dropped in Contra Costa (-1.3%), San Francisco (-2.6%), and San Mateo (-5.3%).

        The Sales Price to List Price Ratio in Bay Area was 104.4% signaling a competitive seller's market. Anything over 100% gives sellers an upper hand in price negotiations. The housing supply remains tight. The unsold inventory index now sits at around 8 weeks, which means it would take about 60 days to squeeze away all the listings from the market at the current sales pace.

        Bay Area Housing Market
        Data by CAR

        Below is the latest tabulated housing market report for the entire Bay Area released by the California Association of Realtors. The tabulated report shows the sales and prices of the Bay Area counties for June 2022. Much of the Bay Area real estate market remains firmly in “seller's market” territory with months of supply of available single-family homes being about eight weeks at the current pace of sales.

        Bay Area Housing Market Trends
        Source: CAR.org

        San Francisco County Housing Market Trends (Resales | Rents | Condos)

        Tech hubs like San Francisco and San Jose have drawn substantial homebuyer demand over the years but San Francisco’s infamously hot real estate market saw an outward migration due to the pandemic. People were leaving the city, increasing demand in the suburbs. The value of suburban single-family homes is skyrocketing, while rents and pricing in tech hubs are falling. Recent market trends indicate that the market is reviving and will most likely heat up again in the coming months.

        • In June 2022, the existing single-family home sales growth was negative in SF county.
        • The closed sales were down by 21.3% from the previous year and 14.6% from the previous month, according to C.A.R.
        • The median price for a single-family home in San Francisco County was $1,900,000, down 2.6% YTY and 5.7% MTM.
        • Last month's median price in San Francisco was $2,015,000.
        • Last year's median price in San Francisco was $1,950,000.

        In California, San Francisco and Los Angeles are the top markets for outward migration, for both permanent and temporary moves during the pandemic. Rents and condominium prices are expected to grow over the next twelve months, according to most analysts. Lesser-known areas with greater space, such as the Richmond, Sunset, and West Portal, are becoming increasingly popular for single-family homes.

        Rents were falling in many major cities across the country due to the pandemic, but the drop was most pronounced in San Francisco, one of the nation's priciest housing markets. After the pandemic began in March 2020, rent went into free fall in almost every major city on either coast as well.

        When the vaccine rollout began in January 2021, cities on the East Coast saw rents rise back to where they were before the pandemic. But on the West Coast, prices have only risen incrementally, leaving the Bay Area and Seattle still well below where they were before the pandemic began. As of June 2022, San Francisco ranks as the most expensive city in Bay Area with median rent at $3,000 for a one-bedroom and $3,950 for a two-bedroom apartment (source: Zumper).

        According to latest rental report by Realtor.com, in 38 of the 50 largest US metros, the monthly cost of renting a home is lower than buying a starter home. Low unemployment is correlated with strong rent growth. The 5 metros with the highest growth in the cost of living have an average gap between buying and renting of just $373, or 16.6% of monthly rent.

        In the low-inflation metros like San Francisco and Los Angeles, the cost of living was already high and the choices for housing were already sparse, so in-migration has not added fuel to the inflation fire. In May 2022, the overall median rent in San Francisco-Oakland-Hayward, CA was $3,171, a gain of 12.6% YoY (source: Realtor.com) The monthly cost of purchasing the property was $5,705, which was greater than the monthly cost of renting by $2,535 (or 79.5%).

        San Francisco has seen some of the biggest pandemic-related disruptions. It is now the second most expensive city to rent after New York. It has fallen behind New York in average one-bedroom rent, with New York at $3,950 and San Francisco at $3,095. More than two-thirds of apartments in San Francisco cost over $3,000 per month.

        As of July 24, 2022, the average rent for a 1-bedroom apartment in San Francisco, CA is $3,095. This is an 15% increase compared to the previous year. Over the past month, the average rent for a studio apartment in San Francisco increased by 4% to $2,195. The average rent for a 1-bedroom apartment increased by 3% to $3,095, and the average rent for a 2-bedroom apartment increased by 6% to $4,195.

        • The average rent for a 2-bedroom apartment in San Francisco, CA is currently $4,195. This is an 11% increase compared to the previous year.
        • The average rent for a 3-bedroom apartment in San Francisco, CA is currently $4,950. This is a 10% increase compared to the previous year.
        • The average rent for a 4-bedroom apartment in San Francisco, CA is currently $5,995. This is a 2% increase compared to the previous year.

        According to data by Apartmentlist, the expensive neighborhoods in San Francisco are Pacific Heights ($3,799), Mission Bay ($3,708), and Northern Waterfront ($3,606). The most affordable neighborhoods in San Francisco are Nob Hill ($3,393), Lower Nob Hill ($2,892), and Tenderloin ($2,515).

        • 0% of apartments in San Francisco cost less than $1,000 per month.
        • 7% of apartments in San Francisco cost between $1,000-$1,999 per month.
        • 22% of apartments in San Francisco cost between $2,000-$2,999 per month.
        • 71% of apartments in San Francisco cost over $3,000 per month.

        San Francisco Condo/Townhomes Market Trends: A Big Growth in Sales

        The high inventory levels for condos and townhomes in San Francisco county have made it favorable for condo buyers. The current unsold condo inventory index is 3.6 months and the sustained supply is finally lowering the median prices of condos. People simply no longer wish to live in densely populated areas, especially apartment buildings where they have to share common areas. They want enough space for a home office or two and their own outdoor space as well.

        The current median price for a condo in San Francisco County is $1,250,000, which is the same as last year. The price is up 2.0% from the last month's median price of $1,225,000. Due to the pandemic lower prices of SF condos were driving more sales. In June 2021, it saw a massive growth of 216.2% year-over-year. In December 2021, condo sales increased by almost 44.4% year-over-year.

        However, in January 2022, the rate of sales growth declined as buyers seem to be pulling out for a while. Condo sales in SF county decreased by 29.5% as compared to January of last year. In February 2022, sales were slightly up by 2.2% from last year, and in March 2022, the sales declined by 13.0%. However, in March, the month-to-month sales growth was nearly 58 percent.

        In April 2022, condo sales in SF county declined by 11.5% YoY and 0.8% MoM. In May 2022, condo sales declined by 13.2% YoY and 2.7% MoM. As of June 2022, condo sales declined by 32.7% YoY and 16.3% MoM. It is seeing higher levels of inventory with a significantly larger jump than in the surrounding suburbs. San Francisco had an unusually low inventory relative to other large cities before the pandemic. You can expect more condo listings in the second half of 2022. It could be an opportunity for those that have been wanting to buy a condo for a while and were previously priced out.

        San Francisco Housing Market Trends
        Infographic Source: CAR.org

        San Francisco Bay Area Housing Market Forecast 2022 – 2023

        San Francisco Bay Area consistently ranks among the most expensive real estate markets in the world, and it is one of the most densely populated cities in the U.S. The Bay Area housing market consists of all nine counties (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma) and 101 municipalities. The region is home to three major cities: San Francisco, Oakland, and, the largest, San Jose.

        San Francisco's real estate market is shaping up to continue the trend of the last few years as one of the hottest markets in California. What are the San Francisco real estate market predictions for 2022 to 2023? Let us look at the price trends recorded by Zillow over the past few years. Since the last decade (June 2012), the San Francisco County home values have appreciated by nearly 121% — Zillow Home Value Index.

        As you can see in the graph given below, the San Francisco & Bay Area home values increased consistently, from 2012 through 2018. After that, it marked the beginning of a flattening out of prices which lasted for over a year. From April 2020 to Dec 2020, there was a consistent decline in SF home values.

        After that, the prices have been rising back again. ZHVI is not the median price of homes that are sold in a month within a geographic region. It is calculated by taking all estimated home values for a given region and month (Also called Zestimates), taking a median of those values, and applying some adjustments to account for seasonality or errors in individual home estimates.

