#1 San Antonio, Texas
Population in 2006: 1,273,374
Rent Strength: 10
San Antonio was the ninth most populous city in the U.S. and the second largest in Texas at the time of the 2002 U.S. Census. The city’s population increased by 11.25 percent between 2000 and 2006.
San Antonio has one of the best job growth rates in the country for college educated business and technical professionals, according to CNN Money. The addition of several high profile companies has increased the number of high paying jobs in the area, according to Realty Times. This may account for San Antonio’s impressive job growth from 2000 to 2006—an 8.87 percent increase, the second highest on this list.
Despite being one of the largest cities in the country, the median price for San Antonio homes is the lowest of the top 10, at $96,300. San Antonio’s numbers are strong, aside from a high rental vacancy rate of 10.3 percent.
“Rents are going back to their previous highs,” David Bowman, a San Antonio broker, wrote in Realty Times. “Additionally [San Antonio’s] local employment looks to be poised for expansion evidenced by the high rate of hiring temps in contrast to the national scene….Soon the…state property tax reductions will be a reality and the bottom line for home owners and investors alike will improve. Can you say appreciation?”
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#2 Garland, Texas
Population in 2006: 240,876
Rent Strength: 10
Garland, located 15 miles northeast of Dallas, is the tenth largest city in Texas, according to the City of Garland’s official website. Its population grew by 11.64 percent between 2000 and 2006.
Garland homes sold for an average of 97 percent of the asking price and spent an average of 70 days on the market in September, according to ZipRealty.
With a higher than average gross monthly rent of $862, a low median home price of $116,100 and a rental vacancy rate of 8.3 percent, Garland homes are affordable to purchase and offer a potentially high yield as rentals. Garland also has the highest population density of the top 10 cities, which could mean greater potential for price appreciation.
#3 Montgomery, Alabama
Population in 2006: 202,443
Rent Strength: 10
Montgomery is the capital city of Alabama, and is the second largest city in the state after Birmingham. The city has a low median home value of $106,300, coupled with low monthly owner payments at a median of $323. With a median gross rent of $687, Montgomery property is a potentially profitable investment even with a higher than average rental vacancy rate of 9.6 percent, which is why the city earned a 10 in rent strength.
Government jobs make up approximately one fourth of the workforce, according to City-Data.com, and Maxwell Gunter Air Force Base is located in the city.
“Montgomery’s location in the center of a zone of rich black soil that stretches across Alabama makes it an important processing and shipping center for cotton, dairy, and other farm products….The city’s role as a regional trade center is firmly established, and it serves as a wholesaling and distribution gateway to the entire southeast,” according to City-Data.com.
Montgomery ranks third, despite its excellent numbers, because its population growth from 2000 to 2006 was minimal, at only 0.43 percent, and its population density is low, at 1,302.89 per square mile. These two factors indicate that, while cash flow from property could be high, appreciation would likely be minimal.