The housing foreclosure market continues to be fascinating to watch since it illustrates so clearly how market forces work and how one person’s struggle is another person’s opportunity, which then turns into a third person’s great deal. For the past two years, my hometown of Phoenix (along with Las Vegas) has been ground zero for foreclosures. At one point I saw a Sun City condo on the market for $12,000 – down from the $40,000 value it had once enjoyed. But over the past 18 months or so, investors have snapped up the bargains in Phoenix and they’re very hard to find these days. But in other parts of the country, the foreclosure market is still strong, as this story about yesterday’s auction in Atlanta illustrates.
Phoenix, Las Vegas and much of California no longer offer the best returns. In fact, they are not even in the top 10. Looking at costs of acquisition, rehabilitation, rental rates and maintenance, CoreLogic found Chicago, Tampa, Orlando, Atlanta and Indianapolis now offer the best investor returns for investors in single-family rentals.
“Atlanta is still one of the very early movers in home price appreciation and in distressed asset acquisition, so we think there are a lot of states, especially judicial states that will start releasing stock over the next few years and we want to be there when they do,” said Frost. He expects to start moving into Maryland and New Jersey in the near future.
For those who see investment in foreclosures as callous opportunism, realize that the investor is not only profiting but is helping other people/entities — including the next person/family that will have a rehabilitated home to rent or buy.
