Best places to own a US buy-to-let property - BRIC Group (2024)

FAQs

Best places to own a US buy-to-let property - BRIC Group? ›

The two states tick all the right boxes for rental demand, although Texas dominates the top five. The Lone Star cities of San Antonio, Fort William and Dallas take the top three places in the best places for US buy-to-let property.

What Types of Commercial Properties Are the Most Profitable? High-Tenant Properties – Typically, properties with a high number of tenants will give the best return on investment. These properties include RVs, self-storage, apartment complexes, and office spaces.

The amount will depend on your specific situation, but a good rule of thumb is to aim for at least 10% profit after all expenses and taxes. While 10% is a good target, you may be able to make more depending on the property and the rental market.

To become a real estate millionaire, you may have to own at least ten properties. If this is your goal, you need to accumulate rental properties with a total value of at least a million.

Generally, a good ROI for rental property is considered to be around 8 to 12% or higher. However, many investors aim for even higher returns. It's important to remember that ROI isn't the only factor to consider while evaluating the profitability of a rental property investment.

What Is The 1% Rule In Real Estate? The 1% rule of real estate investing measures the price of the investment property against the gross income it will generate. For a potential investment to pass the 1% rule, its monthly rent must be equal to or no less than 1% of the purchase price.

Most of the time, you can get positive cash flow right from day one with your rental. Figuring out your profit for the year is a matter of taking how much rent comes in and subtract how much money goes out for expenses like taxes, insurance, and mortgage payments. What you're left with is your profit for the year.

Where is the safest place to buy property in USA? ›

The Safest Place to Own a Home Hasn't Changed in Five Years

Nashua, New Hampshire and Laredo, Texas came close behind Columbia as the safest cities in the U.S.

Utah takes No. 1 in rankings that measure health care, education and economy. WASHINGTON, May 2, 2023 /PRNewswire/ -- Utah is the Best State in the country, according to the 2023 Best States rankings.

All of the data below comes from the Census Bureau's 2021 1-year American Community Survey (ACS) Estimates. Hawaii has the lowest property tax rate in the U.S. at 0.27%. The Aloha state has a home median value of $722,500.

The value of those properties isn't necessarily through the roof: 40% of landlords own less than $200,000 worth of property, and an additional 30% fall in the $200,000-$400,000 range. Only 30% of landlords own properties worth $400,000 or more, with 7% at the top owning properties worth $1 million or more.

No matter how much their annual salary may be, most millionaires put their money where it will grow, usually in stocks, bonds, and other types of stable investments. Millionaires put their money into places where it will grow such as mutual funds, stocks and retirement accounts.

Ultra-wealthy individuals invest in such assets as private and commercial real estate, land, gold, and even artwork. Real estate continues to be a popular asset class in their portfolios to balance out the volatility of stocks.

Wealthy people can opt to get affordable loans at a low rate, take a tax deduction that helps subsidize their interest, pay back their loans with "cheaper" money due to inflation, and use the cash they might otherwise have put down on a house to make an investment that stands a good chance of earning a higher return.

How to become wealthy? ›

The 2% rule in real estate is another simple way to calculate ROI for rental properties. According to this rule, if the monthly rent for a rental property is at least 2% of its purchase price, then odds are it should generate positive cash flow.

50% Rule: Set aside half of your rental income each month for repairs, maintenance, taxes, insurance, and other costs related to your property. 1% Rule: Maintenance will cost about 1% of the property value per year.

Like many rules of real estate investing, the 50 percent rule isn't always accurate, but it can be a helpful way to estimate expenses for rental property. To use it, an investor takes the property's gross rent and multiplies it by 50 percent, providing the estimated monthly operating expenses. That sounds easy, right?

The Rule of 72 offers a formula that allows you to estimate the years it will take for your investment to double in value. To use the rule, you divide 72 by the annual interest rate or rate of return on your investment. This calculation results in the number of years it will take for your investment to double.

Basically, the rule says real estate investors should pay no more than 70% of a property's after-repair value (ARV) minus the cost of the repairs necessary to renovate the home. The ARV of a property is the amount a home could sell for after flippers renovate it.

Ways the IRS can find out about rental income include routing tax audits, real estate paperwork and public records, and information from a whistleblower. Investors who don't report rental income may be subject to accuracy-related penalties, civil fraud penalties, and possible criminal charges.

THE 4-3-2-1 APPROACH

This ratio allocates 40% of your income towards expenses, 30% towards housing, 20% towards savings and investments and 10% towards insurance.

A popular standard for budgeting rent is to follow the 30% rule, where you spend a maximum of 30% of your monthly income before taxes (your gross income) on your rent. This has been a rule of thumb since 1981, when the government found that people who spent over 30% of their income on housing were "cost-burdened."

