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Tuesday, 26 February 2019 04:12

Recession-Proof Rental Markets for Single Family Investment Rental Properties

Recession Proof Rental MarkEven though it’s been years since the Great Recession finally faded, for many real estate investors, the idea of it returning is still concerning.

If it does, a portfolio that’s currently providing a stable source of income could quickly turn into a financial burden.

While every form of investing requires a certain amount of risk tolerance, it’s still wise to mitigate the potential damage a recession could cause by investing in markets that are least prone to this kind of economic downturn.

 

10 Recession-Proof Rental Markets for Single-Family Properties

Before we get to the list of properties that the data shows as impressive rental income properties, here are two key takeaways:

 

  • Most of cities listed never experienced more than a 5% drop in average home value since 1996. Yet, during this time, rent prices went up nearly 20%.
  • If you are considering markets in the United States, it’s clearly best to focus on the Midwest and Southern regions.

 

With all this being said, tradeoffs do exist. We require a minimum loan amount of $70,000 at 75% LTV.

 

For example, while these markets are less susceptible to large drops in real estate value, homes in many of these recession-proof cities simply haven’t increased in value as quickly as others have over the past 25 years.

Keeping that in mind, here’s where the best opportunities for single-family home investments lie if you want to keep your money safe during a recession:

1. Broken Arrow, Oklahoma

  • Largest drop in value since 1996: 4.56%
  • Increase in value between 1997 and 2017: 73%
  • Median List Price as of Q4 of 2018: $207,900

Located just about 14 miles outside of Tulsa, Broken Arrow has a lot going for it. With a population of 100,000 and such proximity to Tulsa (with a population of roughly 400,000), you shouldn’t have much trouble finding renters.

2. Richardson, Texas

  • Largest drop in value since 1996: 4.2%
  • Increase in value between 1997 and 2017: 103%
  • Median List Price as of Q4 of 2018: $332,983

While being a suburb of one of the largest cities in the country will certainly help with renters, Richardson also hosts The University of Texas at Dallas and is home to the Telecom Corridor, which gives it a lot of economic stability. 

3. Clarksville, Tennessee

  • Largest drop in value since 1996: 3.9% 
  • Increase in value between 1997 and 2017: 70%
  • Median List Price as of Q4 of 2018: $203,250

Clarksville has about 150,000 residents and with companies like Google, LG, and Hankook setting down stakes in Clarksville, a bright economic future is virtually guaranteed. As these are recent developments, many more renters are on their way.

4. Fort Collins, Colorado

  • Largest drop in value since 1996: 3.66%
  • Increase in value between 1997 and 2017: 173%
  • Median List Price as of Q4 of 2018: $402,344

According to Colorado State University economist, Martin Shields, Larimer County’s “low unemployment rate, solid job and population gains, improving wages and robust housing market indicate the economy will stay the course through the year” – a good sign for landlords. 

5. Amherst, New York

  • Largest drop in value since 1996: 3.36%
  • Increase in value between 1997 and 2017: 89%
  • Median List Price as of Q4 of 2018: $221,417

Amherst was recently named “the best place to live in New York” by Money Magazine. The publication noted that the city is a “hub for students.” Home to no less than five college campuses, it provides no lack of renters. 

6. San Angelo, Texas

  • Largest drop in value since 1996: 3.17%
  • Increase in value between 1997 and 2017: 68% 
  • Median List Price as of Q4 of 2018: $168,717

At a population of about 100,000, San Angelo isn’t a massive city, but it does have a prominent manufacturing industry that includes divisions of Conner Steel, Johnson & Johnson, and Hirschfield Steel.

7. Owensboro, Kentucky

  • Largest drop in value since 1996: 3.11%
  • Increase in value between 1997 and 2017: 61% 
  • Median List Price as of Q4 of 2018: $185,933

Last year, Business Insider cited Owensboro as one of the 11 cities “millennials are flocking to.” With a burgeoning community of young professionals, it seems safe to assume there will continue to be plenty of renters around for years to come.

8. Victoria, Texas

  • Largest drop in value since 1996: 2.79%
  • Increase in value between 1997 and 2017: 85% 
  • Median List Price as of Q4 of 2018: $194,267

Although Victoria isn’t a huge city (population of about 65,000), it is just 30 miles from the Gulf of Mexico, in the middle of the seven-county “Golden Crescent, ” and a major retail center for more than 250,000 people. So, while it often hosts tourists, this has meant a strong economy for the city, too.

9. Cheyenne, Wyoming

  • Largest drop in value since 1996: 2.66%
  • Increase in value between 1997 and 2017: 80%
  • Median List Price as of Q4 of 2018: $271,533

Wyoming has an economy most states would envy, so it should come as no surprise that its capital has a stable outlook, as well. While the rest of Wyoming benefits from oil production and mining, Cheyenne will continue to benefit from the railroad, F.E. Warren Air Force Base, and a number of other local companies.

10. Anchorage, Alaska

  • Largest drop in value since 1996: 1.52%
  • Increase in value between 1997 and 2017: 155%
  • Median List Price as of Q4 of 2018: $302,367

 

Finally, if you’re searching for great place to invest in single-family rental properties, look no further than Anchorage. What’s most interesting about this city is that, despite how amazing its real-estate market has been, experts say its economy is only just beginning to improve after a rough few years. Imagine, then, what things will look like in the years ahead.

Start Adding Recession-Proof Properties to Your Portfolio

It’s always important to diversify your portfolio, even when it comes to single-family investment rental properties. So, even if your portfolio is already concentrated elsewhere, it would be wise to consider putting some of your money in one of the markets listed above, especially if another recession may be looming.

At Investment Rental Properties, we’d be happy to help. We carry a wide range of property-investment products designed for those who are looking to add to their current portfolios.

Contact us today and we’d be happy to help you decide which option would be best for your unique needs.

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