Wednesday
December 17, 2014

Investors Target ‘Hipster’ ZIPs for Rental Returns

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Investors Target ‘Hipster’ ZIPs for Rental Returns

Think hipsters aren't as cool as they think they are? Take a look at their effects on housing.

The hipster lifestyle can have a “major impact on local real estate markets, and mostly in a positive way,” says Daren Blomquist, vice president of RealtyTrac. Neighborhoods that are branded as “hipster” often offer trendy restaurants, coffee shops, and other amenities — and that's likely to see property values and rental rates rise, Blomquist says. 

Savvy real estate investors are even targeting hipster markets to purchase rental properties, betting that they will offer up steady cash flow and strong appreciation. 

RealtyTrac analyzed ZIP codes across the country to identify “hyper-local hipster” markets that offer investors solid returns on rental properties and boast low vacancy rates. For its survey, RealtyTrac identified ZIP codes where at least 20 percent of the population is between 25 and 34 years old — prime hipster age. RealtyTrac also looked at densely populated neighborhoods that are walkable or use public transportation, and where renters account for at least 50 percent of all housing units and vacancy rates are 5 percent or less. 

The following “hipster” markets offered some of the highest gross yields in rents for investors, based on fair-market rents and median home prices: 

  • St. Paul, Minn. (55101): 13.98% gross rent yield
  • Pittsburgh (15203): 10.84%
  • Norfolk, Va. (23510): 7.96%
  • Minneapolis (55401): 7.76%
  • Alexandria, Va. (22304): 7.66%
  • East Rutherford, N.J. (07073): 7.06%
  • Arlington, Va. (22203): 6.69%
  • Iowa City, Iowa (52246): 6.49%
  • Seattle (98121): 6.18%
  • Bellevue, Wash. (98007) 5.95%
  • Minneapolis (55408): 5.93%
  • Sunnyside, N.Y. (11104): 5.90%
  • Hoboken, N.J. (07030): 5.88%
  • Astoria, N.Y. (11102): 5.68%
  • Brooklyn, N.Y. (11232): 5.66%
  • Silver Spring, Md. (20910): 5.46%
  • Chicago (60625): 5.18%

Source: “Top 25 Hipster ZIPS for Returns on Rental Properties,” RealtyTrac (Nov. 21, 2013)

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