This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

10 Great Cities to Become a Landlord In 2011

WASHINGTON ( TheStreet) -- The American dream of homeownership has dissolved into the daydream of a decent rental, and some cities are making it very easy on their month-to-month newcomers.

Vacancies among the nation's rental properties dropped from 6.6% last year to 6.2% last quarter as 44,000 more units found renters during that period than during the same period a year earlier, according to Reis (REIS). That's the largest increase during that normally slow winter period since 2000 and the lowest vacancy rate since 2008.

"The vacancy rate skyrocketed to a record high of 8% in 2009, so it wasn't like this sector dodged a bullet," says Victor Canalog, Reis' vice president of research and economics. "Since we've only been around since 1980, we've never seen a vacancy rate that high, but we saw that sector recover during every quarter in 2010 faster than the rate of the economy."

Slight improvements in job growth and employment figures are driving demand for housing again, but even the 4.5% rate on a 30-year fixed-rate mortgage quoted by Fannie Mae this month -- the lowest since December -- haven't helped year-to-date existing home sales plummet to 13% of what they were just before the first-time homebuyer credit expired during the same period last year, according to the National Association of Realtors. The foreclosure rate is leveling off, according to RealtyTrac, but the Census Bureau found that U.S. homeownership dropped from 69% in 2004 to 66.5% at the end of last year.

The $163,700 median existing home price is 5% lower than it was a year ago, but potential homebuyers facing 9.1% national unemployment and tight credit requiring a 20% down payment on home purchases are content to wait it out in a rental.

Potential landlords just love to hear that. Average asking prices ($1,047) and actual paid rent ($991) are up roughly 2% as 79 cities reported rent increases and shrinking rental stock. Reis noted that landlords who were offering incentive packages a year ago that gave tenants three to four months free on 12- to 15-month leases have cut those concessions to a month or less.

"Those rents basically bring you back to levels we last saw in 2008 before the downturn began," Canalog says. "It's not even a question of how soon we'll get back to previous peaks -- we're there already."

With help from Reis, TheStreet took a look at the U.S. rental market and came up with the best 10 places to buy a rental property and cash in on rising rents and dwindling supplies. We haven't seen cities this excited about rent since Broadway in the '90s:
1 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BOKF $60.18 0.00%
OKE $36.15 0.00%
WMB $19.39 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs