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."
- Cleveland
Average investment-home price: $75,500
Year-over-year change: 16.2%
- Cincinnati
Average investment-home price: $87,100
Year-over-year change: 11.4%
- Columbia, S.C.
Average investment-home price: $94,400
Year-over-year change: 4.9%
- Memphis
Average investment-home price: $87,000
Year-over-year change: 1.1%
- Richmond, Va.
Average investment-home price: $121,700
Year-over-year change: 5.8%
- Oklahoma City
Average investment-home price: $98,000
Year-over-year change: 22.4%
- Indianapolis
Average investment-home price: $101,900
Year-over-year change: 6.5%
- St. Louis
Average investment-home price: $96,400
Year-over-year change: 8.3%
- 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)
