Full of rich traditions and culture, there is no U.S. city quite like New Orleans. You'll find its unique Cajun culture reflected in the architecture, music and, of course, its food.
While "NOLA" is a major tourist destination, it's also a large port city. With the Mississippi River to the south, Lake Pontchartrain to the north and Lake Borgne to the east, New Orleans is almost completely surrounded by water. The Port of New Orleans is the sixth largest in the United States, handling 62 million short tons of cargo and 700,000 cruise passengers every year. These industries provide tens of thousands of jobs.
New Orleans's name has sadly become synonymous with the devastating hurricane of 2005, Hurricane Katrina, but it has come back in a big way. Since Hurricane Katrina, NOLA residents' median household incomes have risen 50 percent, according to Bloomberg Business. An astounding number of new hotels, eateries and showrooms have provided the New Orleans economy with thousands of jobs, albeit often low-wage ones.
This may change, however, as New Orleans officials consider ways to diversify its industry. Some of these diversification efforts include tax breaks for computer-related startups, the new University Medical Center (a teaching hospital for Louisiana State University) and Veterans Affairs hospital and the General Electric Technology Center. This economic growth will create additional demand for nearby housing, a fact not lost on the local real estate industry.
Because New Orleans is a major tourist destination, it has seen a proliferation of short-term rentals (which are against city law) that has in turn created a shortage of long-term rentals, thus driving up rents for the latter category of rental housing. In fact, CNN recently placed New Orleans on its list of the worst cities for renters primarily due to the fact that median rents have increased 9 percent since 2009.
Despite the reversal of fortunes New Orleans has experienced in the wake of the destructive Hurricane Katrina, it's one of the worst markets for rental property investors in the U.S. The Q1 2015 Rental Ranking Report found it to be dead last out of the 17 Southeastern U.S. housing markets in terms of attractiveness for real estate investment and 72nd in the U.S. as a whole out of the 75 markets evaluated by the Rental Ranking Reports. The only positive aspect of New Orleans's rental market is its respectable 7.86 percent rental capitalization rate, which was about 10 percent higher than last quarter's national average for that metric.
New Orleans's vacancy rate, median rent appreciation and job growth, three metrics commonly used to gauge demand for rental housing, are all significantly worse than the national averages for those metrics. Rental real estate investors who purchase New Orleans rental properties also need to worry about the sky-high insurance premiums they must pay there that will eat into their profits.
What data is this Rental Ranking Report based on?
To calculate the statistics found in the Q1 2015 Rental Ranking Report, All Property Management gathered data, including the most recent government housing and jobs data, for 75 metros across the United States. Specifically, we looked at home vacancy, capitalization, home value appreciation and job growth rates, changes in rental prices, and the median number of days properties have been on the market to determine which U.S. metros will give investors the highest returns on rental investments. Click here to learn more about the Rental Ranking metrics.
Should I invest in New Orleans rental property?
Unlike Cajun food, the New Orleans rental market is anything but hot. However, New Orleans's respectable rental capitalization rate of almost eight percent indicates that it's an attractive market for those looking to make long-term rental real estate investments.
Thinking about renting out a property in New Orleans? Save time, avoid hassle and maximize your rental income by having a professional property management company operate your rental property for you. Click here to get a free quote from a local property manager or call 877-780-4510 to have the All Property Management staff get quotes for you.
All Property Management specializes in connecting rental property owners with professional property managers in communities across the United States. These property managers help set rental rates, advertise properties, screen and manage tenants, collect rent, manage vendor relationships and ensure compliance with local, state and federal housing regulations. They take the hassle and worry out of managing rental properties - all while maximizing rental property owners' rental incomes.