        It, therefore, represents the whole housing stock and not just the homes that list or sell in a given month. By this calculation, the current typical home value of homes in San Francisco County is $1,649,663 (May 2022). It indicates that 50 percent of all housing stock in the area is worth more than $1,649,663 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes).

        In May 2021, the typical value of homes in San Francisco County was around $1.47 million. Home values have gone up 12.4% over the last twelve months. San Francisco's appreciation rates have lagged behind the rest of the country over the last year. San Francisco's appreciation rate over the last twelve months has been 12.22 percent, which is lower than the appreciation rate in the majority of American communities.

        According to NeighborhoodScout's data, house appreciation rates in San Francisco were 4.47 percent in the most recent quarter, equating to a 19.10 percent annual appreciation rate. It shows a home price appreciation forecast of more than 20 percent over the next twelve months.

        The typical value of homes in San Francisco-Oakland-Hayward Metro (Bay Area) is $1,500,189, up 18.5% over the past year. Here are Zillow's latest home price projections for the Bay Area and its counties. The exact rate of appreciation for the counties for the next twelve months is not available as we write this.

        However, you can gauge it by looking at the past trends shown in the graph. Due to the supply-demand imbalance, property appreciation is certain in 2022. If mortgage rates remain higher than last year's average, it can play an important role in the moderation of price growth. For current homeowners and those looking to sell, there is a lot of money to be made as housing prices have increased in all the counties.

        • Bay Area (San Francisco-Oakland-Hayward Metro) home values have gone up 18.5% over the past year and they are expected to continue to rise by 7% by May 2023 (ZHVI).
        • San Francisco County home values have gone up 12.4% over the past year but they are expected to increase in the next twelve months.
        • Alameda County home values have gone up 20.9% (current = $1,290,434) over the past year and they will continue to rise in the next twelve months.
        • Contra Costa County home values have gone up 20.5% (current= $994,183) over the past year and they will continue to rise at a similar pace in the next twelve months.
        • Marin County home values have gone up 20.9% (current = $1,689,483) over the past year and they will continue to rise at a similar pace in the next twelve months.
        • Napa County home values have gone up 15.7% (current = $932,911) over the past year and they will continue to rise at a similar pace in the next twelve months.
        • San Mateo County home values have gone up 17.5% (current = $1,783,114) over the past year and they are expected to rise at a faster pace in the next twelve months.
        • Santa Clara County home values have gone up 22.4% (current = $1,712,709) over the past year and they will continue to rise at a similar pace in the next twelve months.
        • Solano County home values have gone up 18.2% (current = $624,913) over the past year and they will continue to rise at a similar pace in the next twelve months.
        • Sonoma County home values have gone up 12.6% (current = $829,252) over the past year and they are expected to rise at a similar pace in the next twelve months.

        Here is the graphical representation of historical home prices since the last decade.

        San Francisco Bay Area Housing Market Forecast
        Credits: Zillow.com

        Despite the ongoing health and economic crisis caused by the COVID-19 pandemic, the San Francisco housing market made a large recovery in sales from the steep declines. As affluent buyers are least affected by the economic downturn, they are seen to have been jumping back into the market to a greater degree than other segments. High-end luxury real estate has seen a very strong demand in virtually every housing market in the entire Bay Area.

        The pandemic & economic shutdowns have not had much impact on this housing market. The buyer demand has been significantly high as is reflected in the latest housing data. Despite high rates of unemployment and an economic downturn, housing has held onto its value in the San Francisco Bay Area. As the Bay Area employs a high number of skilled workers with college degrees, its unemployment rate is lower than other areas of the United States, and its housing market is holding strong.

        The high-end buyer activity has pushed the median price to an all-time high. More affluent buyers having the greatest financial resources have been jumping back into the market to a greater degree than other segments. In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero.

        In terms of months of supply, San Francisco, or the entire Bay Area housing market can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s not going to happen. Because of a persistent imbalance in supply and demand, the entire Bay Area region is heavily skewed toward sellers.

        In June, the inventory of available single-family homes increased to 2.0 months. The bad news for buyers in San Francisco and the rest of the Bay Area is that mortgage rates are increasing when compared to last year's average rate. Still is a good time for them to enter the market and seize their favorite deals, as rising rates will have an impact on housing affordability in the future.

        Real estate market forecasts given in this article are just an educated guess and should not be considered financial advice. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Many variables could potentially impact the value of a home in San Francisco in 2022 (or any other market) such as big changes in the distressed, new-construction, or luxury home segments. There are also a wide variety of economic and political factors that can and do impact real estate markets. Most of these variables are difficult to predict in advance. 

        San Francisco Real Estate Investment Overview 2022

        Should you consider San Francisco real estate investment? Many real estate investors have asked themselves if buying a property in San Francisco is a good investment as the median price for a two-bedroom sits at $1.35 million. The high cost of real estate in San Francisco is impossible for most families to manage. Exodus is yet another problem and a new report confirms that the numbers are staggering. Online real estate company Zillow released new statistics shining a stark light on the issue this week.

        Their “2020 Urban-Suburban Market Report” reveals that inventory has risen a whopping 96% year on year, as empty homes in the city flood the market like nowhere else in the country. Although this article alone is not a comprehensive source to make a final investment decision for San Francisco, we have collected some evidence-based positive things for those who are keen to invest in the San Francisco real estate market. If you can afford it, then it’s an investment that will continue to increase in value over time.

        Due to low-interest rates in 2021, there was an influx of high-end luxury buyers, with certain instances where homes have been sold for $1 million over asking. Let’s talk a bit about San Francisco and the surrounding bay area before we discuss what lies ahead for investors and homebuyers. San Francisco is home to nearly 900,000 people. It is the hub of the San Jose-San Francisco-Oakland area; this larger metro area is home to nearly nine million people.

        The city alternately makes the news for people paying incredibly high rents to live in boxes, the homeless problem, and the tech industry. This makes many think about why or how anyone could live there. Others would think why you’d want to buy a property now in such an overvalued real estate market. Yet we can give you ten positive signs about the San Francisco housing market. Keep on reading to find out more. Why is housing so expensive in San Francisco?

        First of all, the entire state of California has a consistent housing shortage due to limited land. Most of the cities including San Francisco are failing to meet the regional housing needs. New construction permits in all cities often lag due to community resistance which blocks new housing. Jobs are increasing and the economy is the strongest in 50 years. But due to the tight supply of homes, San Francisco home prices have grown much faster than incomes.

        The minimum annual income required for owning a house in the San Francisco bay area in 2019 was $197,970. That's an increase of 119.1% since 2012 when affordability was at its peak. Homeownership is not rebounding anytime soon in San Francisco. By 2025 more than 60% of the population is estimated to rent. Housing affordability has been a consistent issue for first-time buyers over the last few years. They have limited options in the San Francisco housing market.

        Although mortgage rates have decreased, big down payments & all-time high home prices aren't spurring more sales. Many simply can’t afford to buy a house due to these factors. Despite Covid-19, in the latest quarter, the San Francisco real estate appreciation rate has been around 0.21%, which amounts to an annual rate of 0.84%. Some experts feel that home prices may drop by 1 to 2% in the next twelve months.

        This is a good sign for new homebuyers and investors as far as affordability is concerned as many of them can’t afford to buy a median-priced home in San Francisco. We shall discuss some more important reasons why you may want to consider buying San Francisco investment properties for the long-term buy and hold.

        San Francisco's Strong Economy Propels Real Estate

        Why doesn’t everyone just move out of the San Francisco housing market? Some do move, but they have a one and a half to two-hour commute each way to work because they still want to work there. They just can’t afford to live there. Moreover, it is the high-tech job market that draws so many people to San Francisco and leaves many others struggling to pay the bills. San Francisco is turning into a major international city. It is a white-collar city, with fully 90.74% of the workforce employed in white-collar jobs, well above the national average.

