Albuquerque real estate is the third-best metro in the country to make money owning rental housing, according to new rankings from Seattle-based All Property Management.
Based on an analysis of primarily federal data, the Albuquerque metro area emerges with particularly strong ratings for measures of rent growth and return on investment in owning rentals across all housing types – from detached, single-family homes to apartment complexes.
Albuquerque holds up comparatively well among the 75 ranked metros for vacancy rate, recent job growth and future property appreciation, according to the online network of property management services.
In a recent news release on the rankings in its Rental Property Management Health Index, All Property Management quotes several local professional property managers offering explanations of why Albuquerque would be a profitable place to own rentals.
Churn in the workforce, stemming in part from government-related job opportunities, contributes to a strong rental market, Cindi Reeves of Real Property Management in Albuquerque is quoted as saying.
“Albuquerque is a bit transitional for a lot of people, so many choose to rent a property versus buying unless they know they will be here for three or more years,” Reeves says. “Homes haven’t appreciated to pre-recession pricing, so owners are opting to rent out their homes and wait until the market fully rebounds.”
Rental rates in Albuquerque are still reasonable compared to income, with diverse submarkets of homes for investors and renters to choose from, says Mark Webb of Real Property Management Rio Grande in the news release.
In the Rental Property Management Health Index, Albuquerque ranks behind No. 1 Grand Rapids, Mich., and Bakersfield, Calif., and just ahead of Rochester, N.Y., and Worcester, Mass. Ranked at the bottom of the index are Riverside, Calif., and Milwaukee.
Here’s the index’s basic measures for Albuquerque:
– Average vacancy rate of 6.38 percent for a rank of 23 out of 75 metros, based on census data.
– Average year-over-year rent change of plus 10.53 percent, for a rank of 14, based on Department of Housing and Urban Development data. The rate factors in single-family home rentals.
– A cap rate, or return on investment, of 10.8 percent for a rank of sixth highest, based on HUD data.
– Projected home-price appreciation of 4.5 percent from the first quarter of 2013 to the first quarter of 2015, for a rank of 37, based on CoreLogic and CNN Money data.
– A job growth rate of 1.92 percent for the 12 months ending with July, for a rank of 28, based on Bureau of Labor Statistics data.
The index is partly a response to the housing recovery from the standpoint of real estate investors, said Jacob Colker of All Property Management.
“The housing crisis created some good deals for investors. Those good deals are largely gone,” he told the Journal, explaining that the index can be a starting point for investors looking to explore new markets with an upside.
“It’s harder to find hidden gems. Albuquerque is an example (of a hidden gem),” he said. “This is not a definitive perspective of Albuquerque. It’s a guidepost.”
By Richard Metcalf (Albuquerque Journal)
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Archives for October 2013
Commercial Property near Centennial in holding pattern
LAS CRUCES – The question of what to do with a contentious 16-acre parcel of land adjacent to “A” Mountain continues, with everyone from residents to school advocates weighing in.
The county’s land-use board in February denied the owners’ request to designate the land for commercial use. But now board members must decide how to classify the property, located across from Centennial High School.
The land switched from government to private hands but is temporarily in a “holding” zone classification, said Paul Pomeo, who represents the property owners in the zoning process.
After denying the commercial request, the county must now come back with appropriate designations, Pomeo said.
“Everybody, from the landowners to the public, we’re all waiting to see what the planning staff with come back with,” he said.
The property currently can’t be used for anything other than mining, which has been its purpose for 70 years, even if it were to be sold, he said.
“Right now, we’re just anticipating and looking forward to seeing what the staff recommendation is,” Pomeo said.
County Community Development Director Dan Hortert said, after consulting with the county’s legal team, that the land can essentially be classified as residential, industrial of commercial property. An individual could also purchase the property and put it “in perpetuity as a preservation district,” he said.
Ongoing debate
The land is one of the more contentious properties to come before the county in recent years, Hortert said.
Dozens of Talavera residents have written letters and attended meetings to oppose a commercial designation.
A group of school nutrition advocates also oppose a commercial classification, which would allow for fast food options to be built near Centennial.
The group has proposed a “Healthy Food Zone” around Las Cruces public schools that would limit “brick and mortar” food places nearby, said Kari Bachman, a special projects coordinator with New Mexico State University’s Cooperative Extension Service.
Instead, the group proposes local vendors bring healthier food options to campus, by way of food trucks, for example, Bachman said. The plan would promote local businesses and healthy eating, she said.
“LCPS thinks it’s a good idea,” she said.
What’s next
Now that the county has determined which zoning designations the land can hold, the hearing process essentially begins again, from gathering public input to bringing the application before the Extra-territorial Zoning Commission then the Extra-territorial Zoning Authority, which approves or denies the commission’s recommendation.
The process is essentially “starting over,” said Pam Carmody, an interested party in Doña Ana Sand & Gravel, which owns the land.
Hortert said he isn’t sure how long the process will take or when the next meeting will be.
The county has to balance both the rights of the property owners to sell or develop their land and the rights of the residents, who want the property to remain open space, Hortert said.
If the owners don’t like which classification the zoning authority recommends and eventually designates, they can reapply.
“We’re hoping what the staff comes up with is palatable to us,” Pomeo said, noting the owners are interested in a commercial designation.
A residential classification wouldn’t fit with the nearby property for academics and research owned by New Mexico State University, and an industrial designation would be “too intense,” he said.
“Ideally, what should go there is anybody’s guess,” Hortert said.
Government Shutdown for REALTORS (NAR)
The United States Government remains closed today. Congress has failed to approve a Continuing Resolution (CR) providing funding for most government operations. Therefore, spending authority for most of the government expired at midnight on September 30, 2013. Until legislation providing for funding is signed into law, many offices and programs of the federal government are now shut down. This means many, but not all, government programs, including some that impact federal housing and mortgage programs, have been suspended or slowed due to the lapse in government funding. Attached is information based on NAR staff review of agency contingency plans for the current shutdown and past experience with previous shutdowns and near-shutdowns. Read more… Govt Shutdown for REALTORS
Access a memo and video featuring NAR President-elect Steve Brown on the impact of the federal government shutdown on programs affecting real estate. In general, Fannie Mae, Freddie Mac, FHA mortgage finance, and federal flood insurance operations are proceeding without interruption, but impacts involving other agencies, including the IRS and Social Security Administration, to the extent they’re needed to provide information in a real estate transaction, could be an issue in some cases. The memo is being updated as additional information becomes available. Check REALTOR.org periodically for updates.
