But just because home values are rising in some markets doesn't mean real estate isn't a game without risk, especially for those seeking an income stream from their investment. Although rents across the country are rising due to heightened demand, finding renters who will pay a high enough rent to offset an investor's carry costs isn't always a sure thing.
"We're at a point in the real estate cycle where investors and homeowners no longer have to fear falling home prices, though these may still drop by 5 or 6 percent in a few markets," according to Ingo Winzer, president of real-estate data firm Local Market Monitor. "The risk for investors who plan to buy and rent out is that they won't get the returns they're looking for. In some cases they won't get any returns at all because they won't find renters."
While headlines scream that now is the best time to buy, with home prices at or near their bottom and interest rates at historic lows, would-be investors need to take a closer look at their specific markets.
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"There are good investments to be made, but you have to be very careful," Winzer says. "You have a better chance in some markets."
Here's a look at real estate markets that any but the brashest investors should avoid for now:
Just because these markets are perilous now doesn't mean they'll always be. While experts don't expect the environment to change radically over the next few years, broader economic recovery across the nation could cause the winds of fortune to shift in their favor.
"The stars are all aligned," Winzer says. "But the timing matters a lot."
Meg Handley is a reporter for U.S. News & World Report. You can reach her at mhandley@usnews.com and follow her on Twitter.
Taken from: http://www.usnews.com/news/blogs/home-front/2012/08/27/riskiest-real-estate-markets-for-investors
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