Where in the US can I get the most house for my money? ›

The typical rate for a 30-year loan topped 7% this week, which means it's now more than twice as expensive to finance a home purchase compared with 2021 and early 2022, when rates were about 3% or even lower. On a national basis, the average home costs 25% more to own than to rent, the analysis found.

What are the best states to live in? The best states to live in are Wyoming, Vermont, South Dakota, New Hampshire, Massachusetts, North Dakota, New Jersey, Maine, Florida, and Virginia.

1. Mississippi. Coming in as the cheapest state to live in in the United States is Mississippi with a cost of living index score of 83.3. It also has the lowest average housing costs in the nation at 33.7% below the national average.

Rather, Alabama is the most affordable state to retire in, according to WalletHub's “2023 Best States to Retire.” The analysis compared all 50 states across three key categories: health care, quality of life and affordability.

Unfortunately, there are no states without a property tax. Property taxes remain a significant contributor to overall state income. Tax funds are used to operate and maintain essential government services like law enforcement, infrastructure, education, transportation, parks, water and sewer service improvements.

Which Are the Tax-Free States? As of 2022, Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming are the only states that do not levy a state income tax. Note that Washington does levy a state capital gains tax on certain high earners.

As of 2023, eight states — Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming — do not levy a state income tax.

California has more rent-burdened tenants than anywhere in the United States, according to a new report by the O.C. Register. It's more proof that California desperately needs to end statewide rent control restrictions – and allow localities to create new or expanded rent control policies.

Hawaii and California top the list of states where renters spend the biggest chunk of their paychecks on housing, according to an analysis by Forbes Home. The average monthly income of Hawaiians is $5,079, yet residents spend an average of $2,136 on rent.

What is the easiest state to evict someone in? ›

Louisiana. Louisiana's effective property tax rate is just 0.54%, the third lowest in the US. It is also one of the states that have laws that preempt rent control. Louisiana has one of the fastest eviction processes in the country.

The number of millionaire renters has tripled in the past five years. More and more millionaires are stepping on the everyman's corner and renting apartments rather than putting down roots and money to become homeowners.

So they may rent a place in New York City, London, and San Francisco to live in because it's much cheaper than buying. Since they have cash-flowing real estate and other investments to live off of, they know the difference between a property that is an expense and an income property.

Don't get in over your head. Some real estate investors enjoy great success with one or two rental properties, while others own dozens. There's really no preset number of properties you should limit yourself to. Rather, you should think about your capacity to manage those properties.

Rent-to-Income Ratio FAQ

A good rent-to-income ratio recommendation is usually 30%. Meaning that roughly 30% of a tenant's gross salary should go toward rent.

The best commercial properties to invest in include industrial, office, retail, hospitality, and multifamily projects. For investors with a strong focus on improving their local communities, commercial real estate investing can support that focus.

Generally, an LLC is typically better for rental properties than an S corp. However, both offer: Liability protection for the owners. The chance to avoid double taxation by being taxed as a partnership.

Generally, a good ROI for rental property is considered to be around 8 to 12% or higher. However, many investors aim for even higher returns. It's important to remember that ROI isn't the only factor to consider while evaluating the profitability of a rental property investment.

#5 Single Family Property (Lowest Risk)

Single family properties are usually the least risky investment property type. They are typically less expensive and easier to manage than other property types, making them ideal for first-time investors.

The best investment property for beginners is generally a single-family dwelling or a condominium. Condos are low maintenance because the condo association takes care of external repairs, leaving you to worry about the interior.

Who are the most successful property investors? ›

Donald Bren is one of the greatest real estate investors in American history. He is currently the wealthiest real estate investor in the country and has a net worth of $15.3 billion. Donald got his start in the real estate world early in life. This is because his father was a real estate investor.

A lease may sometimes beat out a purchase in terms of cash flow, particularly in the early years. But over the long haul, a purchase is usually cheaper because a landlord, in addition to paying all of the costs associated with purchasing and maintaining the property, will attempt to build in a profit for himself.

Main tax benefits of owning rental property include deducting operating and owner expenses, depreciation, capital gains tax deferral, and avoiding FICA tax. In most cases, income from a rental property is treated as ordinary income and taxed based on an investor's federal income tax bracket.

2% Rule. The 2% rule is the same as the 1% rule – it just uses a different number. The 2% rule states that the monthly rent for an investment property should be equal to or no less than 2% of the purchase price. Here's an example of the 2% rule for a home with the purchase price of $150,000: $150,000 x 0.02 = $3,000.

What state has the highest ROI on real estate? The state with the highest one-year ROI on residential single-family homes is Arizona with 27.42 percent, according to iPropertyManagement data. The next two highest states are Utah with 27.05 percent and Idaho with 27.02 percent.