        In a report published by Google in June 2019, it announced one billion dollars of investment in housing across the Bay Area. A 10-year plan to add thousands of homes to the Bay Area. The company would be making this major investment in what it believes is the most important social issue in the bay area real estate market.

        This proposition by Google will add thousands of new homes to the Bay Area real estate market over the next ten years. About $750 million would be used for repurposing Google's own commercial real estate for residential purposes. This will allow for 15,000 new homes at all income levels in the Bay area. Another $250 million investment fund would be utilized to provide incentives to enable developers to build at least 5,000 affordable housing units across the Bay area housing market.

        As a move to support affordable housing initiatives these investments will help Google plans to give $50 million in grants through Google.org to nonprofits focused on the issues of homelessness and displacement of citizens. The company also plans to fund community spaces that provide free access to co-working areas for nonprofits, improve transit options for the community, and support programs for career development, education, and local businesses.

        As it is the epicenter of the technology industry, there are a lot of people with an immense amount of wealth. Wealth isn’t just limited to the uber-wealthy founders of major tech companies or successful VCs but also the general workforce, whose salaries and incomes are among the highest in the world. Overall, San Francisco is a city of professionals, managers, and sales and office workers. Also of interest is that San Francisco has more people living here who work in computers and math than 95% of the places in the US.

        The predicted 2020 job market slowdown won’t result in layoffs, just a drop in job growth to 1.5 to 2 percent a year. Note that the area already has an unemployment rate of 1.2 percent below the national average. The unemployment rate in the San Francisco-Redwood City-South San Francisco MD was 1.8 percent in December 2019, down from a revised 1.9 percent in November 2019, and below the year-ago estimate of 2.1 percent.

        This compares with an unadjusted unemployment rate of 3.7 percent for California and 3.4 percent for the nation during the same period. An upcoming recession is likely to have a limited effect on the SF Bay Area’s housing market. It will only temper housing price appreciation but not reduce it. These solid economic fundamentals are integral to maintaining high rental property demand and ensuring a good return on investment.

        San Francisco Rental Market

        You may read about the growth of Portland and other Pacific Northwest cities as talent and businesses flee the expensive San Francisco real estate market. That’s hardly impacted the San Francisco housing market, though. However, San Francisco has several advantages over its Oregon rivals, and that’s the fact that you aren’t in Oregon. Oregon passed a state-wide rent control law in 2019. This is in addition to many city regulations regarding affordable housing. In Oregon, your ability to raise rents is limited by the state.

        Making matters worse, there are many more renters than property owners, so they’ll tighten the allowable rental increases and continue to hamper owners until they’re losing money. And then there is California. You can find a variety of rent control laws in the San Francisco housing market because every city takes its approach to the problem. This means that you can find suburban San Francisco rental properties where you could raise rental rates to match the market. Furthermore, rent control laws typically don’t apply to newer single-family homes.

        California, on the whole, is unfriendly to landlords. It is challenging to evict people. It can take a long time to evict someone who occasionally pays the rent. Taxes are high. What does this do to the San Francisco housing market? It leaves open the possibility that you could snap up San Francisco rental properties at a relative bargain price by people who just want to quit, whether they want to sell the properties or leave the state. For example, the laws governing the San Francisco real estate market allow you to buy San Francisco rental properties and evict the tenants to turn the units into condos for sale.

        SF Rental Statistics

        San Francisco holds the position of the priciest rental market. It is still #1 among the top 5 rental markets in the nation. The average rental income for traditional San Francisco investment properties is well above the national average.  Like most of the Bay Area, the percentage of people renting in San Francisco is more than owners. San Francisco has around 56 percent of its residents living in rental homes.

        If condo prices are going to drop or remain flat in 2021, people will see a good investment opportunity. They’ll be able to get in at a good price and there will be an increase in demand. If you’re in the market for a condo in San Francisco, that means you could get a great deal. According to several rent reports (discussed above), rental price declines have hit the bottom and are almost flat as compared to the previous month.

        San Francisco's Geography & Zoning Restrictions Limits inventory

        San Francisco real estate market is perpetually constrained in terms of inventory. Several factors contribute to this, but principally the strict zoning laws prevent new development and high-rise construction throughout the city. The strict zoning laws, coupled with the fact that the SF is only seven by seven miles, make it a very constrained market and keep supply perpetually low. San Francisco sits on a peninsula, surrounded on three sides by water.

        They cannot build to meet housing demand. The surrounding cities are densely built up, as well. The only way the San Francisco real estate market could meet demand is by ripping out large swaths of two and three-story buildings to build condo towers, but that’s almost impossible given local regulations. The ability to build up is limited in the surrounding suburbs because of the mountains.

        The San Francisco real estate market is, for better or for worse, beholden to several competing interest groups. For those with money that own their homes and have the most influence, “not in my backyard” or NIMBY means that voters fight any proposal to replace a 2 or 3-story warehouse with a 20-story apartment or condo building. They want to protect the look and feel of the community, and through high-rise construction could start to relieve the overcrowding in the San Francisco real estate market.

        The horrific stories of developers going through four years of red tape to build multi-family San Francisco rental properties deter others from even trying. Ironically, this creates significant returns for those who buy up San Francisco rental properties and can convert them to multi-family housing.

        San Francisco's Environmental Movement

        The environmentalist movement and California are intertwined in the public’s mind and for good reason. This is the best demonstration of its impact in Marin County. An estimated 85 percent of the county is off-limits to development. This doesn’t mean there are no homes here. It means that there are large estates that cannot be turned into tract homes. Neighbors fight any such project. This is why George Lucas had to threaten to build hundreds of homes on Skywalker Ranch when they wouldn’t let him expand his studios there. This also explains why the San Francisco real estate market cannot solve its affordable housing crisis by building in the relatively open lands in Marin County.

        Warehouses and factories have been converted to lofts in large, established cities around the world. They offer open spaces, high ceilings, and proximity to public transit and downtown amenities. San Francisco is no exception to this trend. The difference is the growth in high-density San Francisco rental properties as can only be found in co-living spaces. These can be considered high-end dorms.

        People may rent a bunk bed and storage space for their possessions, gaining access to laundry, kitchen, and workout facilities. Several people may share a bedroom that rivals a cramped college dorm room. These facilities are booming because they cater to the new college graduates already used to living this way and willing to continue to do so to work for Big Tech firms in San Francisco.

        San Francisco's Luxury Real Estate Market is Booming Despite Pandemic

        Dealing in the luxury real estate market has its benefits. More affluent buyers are the demographic least affected by any economic crisis such as brought up by the Covid-19 pandemic as they have the greatest financial resources. Although home prices soaring there is an influx of wealthy buyers. A relatively high percentage of the buyers in the city are all cash (Around 40 to 60 percent of them). Those that aren’t paying all cash are putting at least 20 percent down with the ability to close fast, even with a loan.

        In June, house values in California city reached a record monthly high of $1.8 million. Deep-pocketed home buyers across San Francisco bolstered the market’s rebound and pushed up transactions and house prices, according to a report Monday from Compass. The number of luxury single-family homes—defined by the report as those priced at $3 million and above—that accepted an offer in June surpassed 30, the highest level the metric has reached in two years, data from the brokerage showed.

        The increase helped push San Francisco house values to a record monthly high of $1.8 million in June, 3% higher than the previous peak of $1.75 million in June 2019. You will find first-time homebuyers who are buying over $2.5 million or baby boomers looking for second homes in the $2 million range. New units are being built in the San Francisco housing market. However, the reality is that the pool of people who can afford to buy is smaller and smaller and the supply of housing is not growing with demand. They mostly consist of luxury condos and mega-mansions built for the elite of the Big Tech workforce.

        Another unintended side effect of regulations on San Francisco rental properties is that it incentivizes the construction of high-end units. Investors could invest in these projects or buy properties in the hopes that they are torn down and redeveloped. This is why burned-out husks can sell for hundreds of thousands of dollars and ones with demolition permits can sell for a million or more.

