Purchasing my first - Top places for ROI

[Antonio D Belloni]

I'm currently shopping for my first STR. I'm open to area and price up to 500k. I'm curious to know if any areas have suppressed values. I live in NJ and the shore is basically up 30-50% making investing were I would want, LBI and Point Pleasant Beach,locally nearly impossible. My first thought was Kissimmee but it appears the nicer communities are up 20-30% as well. Anyone have an area that hasn't been effected by the recent housing price surge? My main concern is being upside down in 10 years when I might be looking to exit the property.

[Collin Hays]

RE is white hot right now through most of the country.  You either need to be mining for, and betting on, diamonds in the rough, or buying momentum.  

A key question is, "What sort of earnings/price ratio is satisfactory to me?"  

For example, if a property is $300,000, and is producing $30,000 per year, That is a ratio of 10 (rents divided by purchase price).   If the rents are $20,000 per year, that is a ration of of 6.6.

Of course, that is before all expenses.  What sort of ratio are you seeking?   In the Smoky Mountains, for example, even after a significant run-up, ratios are commonly 12, 13, 14.  

There are investors who are willing to sacrifice a high ratio to buy in an otherwise highly-desirable area.  Cape Cod, Malibu, etc.

So before you can establish "where" you want to buy, I think it's important to ask "why" you want to buy. Current income?  Price appreciation?  Personal taste and vacation preference?