There's a mother lode of single-family home investment opportunities popping up around the nation, with big, fat, shiny veins snaking through the Golden State and the Sunshine State.
In a first quarter 2012 ranking of top rental property investment markets, California, from San Diego to Sacramento, yielded 12 markets.
But Florida's no slouch. It placed second with nine markets and unlike California's markets, Florida's markets were all high on the list, within the top 33 markets.
Also unlike California's markets, Florida's ranked higher, in part, because all of its top markets are doing better than the national average based on the expected future relative returns of single-family home investments, in Best 100 U.S. Markets to Invest in Rental Property
The expected investment return in each market is compared with the national average expected investment return (5.2 percent) to place markets on the list, according to study authors HomeVestors of America, Inc., (the "We Buy Ugly Houses" company) and real estate market intelligence company Local Market Monitor, Inc. .
California and Florida dominate, but the No. 1 and No. 2 most lucrative investment markets were Las Vegas, NV and Detroit, MI, respectively. Also respectively, their risk return premiums are 5.6 percent and 3.90 percent better than the national average.
The are followed by Orlando, FL; Daytona Beach, FL; Bakersfield, CA; Fort Myers, FL; Warren, MI; Phoenix, AZ; Atlanta, GA and Boise City, ID to round out the top 10. All the top ten markets enjoyed risk return premiums that are at least 2.30 percent better than the national average.
Zillow's new Zillow Rent Index confirms Best 100 findings
Zillow's corroborating January Zillow Rent Index (ZRI), released for the first time ever this month, showed year-over-year rent gains in 69.2 percent of metropolitan areas, compared to home price gains in only 7.3 percent of the metro areas.
Nationwide, median rents rose an average 3 percent from January 2011 to January 2012, but home values continued to fall, declining 4.6 percent during the period, according to Zillow's January Real Estate Market Reports.
Despite the affordability created by cheaper home prices and record low interest rates, tight credit and still relatively high unemployment levels continue to shut the door on many potential owner-occupants.
Investors, however, are having a field day as demand surges for housing to rent.
"The flourishing rental market is the silver lining to the nation's housing downturn. The inaugural ZRI shows us a healthy and growing rental market across the majority of the country, even as home values continue to fall," said Zillow's chief economist Dr. Stan Humphries.
Zillow found rents rising as much as home prices fell In some large markets, including Chicago where rents were up 9.1 percent, year-over-year, ending in January, while home values fell 10.4 percent. In the Minneapolis-St. Paul, MN metro, rents rose 11 percent and home values fell 8.1 percent.
Hot, not so hot rental markets
Chicago was No. 55 on Minneapolis No. 43 on the HomeVestors-Market Monitor Best 100 list.
In Zillow's report, along with Chicago and Minneapolis, cities enjoying the highest year-to-year rent increases were (along with each city's Best 100 standing in parentheses) Philadelphia, 12.1 percent (No. 78); Baltimore, 8 percent (No. 82); Washington, D.C., 7.9 percent (No. 84); Portland, OR, 7.5 percent (No. 70); St. Louis, MO, 6.1 percent (No. 50); Miami-Fort Lauderdale, FL, 6 percent (No. 33); Denver, CO, 5.9 percent (No. 52) and San Francisco, CA, 5.4 percent (100).
HomeVestors' co-president, David Hicks said the Best 100 rankings report, combined with job growth rates, reveal an opportune time for investors - short term and long term.
Short term - For immediate investments, check out several Florida markets, - Tampa-St. Petersburg, Daytona Beach, Fort Myers - along with Phoenix-Scottsdale, AZ, Bakersfield, CA, Boise City, ID, Warren, MI, Grand Rapids, MI, Rochester, NY and Dallas/Fort Worth, TX.
"Prices are close to a bottom and the local economy is growing well. And opportunities in Dallas, Fort Worth and Rochester, which didn't have a boom and bust, are probably best to consider right now," said Hicks.
Long term - Other markets continue to ripen, including, in Florida, Orlando, Ft. Lauderdale, Sarasota, Jacksonville and West Palm Beach, along with Atlanta, GA and Detroit, MI.
Ingo Winzer, president and founder of Local Market Monitor, said "Wait until next year for Las Vegas and Reno, where home prices are still falling sharply."