Turning foreclosure properties into rental units has become very popular among real estate investors. The abundance of foreclosures throughout the country, combined with the increasing demand for rental units, has made this the perfect real estate opportunity.
A quick survey of the various housing markets in the country has shown that some places have much better opportunities for investors than others. The following 10 cities have been ranked as having the best opportunities for turning foreclosure properties into rental properties.
Cities were judged on the amount of discount REO properties are selling for in comparison to normal sales and the amount of foreclosure properties available in the area. Interestingly, a large percentage of cities to make the list are also the capitals of their state.
1. San Luis Obispo, California. At this time, the average foreclosure sales price registers at $322,800, representing a 23.4 percent discount over non-distressed properties in the area. Currently there is almost an eight-month supply available of foreclosure properties in this area.
2. Boston, Massachusetts. The average foreclosure sale registered at $204,700, which equals a 44.6 percent discount compared to regular home sales in the area. Boston has almost 18 months’ worth of foreclosure inventory available.
3. Olympia, Washington. The capital city of this North Western state is averaging $183,800 for foreclosure sales. This is 15.6 percent below average sales for non-distressed properties in the area. Olympia has approximately 9 months of foreclosure inventory available.
4. Durham, North Carolina. This charming southern city has seen foreclosure sales average $154,900, which is almost 25 percent less than non-distressed sales in the area. Foreclosure inventory in this area is just shy of 12 months.
5. Worcester, Massachusetts. Foreclosures in this area are selling for $ 138,900. This represents a 39 percent discount compared to other sales in the area. Available inventory for this quaint Massachusetts town is 14 months.
6. Providence, Rhode Island. The capital city of the smallest state is prime for real estate investors. The average cost of a foreclosure is $137,900, which represents a 36.4 percent discount in comparison to other sales. Available inventory is almost 15 months.
7. Phoenix, Arizona. Foreclosure properties have begun to dry up in this area, but the remaining properties are still a great deal. The average foreclosure sale came in at $130,700. This is a 22.4 percent savings. At this time, there is 11 months of inventory available in this area.
8. Springfield, Massachusetts. This historic town has seen foreclosure properties selling at $99,000. This is nearly a 47 percent discount from other non-distressed property sales in the area. There is 145 months of available distressed inventory.
9. Montgomery, Alabama. Alabama’s capital city has incredible foreclosure pricing, with the average sale coming in at $95,000. This is a 35 percent discount compared to other sales. At this time, there is a 17-month inventory available.
10. Cleveland, Ohio. The average foreclosure price in Cleveland registered at $69,400. This is a 37.2 percent discount when compared to sales for non-distressed properties in the area. Current inventory levels are at 15 months.