        San Francisco's Real Estate Appreciation Rate is High

        Thanks to all the factors discussed above, the entire bay area has one of the highest appreciation rates. A major reason San Francisco’s housing prices have climbed so high over the past decade is the city’s vibrant tech industry, which started booming in 2012 (thanks, in part, to a tax incentive aimed at attracting tech companies to the city over Silicon Valley). It now attracts a skilled workforce to the city while also driving up the demand for housing and the cost of living.

        The data from NeighborhoodScout reveals that San Francisco real estate appreciated 100.33% over the last ten years, which is an average annual home appreciation rate of 7.20%. This figure puts San Francisco in the top 10% nationally for real estate appreciation. And within San Francisco, some individual neighborhoods’ home values have jumped by more than 100%, according to Trulia & Zillow. Here are the five San Francisco neighborhoods that have had the biggest jump.

        • Bayview: Bayview had a $424,900 median home value in April 2009, which went to $1.07 million in Jan 2020. The current value is $1,004,025 (Zillow Home Value Index).
        • The Forest Knolls: In April 2009, the neighborhood’s median home value was $811,800, and it topped $1.8 million in Aug 2018. The current value is $1,895,032, up 11% YTY.
        • Bernal Heights: This neighborhood went from a median home value of $715,000 in April 2009 to $1.66 million in Aug 2018. The current value is $1,684,994, up 7.5% YTY.
        • Mission: This East of The Castro neighborhood is in central San Francisco. The median home value was $699,900 in April 2009 and $1.53 million in Dec 2019. The current value is $1,420,188, up 1.8% YTY.
        • Potrero Hill: This neighborhood lies in the East of the Mission District. It has a median home value of $734,200 in April 2009 and it topped $1.59 million in Sep 2020. The current value is $1,528,254, up 2.1% YTY.

        The good news is that if you are a home buyer or real estate investor, San Francisco has a track record of being one of the best long-term real estate investments in the nation over the last ten years. So if you bought a home in San Francisco 10 years ago, it’s very likely you’d have profited on the deal by now — in fact, in several neighborhoods, you would have a good chance at doubling your money. All the variables that contribute to real estate appreciation continue to trend upwards which makes investing in SF real estate a sound decision.

        Where To Invest In San Francisco Real Estate Market?

        Are you looking to buy an investment property in the San Francisco real estate market? California has the 6th largest economy in the entire world. This is largely driven by its innovative production, the heavy tech sectors in the state, and more. The San Francisco market is expensive, but that doesn’t mean it is overpriced. There are opportunities, though they come with risks. If the city had better leadership and more people willing to allow redevelopment on a large scale, the city could blossom.

        Good cash flow from San Francisco investment property means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in San Francisco in a growing neighborhood would be key to your success.

        If you invest wisely in San Francisco real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it is very important to read good books on real estate. The less expensive the San Francisco investment property is, the lower your ongoing expenses will be.

        When looking for the best real estate investments in San Francisco, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing. San Francisco home prices are not only among the most expensive in the state of California but they are also some of the most expensive in all of the United States. According to Realtor.com, Dolores Heights has a median listing price of $2.5M, making it the most expensive neighborhood.

        Some of the popular neighborhoods in and around San Francisco are South Beach, Pacific Heights, Mission District, Presidio Heights, Excelsior, St. Francis Wood, North Beach, West Portal, Outer Sunset, Hayes Valley, Portola, Dogpatch, Bernal Heights, Noe Valley, and Russian Hill.

        According to Financialsamurai.com, the best neighborhood to buy property in San Francisco is Golden Gate Heights. This neighborhood has many homes with ocean view properties (under $1,000/Sq Ft), and some of the best schools in SF. Golden Gate Heights consists of mainly single-family homes instead of condos. As a result, the neighborhood is family-friendly and much less dense than other areas of San Francisco. The neighborhood is relatively inexpensive. At an average price per square foot of $850 – $980, Golden Gate Heights is an absolute steal compared to other neighborhoods in San Francisco.

        Other best neighborhoods to buy investment properties in San Francisco are:

        • Inner Parkside, Parkside
        • Inner Sunset, Outer Sunset
        • Inner Richmond, Outer Richmond
        • Diamond Heights

        All of these neighborhoods are safe, relatively inexpensive, and offer single-family homes for working-class people in the SF Bay Area. Single-family homes are defensive during downturns and tend to outperform during upturns.

        Bernal Heights is considered an ideally located yet still moderately affordable place to raise a family. It’s on the south side of San Francisco, so it’s very easy to commute. The typical home value in Bernal Heights is $1,684,994. Bernal Heights home values have gone up 7.5% over the past year and this neighborhood will continue to rise in value.

        Tenderloin is an affordable neighborhood for those who can afford to buy a home in the median price range of $679K, trending up 26% year-over-year. As of October 2021, the Tenderloin is a balanced real estate market, which means there is a healthy balance of buyers and sellers in the market. When housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.

        Bayview is one of the most affordable neighborhoods, with a median listing price of $850K (on Realtor.com). Bayview saw an astounding 136% appreciation from 2000 to 2006, followed by a huge 50% drop from 2006 to 2010/2011. From 2012 onward the recovery has been consistent. The median listing home price in Bayview was $850K in October 2021, trending down -10.5% year-over-year. The median listing home price per square foot was $664. The median home sold price was $920K.

        Median housing prices in Bayview are also still among the lowest of any neighborhood in the city, which attracts buyers looking to get a foothold in the rapidly appreciating Bay Area housing market. The markets in Bayview and nearby neighborhoods are quite strong because they contain the most affordable houses in the city. It has one of the highest appreciation rates in the SF Bay Area region. During the downturn, its housing market became dominated by distressed sales and it fell so far that now, with the disappearance of the subprime effect, its recovery has been equally dramatic.

        Stoneridge Park is a neighborhood in Pleasanton, California. It lies in Alameda County—one of the nine counties of the Bay Area region. According to Niche.com, it is a family-friendly neighborhood and one of the best places to live in California. Living in Stoneridge Park offers residents an urban-suburban mix feel and most residents own their homes. In Stoneridge Park, there are a lot of restaurants, coffee shops, and parks. The public schools in Stoneridge Park are highly rated (A+). The median home value is $911,000 and the median rent is $2,572.

        Parkside receives an overall grade of A from Niche.com. It is a neighborhood in San Francisco County and is also considered one of California's best places to live. Living here offers residents an urban-suburban mix feel and most residents own their homes. The public schools in Parkside are highly rated. It is an expensive neighborhood with a typical home value of $1,631,675. Parkside home values have gone up 14.1% over the past year and they will continue to rise over the next twelve months.

        Here are the top neighborhoods in San Francisco having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.

        1. Presidio Heights
        2. Pacific Heights
        3. Sea Cliff
        4. Pacific Heights West
        5. Cow Hollow West
        6. Inner Richmond Northeast
        7. Laurel Heights
        8. Cow Hollow
        9. Pacific Heights Southeast
        10. Noe Valley North

        California Real Estate Investment Markets

        Apart from San Francisco, you can also invest in many other real estate markets in California. California's real estate market is the focus of many U.S. and foreign real estate investors.

        Another market to buy rental properties in California is San Jose. San Jose is part of Silicon Valley, a place where $100,000 a year or higher salaries from competing tech firms have driven up the cost of real estate. But what about the San Jose housing market itself? San Jose is the third-largest city in California, home to roughly a million people. It has the highest cost of living in any area in the U.S., and it is one of the most expensive housing markets in the country.

        If you want to invest in the San Jose rental properties, you may not need to buy and renovate. Instead, if you know of industrial or commercial properties near major employers they may need to convert to employee housing, which you could buy now and hold until it sells. If that doesn’t happen, you could still turn it into a co-working space.

