Soaring house prices in major California markets like Los Angeles, San Diego and the San Francisco Bay Area have left even well-paid workers in those markets with little hope of buying a home of their own, but a group of companies that cropped up in the wake of the 2008 financial crisis are offering them a way to take advantage of cheaper real estate in other parts of the country. These companies strive to provide their clients with steady rental incomes rather than quick turnovers and rapid profits.
While even a modest Bay Area home sells for seven figures, house prices in cities like Cleveland have remained depressed even though rents may be rising. Companies like HomeUnion, Roofstock and Investability help their clients to take advantage of these market discrepancies by offering property management services for fees of between 7 and 10 percent and property acquisitions for about 3 percent of the sales price. These real estate outsourcing companies say that the majority of their clients own one or two homes to provide them with additional income or to bolster and diversify their investment portfolios.
Those hoping to prosper in the residential rental market look for areas that offer landlords a robust gross annual yield, which is calculated by comparing annual rents with property values. Atlanta is a thriving southern metropolis, and landlords in the Georgia city earn healthy gross annual yields of more than 25 percent. The yield in the San Francisco Bay Area is less than 4 percent.
The profits earned by real estate investors are sometimes high, but putting money into a property thousands of miles from home can be a risky undertaking. Experienced real estate attorneys may explain how property laws can differ from one state to another, and they could also look into the track records of companies that offer to help their clients with out-of-state residential or commercial property investments.