If the earlier rounds of March Madness have shown us anything, this year’s tournament has had plenty of excitement, drama and disappointment for die-hard fans and the players. The Final Four matchups promise to serve up more of the same Saturday night as the teams take the court for the chance to play for the NCAA mens’ basketball national championship in Atlanta on Monday night.
There’s the one remaining No. 1 ranked team, Louisville, going up against a giant killer, No. 9 ranked Wichita State, which beat another No. 1 ranked team — Gonzaga — in the second round. Then in the other game there is the meeting of the fours — both Michigan and Syracuse were ranked No. 4 in their brackets going into the tournament.
Well, that’s all good for basketball, but which of the Final Four teams would reign supreme in terms of the best college town for real estate investors to buy rental properties for cash flow? Based on data compiled by RealtyTrac, the national champion in this tournament would be the Syracuse Orange.
The Syracuse metropolitan statistical area wins hands down in a number of categories defined by RealtyTrac in its March Madness survey of the Final Four metros. To begin with, Syracuse had the lowest median sales price for a three-bedroom home ($88,250) and the lowest estimated monthly mortgage payment ($337 a month) in the fourth quarter of 2012. At an average rent of $1,037 a month, the rent as a percentage of the purchase price is also the highest at 1.18 percent. After expenses, investors financing their purchase would have an estimated cap rate of 3.88 percent — highest among the four college towns represented in the Final Four. Investors buying all-cash in Syracuse would have an estimated cap rate of 8.46 percent — also highest among the four college towns.
Runner-up in this tournament was Wichita State. In the Wichita metro area the median sales price of $104,000 brought in an average rent of $992 a month, and the second lowest mortgage payment of $387 a month. Rental homes there generate an estimated cap rate of 2.29 percent for financed purchases and 6.87 percent for all-cash purchases.
The University of Michigan comes in third. Ann Arbor had the highest median sales price for a three-bedroom home among the Final Four college towns ($177,500), the highest average monthly rent ($1,226) and the highest mortgage payment ($678 per month), but it had the third highest return on investment with a cap rate of 0.39 percent for those who financed and 4.97 percent for those who paid cash.
From an investment perspective, the University of Louisville came in last among the Final Four. The median sales price of $153,500 for a three-bedroom home in the Louisville metro area was third highest, as was the average rent at $1,023 a month. But the cap rates for both financed purchases and properties bought for all-cash were the lowest of the four — 0.21 percent and 4.80 percent respectively.
Whether or not Syracuse makes it to the last dance on Monday will be decided in tomorrow. Yet for real estate investors looking for areas of the country where they can still find good potential for investment properties, the mantra for the moment is…GO ORANGE!!!