        The San Diego real estate market offers an ideal mix of limited supply, high demand, and excellent income potential. If you’re going to invest in California, it needs to be in San Diego. The San Diego real estate market has been ranked among the ten most expensive real estate markets in the country, though it ranks below several other West Coast cities. This creates massive demand for San Diego rental properties by those who simply cannot afford to buy homes. The rental market will continue to grow as the city grows an estimated 500,000 by 2050, adding tens of thousands each year.

        Another expensive market like San Francisco is LA. The numbers may not make sense for many investors but if you ask savvy investors based in LA they would like to bet anytime on this expensive real estate market. The Los Angeles real estate market has many points in its favor beyond its sheer size. The strong market fundamentals make the Los Angeles housing market a good place to invest if you’re looking at buying real estate in California.

        Los Angeles has an unemployment rate of around 4%. What makes Los Angeles unique is the employment market. Want to work in Hollywood? Move to L.A. Want to work for a production company or in fashion? Come to L.A. If rent is too high, share an apartment or single-family home with friends. The Los Angeles housing market has seen a bump in residential construction. This has helped to satisfy some demand from renters. However, due to increasing demand, the new supply hasn’t brought prices down.

        The Oakland real estate market is a cheaper version of the San Francisco real estate market with similar rental rates and a slightly friendly legal climate. It presents a good opportunity for real estate investors. The Oakland real estate market is second only to San Francisco in terms of rental rates. It is rivaling New York City, Boston, and San Francisco in terms of rental prices. One-bedroom apartments are averaging $2400 a month. Yet Oakland housing units remain two hundred to five hundred thousand dollars cheaper than San Francisco properties. This means you’ll see far better ROI on Oakland rental properties than San Francisco properties.

        For most investors, buying or selling real estate is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

        NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in San Francisco.

        Consult with one of the investment counselors who can help build you a custom portfolio of San Francisco turnkey investment properties in some of the best neighborhoods. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete San Francisco turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.


        Please do not make any real estate or financial decisions based solely on the information found within this article. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

        References:

        Market Data, Reports & Forecasts
        https://www.car.org/en/marketdata/data
        https://www.zillow.com/sanfrancisco-ca/home-values
        https://www.zillow.com/research/2020-urb-suburb-market-report-27712/
        https://www.littlebighomes.com/real-estate-san-francisco.html
        https://www.realtor.com/realestateandhomes-search/SanFrancisco_CA/overview
        https://www.bayareamarketreports.com/trend/san-francisco-home-prices-market-trends-news

        San Franciso (City) Cooling-off
        https://www.cnbc.com/2020/09/27/san-francisco-housing-suburbs-red-hot-but-city-still-in-demand.html

        City details
        http://worldpopulationreview.com/us-cities/san-francisco-population

        Best Neighborhoods
        https://www.neighborhoodscout.com/ca/san-francisco/real-estate
        https://www.helena7x7.com/san-francisco-neighborhood-appreciation-rates/
        https://www.financialsamurai.com/best-san-francisco-neighborhoods-to-buy-property-for-price-appreciation
        https://www.niche.com/places-to-live/search/best-neighborhoods-to-buy-a-house/m/san-francisco-metro-area/

        Rental Market Statistics
        https://www.rentcafe.com/average-rent-market-trends/us/ca/san-francisco/
        https://www.rentjungle.com/average-rent-in-san-francisco-rent-trends/
        https://www.zumper.com/blog/rental-price-data/
        https://www.nolo.com/legal-encyclopedia/california-rent-control-law.html
        https://homeguides.sfgate.com/tenants-rights-landlord-sells-house-53734.html
        https://www.npr.org/2019/02/27/698509957/oregon-set-to-pass-the-first-statewide-rent-control-bill

        Should You Invest in SF
        https://realestate.usnews.com/places/california/san-francisco/jobs
        https://sf.curbed.com/2020/3/11/21155283/buying-a-house-san-francisco-2020
        https://reason.com/2018/02/21/san-francisco-man-has-spent-4-years-1-mi
        https://www.nytimes.com/2017/01/21/us/san-francisco-children.html
        https://www.latimes.com/politics/la-pol-ca-marin-county-affordable-housing-20170107-story.html
        https://www.citylab.com/equity/2016/04/blame-geography-for-high-housing-prices/478680
        https://www.theguardian.com/business/2016/aug/05/high-house-prices-san-francisco-tech-boom-inequality
        https://www.mercurynews.com/2019/03/14/bay-area-job-market-slowdown-experts-predict-google-apple-amazon-facebook
        https://www.washingtonpost.com/news/morning-mix/wp/2015/04/17/george-lucas-wants-to-build-affordable-housing-on-his-land-because-weve-got-enough-millionaires

        Luxury market
        https://www.mercurynews.com/2014/03/05/in-the-bay-area-million-dollar-homes-are-torn-down-to-start-fresh
        https://www.sfgate.com/realestate/article/863-carolina-street-potrero-hill-tear-down-listing-13844146.php
        https://www.housingwire.com/articles/36691-la-demolishing-affordable-housing-building-luxury-housing-instead

        Filed Under: Growth Markets, Housing Market, Real Estate Investing

        Utah Housing Market (Salt Lake City) Trends & Forecast 2022

        July 26, 2022 by Marco Santarelli

        Utah Housing Market

        The pandemic has supercharged Utah’s housing market driven by historically low-interest rates and low unemployment rates. Utah’s home prices have skyrocketed. Utah's housing market has been ranked as the nation’s #1 housing market for the strongest pace of job growth, along with low unemployment, low mortgage rates, few mortgage delinquencies, and low state & local taxes, according to Bankrate.com. Continued historically low mortgage rates and a solid recovery from the pandemic predict that the Utah real estate market could set another record in 2022.

        Utah’s rock-solid economy has provided a big help to the housing market. Utah’s housing prices continue to climb at a really rapid pace, but we will have to wait and see if this is sustainable considering that mortgage rates are likely to continue rising in the coming months. Twenty-four of Utah's 29 counties had increases in the double digits last year.

        • For the year 2021, 55,588 homes were sold in the state of Utah.
        • 2021's median price of $442,200 was 24.6% higher than the previous year.
        • As the year ended, 17,899 homes were sold in Salt Lake County.
        • Its median price went up 21.5% in 2021, to reach $460,000.

        In 2022, we can see a minor decrease in the speed of price growth compared to 2021. However, prices are expected to climb in double-digits in all the counties while some may potentially surge by close to 20 percent. To suggest that it is a seller’s market in Utah would be an understatement. The current housing supply can't satisfy demand, which will drive prices to increase further even in the face of rising mortgage rates.

        The same can be said about the Salt Lake County real estate market. According to a study, three Utah towns — Ogden, Provo, and Salt Lake City — are close behind Boise, Idaho, among the nation's top ten cities with “overvalued” home prices. According to Florida Atlantic University and Florida International University, Utah and Idaho cities have risen to the top of the list of cities in other states such as Texas, Michigan, Washington, Arizona, Nevada, and California with the “most overpriced” housing markets in the country.

        The hot housing market in Salt Lake City is expected to continue in 2022. The price momentum will be reduced in 2022, but another year of double-digit growth is anticipated. Realtor.com's 2022 Housing Forecast ranks SLC as the nation’s top housing market for 2022. The group expects Salt Lake City to lead the nation with 23.7% combined growth in sales and prices next year. They expect sales to rise 15.2%, and prices to increase by 8.5%.

        Utah Housing Market Trends & Statistics 2022

        In April 2022, around 4,225 homes were sold in Utah's housing market (statewide), down – 14.7% from the last April, according to a report published by the Utah Association of REALTORS®. YTD sales were 14,946, down – 8.2% from last year. The statewide median sales price was up 25.5% to $534,807. Last year at the same time, the median sales price was $426,000.

