From sea to shining sea in the United States, there may be a flip or turn-key rental property perfect for your client. But finding that investment can be easier said than done.
Financial advisors across the country offered their ideas on finding rental investment properties that will generate a reliable stream of revenue for clients.
Pittsburgh, the second-largest city in Pennsylvania, is undergoing a dramatic redevelopment. Long known as "Steel City" and the "City of Bridges," Pittsburgh is home to corporate giants Google, Apple, Bosch, Nokia, Uber, Microsoft and IBM. It is also a favorite with film production companies, thanks to the state's tax credit programs and scenic locales. According to The Economist's 2018 Livability Index, Pittsburgh ranks second as America's most livable city.
Those factors lead Diane M. Pearson, a wealth advisor and shareholder with Legend Financial Advisors Inc. and EmergingWealth Investment Management Inc. in Pittsburgh, to see potential in the city's rental investment market.
"Pittsburgh used to have a reputation as a Skokie steel town," she told Financial Advisor magazine. "Steel still has a presence here, but it's becoming more [gentrified]." Pearson noted that with the opening of UPMC Children's Hospital in the Lawrenceville section of the city several years ago, the area has undergone a dramatic change.
"There's probably more move-in ready properties now, where there used to be more flippers before Children's Hospital opened there," she said. "[But] investors can still find opportunities in the North Shore area."
Pearson said that the Strip District, known for its produce market, has presented rental investment opportunities since the development of multifamily housing there over the past 10 years. "It's been fun to watch, [but] we've always been cautious in advising our clients to flip properties," she said. "We believe there needs to be an expertise in that area. Unlike TV shows, flipping can't be done in 60 minutes -- and I should know since I'm married to a flipper. He makes everything look good."
Pearson cautions investors that even after renting out a property, an owner's obligation to maintain it can require skills not everyone has.
Michael Zmistowski, Certified Retirement Counselor with the International Foundation for Retirement Education and primary member of Financial Planning & Wealth Management LLC, in Tampa, Fla., agrees residential real estate isn’t for everyone. "It’s really a tough road to go if you want to deal in residential," Zmistowski said. "Most people don't want another job (managing it)."
Zmistowski adds he offers long-time clients commercial deals. "The people that come to me are basically looking for a place to park cash, so we look for trustworthy partners [to share the risk]," he said. "We're a tight-knit group where we all trust each other."