Sunday
December 17, 2017

Where Investors Get the Biggest Returns

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Where Investors Get the Biggest Returns

Soaring home prices aren't denting investors' appetite in many markets. "We are seeing more investors and new investors," says Steve Hovland, director of research at HomeUnion, a real estate investment marketplace. "The Fed has really been helping us out. Interest rates are not as high as they have been in past cycles. Commercial real estate is overheated. The bull stock market has been running for a long time, so investors are looking to diversify."

But the markets with the highest rents do not always offer the highest rental returns. HomeUnion ranked the nine best markets for real estate investing in the first quarter of this year, based on first-year returns or the "capitalization rate."

  1. Cleveland
    Average investment-home price: $75,500
    Year-over-year change: 16.2%
  2. Cincinnati
    Average investment-home price: $87,100
    Year-over-year change: 11.4%
  3. Columbia, S.C.
    Average investment-home price: $94,400
    Year-over-year change: 4.9%
  4. Memphis
    Average investment-home price: $87,000
    Year-over-year change: 1.1%
  5. Richmond, Va.
    Average investment-home price: $121,700
    Year-over-year change: 5.8%
  6. Oklahoma City
    Average investment-home price: $98,000
    Year-over-year change: 22.4%
  7. Indianapolis
    Average investment-home price: $101,900
    Year-over-year change: 6.5%
  8. St. Louis
    Average investment-home price: $96,400
    Year-over-year change: 8.3%
  9. Pittsburgh
    Average investment-home price: $95,500
    Year-over-year change: -4.5%

Source: “Landlord Alert: Where to Buy Homes for the Best Rental Returns,” CNBC (May 5, 2017)