        In Utah, Summit County is the most expensive housing market with a median sales price of $1,380,000 (+ 4.5% YoY). Emery County is the least expensive with a median sales price of $218,050 (+ 28.3% YoY). If we talk about Salt Lake County, 1,276 sales were recorded in April, down – by 18.4%. The median sales price in Salt Lake County was $555,000, up 25.9% from last year.

        Why is Utah's housing market so hot? Rapid population growth and job growth are the two most important drivers of housing demand in Utah right now. According to local real estate agents, there aren’t enough single-family homes to meet the rising housing demand. A balanced market has roughly a six-month supply of houses, which means that if we stopped listing new properties, we'd still have about six months before we ran out. And right now, Utah is down to about four weeks of supply of homes.

        As a result, finding a dream house in this market is challenging for buyers, making it extremely competitive. Utah's employment landscape is also one of the most impressive in the country. It has had the most rapidly growing job market in the country for the past decade. Utah's population grew by 18.4% over the past decade, making it the fastest-growing state. It's now the 30th most populated state, with nearly 3.28 million people, according to U.S. Census Bureau data.

        A large number of Californians are relocating to Utah, putting extra pressure on the supply side. In-migration to the Salt Lake metropolitan area is still at an all-time high. The issue is that demand is so strong that inventory can't reach a level that indicates a sufficient supply. People are also coming from New York, Boston, Vermont, Austin, Texas, and other cities, according to local real estate agents. They also think that people who are first-time homebuyers in Utah will be priced out of the market by people moving in from other states.

        The following analysis of select counties of the Utah housing market is provided by Windermere Real Estate Chief Economist Matthew Gardner for the first quarter of 2022. Counties include Davis, Weber, Utah, Salt Lake, Morgan, Wasatch, and Summit.

        • The region continues to favor sellers.
        • In the first quarter of 2022, 6,493 houses were sold, a 7.5 percent decrease year on year.
        • Sales were down 29.1 percent from the fourth quarter of 2021.
        • Sales increased in four of the seven counties included in this study but declined in the rest of the region.
        • The number of available houses was down 30.9 percent from the previous quarter and 5.6 percent from the same period last year.
        • Pending sales, a leading predictor of future closings, declined 9.2 percent from the fourth quarter of 2021, implying that second-quarter closings may continue below normal.
        • Prices increased 19.5 percent year on year to an average of $639,131. Prices were 6.1% higher in the fourth quarter of 2021.
        • Prices grew in all counties except Morgan in the fourth quarter of last year, with Summit County soaring more than 20%.
        • The average time it took to sell a home in the counties covered by this report dropped eight days compared to the first quarter of 2021.
        • Homes sold the fastest in Davis County once again, and market time decreased in all but three counties compared to last year.
        • Summit County saw the highest decrease in market time, with homes selling in 31 days less time.

        Utah's housing market is sizzling hot at the moment. Residential real estate has boomed during the pandemic, and Utah has emerged as a particularly desirable market. Utah home prices are soaring as Californians migrate into the state leading to an imbalance between its supply and demand. Utah's economy is currently in excellent shape. The latest data available shows that Utah closed 2021 strongly with solid employment gains and an annual growth rate of 4.7%.

        Utah's housing market will have another excellent year. Rising salaries, according to Matthew Gardner, will likely offset the majority of the potential hardship from higher mortgage payments. The state has a robust economy, the unemployment rate dropped to 2%, which is the lowest level recorded since the Labor Department started keeping records in 1976.

        Saly Lake City House Prices
        Source: FHFA HPI® Top 100 Metro Area Rankings (as of 2022 Q1)

        Utah and the Salt Lake City metropolitan area continue to rank among the nation's hottest housing markets. According to the Federal Housing Finance Agency, the Salt Lake City metro region ranked 13th in terms of year-over-year house price growth among the nation's top 100 metro areas through the first quarter of 2022, with a 25.6 percent year-over-year increase in prices. Price rose 6.5% over the last quarter. The Cumulative change in FHFA HPI since 2007 amounts to 128.2 percent.

        Salt Lake City Metro Housing Price Trend
        Graph Source: FRED – All-Transactions House Price Index for Salt Lake City, UT (MSA)

        Utah boasts the nation’s strongest pace of job growth, along with rock-bottom unemployment, ultra-low mortgage rates, few mortgage delinquencies, and low state and local taxes. All those factors pushed Utah into first place in Bankrate’s Housing Heat Index for the fourth quarter of 2020. Utah's home values increased by 15.39% in the 12-month period that ended Dec. 31, third-best among U.S. states, according to the Federal Housing Finance Agency.

        Since 1991 Q1, HPI for Utah has increased by 414.95%. Idaho ranked #1 in FHFA State House Price Indexes. The HPI is a broad measure of the movement of single-family house prices. It is measured by reviewing mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac. According to a Bankrate analysis of Labor Department data, Utah also posted the second-strongest job growth in the nation from December 2019 to December 2020.

        Since the last decade (Jun 2012), Utah housing prices have gone up by nearly 181.6% — Zillow Home Value Index. For your information, ZHVI is a seasonally adjusted measure of the typical home value and market changes across a given region and housing type. It reflects the typical value for homes in the 35th to 65th percentile range. ZHVI represents the whole housing stock and not just the homes that list or sell in a given month.

        The typical home value of homes in Utah is currently $574,570. It indicates that 50 percent of all housing stock in the area is worth more than $574,570 and 50 percent is worth less (adjusting for seasonal fluctuations). In May 2021, the typical value of homes in Utah was around $450,000. Home values have gone up 27.7% over the last twelve months alone and will continue to rise at a similar rate (double-digit appreciation). Housing supply is at an all-time low, while demand remains high, implying that prices are set to rise further.

        Utah housing prices
        Credits: Zillow

        Utah Real Estate Market Trends For April 2022

        Here's how the housing market performed last month.

        • In April 2022, around 3926 homes were sold on MLS.
        • No. of single-family homes sold was 2946.
        • No. of multi-family homes sold was 980.
        • The median days on market were 6, no change from last month.
        • The median selling price reached $580,000 for single-family homes, up 23.1% year-over-year.
        • The median selling price reached $431,000 for multi-family homes, up 26.8% year-over-year.
        • The data is provided by UtahRealEstate.com, the leading provider of real estate technology in Utah and one of the largest Multiple Listing Services in the United States.
        Utah Housing Market Trends
        Source: UtahRealEstate.com MLS-Wide Housing Stats for April 2022

        Here's the current overview of Utah's Listing prices by “Counties” (source: Realtor.com)

        A list price in real estate is the price of a house for sale determined by the seller and her listing agent. The listing price determines how long it takes to locate a buyer (i.e., Time On the Market = TOM), and TOM influences the price that comes from the seller-buyer bargaining. Although paying 1 to 3 percent over the list price is not unusual, you should ask your realtor to come up with a price that is best for you.

        Counties Median Asking Price $/SqFt
        Salt Lake County
        $545K
        $261
        Utah County
        $539.9K
        $224
        Davis County
        $525K
        $228
        Weber County
        $429.9K
        $222
        Washington County
        $600K
        $297
        Cache County
        $449.7K
        $209
        Summit County
        $1.6M
        $871
        Iron County
        $415K
        $221
        Wasatch County
        $1.2M
        $433
        Tooele County
        $465K
        $197
        Box Elder County
        $449.9K
        $196
        Uintah County
        $265K
        $149

        Salt Lake City Real Estate Market Trends

        The Salt Lake City real estate market has been one of Millennials' toughest real estate markets due to limited supply relative to demand. It has become one of the top markets to watch in 2022. According to the most recent Salt Lake County house sales data, it seems that Utah's housing market may be slowing ever so little in the near future. More houses were sold in 2020 than in any prior year, putting 2021 on pace to be the second-highest sales year ever. With 19,202 homes sold in Salt Lake County, 2021 saw another record-breaking price rise, and it is expected to continue this year as well.

