No matter what side of the political aisle you prefer, odds are that when it comes to your real estate investment portfolio, your choices tend to be more red than blue. A recent report from ATTOM Data Solutions indicates that although deep-blue California is home base for a vast population of deep-pocketed real estate investors, those investors do not necessarily keep their investment activities close to home. In fact, about one in every four properties owned by Californian investors are located out-of-state and, furthermore, the researchers estimated that about 3.4 million single-family investment properties in traditionally “red” states are likely owned by “blue” owners.

Of course, this is not entirely surprising given the cost of real estate, out west in particular. Many investment advisers and firms routinely recommend investors stretch their capital by purchasing properties in more affordable areas of the country. With median home prices on the west coast climbing as high in some areas as $1 million, purchasing in a more affordable market just makes good sense.

Popular markets right now include Florida, which still has a great deal of distressed inventory lingering from fallout from the housing crash and subsequent robo-signing fiasco during the Great Recession; Georgia; North Carolina; and Tennessee. ATTOM included Arizona, Texas, Michigan and Pennsylvania as states with particularly high populations of out-of-state investors.

Interestingly, homeownership trends also tend to fall along state party lines. Red states tend to have more homeowners than blue (67.9 percent versus 63.5 percent) overall, although some of the most expensive markets in the country actually have the highest homeownership rates. San Jose, California, actually has the highest homeownership rate in the country at this time, while Miami, Florida, which went for Republican President-elect Donald Trump in the 2016 election, has the lowest homeownership rate in the country.

In general, in left-leaning states homeowners pay about 32 percent of their mortgage toward their housing, while in right-leaning states they pay about 26 percent. “Purple” swing states’ homeowners tend to pay about a quarter of their income toward their mortgages.

For an investor, knowing where to buy and being bold enough to make purchases out of your geographic region can make the vital difference to the speed of your portfolio-building. While cash-flowing investments can be had in any market if you leverage the right strategy, identifying markets with the right combination of owner-occupants and renters that also offer affordable purchasing opportunities will dramatically speed your portfolio assembly and cut down on the time it takes you to start collecting monthly income from your properties.

 

About the Author

Carole VanSickle Ellis is the host of Real Estate Investing Today, a daily nine-minute investing podcast, and the editor of the Bryan Ellis Investing Letter. Contact her at editor@bryanellis.com or visit www.investing.bryanellis.com.

 

 

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  • Carole VanSickle Ellis

    Carole VanSickle Ellis serves as the news editor and COO of Self-Directed Investor (SDI) Society, a membership organization dedicated to the needs of self-directed investors interested in alternative investment vehicles, including real estate. Learn more at SelfDirected.org or reach Carole directly by emailing Carole@selfdirected.org.

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