        In 2021, the median price of homes sold in Salt Lake County increased by 22% from $378,250 in 2020. According to the Salt Lake Board of Realtors, the median price of single-family houses sold in 2021 surpassed the half-million barrier, reaching $533,000, a remarkable 25% increase over the $425,000 median price in 2020. In December, prices were up 24%, just slightly below the largest gain of 27% in June and there’s no sign yet of a slowdown. The board predicts home prices will continue to climb between 10-12% in 2022.

        Salt Lake City Housing Market Forecast 2022-2023

        Salt Lake City is a moderately walkable city with a population of approximately 186,419 people. While the city limits encompass 110 square miles, downtown runs nearly two miles from east to west and nearly two miles north to south. Salt Lake City's population is also very young. The largest percentage of the city's population falls in the 25 to 39-year-old age group.

        Couple that with a high school graduation rate, and a large number of college graduates and you have an attractive workforce for many large companies. The state of Utah's population grew 9 percent over the last five years, much of it concentrated in Salt Lake City, where the typical home price at the end of 2021 was $583,858 (ZHVI Dec 2021).

        The Salt Lake City area's economy is doing well, and it has one of the lowest unemployment rates in the U.S. Utah’s employment outlook during the pandemic continued to outperform the rest of the country. Utah’s nonfarm payroll employment for December 2021 increased an estimated 3.7% across the past 24 months, with the state’s economy adding a cumulative 59,200 jobs since December 2019.

        Utah’s current employment level stands at 1,646,900. December’s seasonally-adjusted unemployment rate is estimated at 1.9%, with approximately 31,800 Utahns unemployed. Utah’s November unemployment rate is unchanged at 2.1%. The December national unemployment rate continued to decline, registering 3.9%.

        Utah’s economy progressed through 2021. The strength of the overall economy significantly impacts the real estate market as buyers' ability to support housing prices largely depends on key economic factors. The state’s economy has proved to be “one of the nation’s best in reemploying workers” as officials continued to actively encourage those drawing unemployment benefits to seek work in sectors less damaged by the pandemic.

        What are the Salt Lake City real estate market predictions for 2022-2023? Salt Lake City has been named the No. 1 housing market positioned for growth in 2022 by Realtor.com, with the metro expected to see 15.2 percent year-over-year sales growth and an 8.5 percent year-over-year price increase.

        Long-term demographic and economic growth has generated rapid increases in housing prices in Salt Lake County. The median sales price of a single-family home in the county has increased from $378,500 in 2020 to $460,000 in 2021, an average annual growth rate of 21.5%. 2020's annual growth rate was 11.8%. Since 1996, housing prices in Salt Lake County have increased at an average annual rate of 5.1%. Affordability issues may impact rapid price increases in 2022, but we may still see another year of a double-digit increase.

        Let us look at the price trends recorded by Zillow over the past few years. Salt Lake City has a track record of being one of the best long-term real estate investments in the U.S. Since June 2012, the Salt Lake County home values have appreciated by nearly 184% — Zillow Home Value Index.  ZHVI represents the whole housing stock and not just the homes that list or sell in a given month.

        The typical home value of homes in Salt Lake County is currently $622,197. It indicates that 50 percent of all housing stock in the area is worth more than $622,197 and 50 percent is worth less (adjusting for seasonal fluctuations). In May 2021, the typical value of homes in Salt Lake City was around $488,000. Salt Lake County home values have gone up 27.3% over the last twelve months.

        The forecast is that home prices will continue to increase at an almost similar pace in 2022. The limited supply of houses for sale is continuing to drive the home price up. Generally, a balanced market will lie somewhere between four and six months of supply. If MSI is displayed as less than 4.0, sellers have gained asking power. If MSI is above 6.0, buyers have gained negotiation power. In Salt Lake City, it is less than a month. The demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations.

        According to NeighborhoodScout’s data, Salt Lake City appreciation rates (latest twelve months) continue to be some of the highest in the nation, at 30.50%, which is higher than appreciation rates in 97.53% of the cities and towns in the nation. Based on the last twelve months, short-term real estate investors have found good fortune in Salt Lake City. In the latest quarter, Salt Lake City appreciation rates were at 10.23%, which equates to an annual appreciation rate of 47.62%.

        If we consider the Salt Lake City metropolitan area, the typical value of homes is $612,118. Salt Lake City Metro home values have gone up 27.4% over the past year and Zillow predicts they will rise 13.9% by May 2022.

        Here is a visual representation of how home prices have grown since 2012.

        Salt Lake City Housing Market Forecast
        Courtesy of Zillow.com

        Salt Lake City Real Estate Investment Overview 2022

        Now that you know where Salt Lake City is, you probably want to know why we’re recommending it to real estate investors. Is Salt Lake City a Good Place For Real Estate Investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2022.

        If you are looking to make a profit, you don’t want to buy the most expensive property in the Salt Lake City real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, an investment property in Salt Lake City that you might move into or sell at retirement in the future. Either way, knowing your profit potential and purpose is the first thing to consider.

        Salt Lake City is the largest city in the state of Utah, though it tends to be overlooked by real estate investors as just another part of a “flyover” country. Nearly half of all jobs in the state and 40% of the state’s population are located in Salt Lake County. The city is the core of the Salt Lake City metropolitan area, which has a population of roughly 1.2 million. Today, Salt Lake City is a major tourist spot in the U.S. The city is also the national hub of industrial banking.

        People are moving there due to the lower cost of housing, good quality of life, and outdoor recreation. The economy is strong and the city has one of the lowest unemployment rates in the nation.  A strong job market and a robust economy have been contributing to the rising housing costs over the past several years. Utah is the only state since 1900 where the homeownership rate has never fallen below 60%

        The 2021 Utah housing market will be long remembered for its record-breaking price increases. Statewide, housing prices increased by 27%, shattering the 43-year-old record of 20.1% set in 1978, according to the Salt Lake Board of Realtors. Record price increases were not confined to Wasatch Front counties; nearly every county in the state saw record increases. Twenty-four of Utah’s 29 counties had double-digit gains.

        Forecast for 2022: High prices, projected interest rate rises, listing shortages, and slower employment growth will keep Salt Lake County sales at approximately 17,000 units in 2022, according to the Salt Lake Board of Realtors. Mortgage interest rates are projected to climb, but only a little. Based on the estimates of seven organizations, the average rate for 2022 is 3.55 percent.

        The pricing momentum will weaken, but another year of double-digit increases is possible; expect a 10% to 12% increase, resulting in an additional $50 million in commissions. Finally, there are two sides to the pricing coin: present homeowners will profit from high price increases again, but future generations will be less likely to own a home, resulting in more inequality and lower wealth for these households.

        So what makes Salt Lake City Downtown so appealing to home buyers and investors? Downtown is the oldest district in Salt Lake City, Utah. The grid from which the entire city is laid out originates at Temple Square, the location of the Salt Lake Temple. Downtown Salt Lake City encompasses the areas of Temple Square, The Gateway, Main Street, the central business district, South Temple, and others.

        Throughout the last decade, Salt Lake City has seen a significant increase in development, from City Creek Center to 111 Main, these and other developments have played a crucial role in improving the vibrancy of downtown. Like the rest of the state, Salt Lake City Downtown is benefiting from the region’s healthy economy.

        More people live and work in the downtown area than ever before. But according to local real estate experts and representatives from the Downtown Alliance, despite the boom, the supply in downtown Salt Lake City isn’t catching up to the demand, and more development is needed in the city’s central business district to accommodate the growing demand for housing and office space.

        The Urban Land Institute ranked it the nation’s third-best market for commercial development in its 2018 Emerging Trends report, fueled in part by the big names relocating here like Goldman Sachs, which now has the fourth-largest office in the world in Salt Lake City. Salt Lake City's housing market is booming because of an ideal combination of business growth triggering in-migration and strong native population growth.

        And with a variety of affordable homes in high-quality neighborhoods, it is a market that is not yet closed to first-time home buyers. Is Salt Lake City going to be a sizzling real estate market for investors in 2021? Looking at the positive forecast, the annual appreciation rate is predicted to be between 10% to 12%.

        You can either choose to invest in your future or market your home to potential buyers. If you are looking for an affordable real estate market with a high potential for return on investment, you should consider Salt Lake City in 2021. Let’s take a look at the number of positive things going on in the Salt Lake City real estate market which can help investors who are keen to buy an investment property in this city.

        Positive Demographic Trends

        The total fertility rate for the United States hovers between 1.8 and 2.1 depending on the source you want to believe. Mormons, the majority of the population in Salt Lake City and Utah as a whole, have an average of 3.4 children. This puts constant pressure on the Salt Lake City real estate market. It also makes the Salt Lake City housing market unusual in the demand for homes with multiple bedrooms suitable for large families. There is a niche in the Salt Lake City real estate market for large luxury homes, but it is notable for the sheer demand for 4 or more bedrooms in affordable neighborhoods.

        Near Certain Real Estate Appreciation

        Salt Lake City sits at the intersection of I-80 and I-15. The industry tends to spread out along the highways, and housing follows. Investors in the Salt Lake City real estate market can buy land to develop or invest in housing projects being built in expectation of workers who will soon move to the area. Demand is one factor in the equation that determines the price of housing. The other is supply.

        Salt Lake City has seen an increase in housing construction since the economy rebounded. However, geography limits how and where homes can be built. This is causing home prices to appreciate significantly, and there is no evidence Salt Lake City could over-build the way Phoenix did before the Great Recession. A subtle issue hitting Utah is the relative shortage of skilled building trade talent despite the influx of people coming to work in business and tech.

        Salt Lake City Market Is Everything Which California Isn’t

        California is experiencing an incredible divergence from its ideals. While there is still a red-hot housing market in Silicon Valley, the state also has the highest poverty levels in the nation. They’re chasing businesses out of the state through oppressive regulation and high taxes. In contrast, Salt Lake City is booming because it is business-friendly.

        So many California tech firms have relocated to Salt Lake City that the area is now nicknamed “Silicon Slopes”. Forbes listed Salt Lake City first on its list of “next tech meccas”. The city is already home to many new startups. Where there are currently good-paying jobs, new residents are sure to move in. And that only puts more pressure on the Salt Lake City housing market. The very low crime rate in Utah compared to surrounding states is merely a bonus.

        The Low Cost of Living in Salt Lake City

        Housing aside, another reason why people relocate from the West Coast to Utah is the low cost of living. In fact, the $400,000 house in Utah with four bedrooms and a yard looks cheap when you sold a two-bedroom condo for 50% more than that in California. The overall cost of living in Utah is cheaper than the nation overall, and it is far cheaper than California, so many choose to relocate here from the high-cost states on the coast.

        The Growing Salt Lake City Rental Market

        The Salt Lake City housing market can’t keep up with demand, and this is pushing many Millennials and new residents into the rental market. While many would like to own a home, affordability is an issue for the young would-be homeowner; the average Millennial earns $68,000 a year while the median home price is $400,000. This explains why Salt Lake City has some of the fastest-growing rents in the country.

        As of June 14, 2022, the average rent for a 1-bedroom apartment in Salt Lake City is currently $1,250. This is a 14% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Salt Lake City decreased by -2% to $1,148. The average rent for a 1-bedroom apartment decreased by -3% to $1,250, and the average rent for a 2-bedroom apartment increased by 3% to $1,545.

        • Two-bedroom apartment rents average $1,545 (a 19% increase from last year).
        • Three-bedroom apartment rents average $2,100 (a 10% increase from last year).
        • Four-bedroom apartment rents average $2,095 (a 14% decrease from last year).

        The Zumper Salt Lake City Metro Area Report analyzed active listings last month across 3 metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Utah one bedroom median rent was $1,197 last month. Salt Lake City was the most expensive city with one-bedrooms priced at $1,270.

        The Fastest Growing Cities For Rents in the Salt Lake City Metro Area (Y/Y%)

        • Salt Lake City had the fastest growing rent, up 15.5% since this time last year.
        • Provo rent jumped 15%, making it second.
        • Ogden was third with rent climbing 11.6%.
        Salt Lake City Metro Area Rent Report
        Source: Zumper

        Landlord Friendliness

        Salt Lake City requires landlords to get a business license, even if they own one rental home. The fees that you are required to pay as part of the rental program depend on how well-maintained the units are. However, Salt Lake City in general is very landlord-friendly. Eviction for nonpayment of rent can get someone out in two to four weeks. Courts regularly side with landlords and award triple fees for damages by a tenant. If someone violates the terms of the lease, they have three days to correct the situation. You can end a month-to-month tenancy with 15 days of notice.

        Multiple Luxury Markets

        Downtown Salt Lake City properties near the Mormon Temple command a premium, but that isn’t the only upscale market in the area. Park City and the northern side of Oakley have properties that cost on average well over a million dollars. As you move up Highway 80 toward Hoytsville and Wanship, properties routinely cost more than a million dollars despite the hour commute to Salt Lake City.

        Looking For Salt Lake City Investment Properties?

        Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

        NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Salt Lake City.

        Consult with one of the investment counselors who can help build you a custom portfolio of Salt Lake City turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Salt Lake City.

        Not just limited to Salt Lake City or Utah but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Salt Lake City turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

        Like the Salt Lake City real estate market, the other housing market to go for to diversify your investments is the Baltimore real estate market. The Baltimore real estate market has been in decline for years, but several spots offer significant returns. And there are signs that the city is starting to turn around.

        The Baltimore real estate market around the new industrial parks built to cater to Amazon will boom because we can expect as many jobs from Amazon’s suppliers in those areas as Amazon itself – and those workers will want to live close to work. The Baltimore real estate market is promising and shows a new increase of opportunities for both buyers and sellers.

        Similarly, Cincinnati, OH is another great market to get started in real estate investing. Cincinnati's real estate market is on the upswing and looking strong for the foreseeable future. It provides many opportunities to investors, regardless of the market you want to invest in.

        Let us know which real estate markets in the United States you consider best for real estate investing! 


        Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US. 

        References

        • https://slrealtors.com/
        • https://utahrealtors.com/
        • https://www.zillow.com/salt-lake-city-ut/home-values/
        • https://www.zillow.com/salt-lake-city-metro-ut_r395053/home-values/
        • https://www.bankrate.com/mortgages/housing-heat-index/
        • https://www.fhfa.gov/DataTools/Tools/Pages/House-Price-Index-(HPI).aspx
        • https://www.fhfa.gov/DataTools/Tools/Pages/FHFA-HPI-Top-100-Metro-Area-Rankings.aspx
        • https://slrealtors.com/wp-content/uploads/2021/01/2021-Housing-Forecast-Report.pdf
        • https://www.realtor.com/realestateandhomes-search/Utah/overview
        • https://www.sltrib.com/news/2021/06/24/hyper-hyper-competitive/
        • https://www.zumper.com/rent-research/salt-lake-city-ut
        • https://www.realtytrac.com/statsandtrends/foreclosuretrends/ut/salt-lake-county/salt-lake-city/
        • https://www.ksl.com/?sid=46284050&nid=1426https://www.buildium.com/laws/utah-evictions-process/
        • https://en.wikipedia.org/wiki/Salt_Lake_City
        • https://www.deseret.com/utah/2021/9/16/22677951/utah-homes-sales-are-slowing-but-the-market-is-still-red-hot-salt-lake-county-city-housing-prices
        • http://www.cbre.us/people-and-offices/corporate-offices/salt-lake-city/salt-lake-city-media-center/cbre-releases-2018-salt-lake-city-real-estate-market-outlook

        Filed Under: Growth Markets, Housing Market, Real Estate Investing

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