Foreclosure Home News and Opinion Best & Worst Markets for Rental Returns: Heat Map

Best & Worst Markets for Rental Returns: Heat Map

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Cash-flowing rental properties allow investors to build wealth over the long term in the form of an appreciating asset while also generating monthly income.

Good cash-flowing rentals can be found in many U.S. markets, but rapidly appreciating home prices are making it more difficult. The heat map below shows where median home prices and average rental rates make for good — and not so good — returns on rental properties.

The rental return for each county is the gross rental yield, calculated by taking the 2014 fair market rent for a three-bedroom home multiplied by 12 (months) and then dividing that 12-month total by the median sales price of residential properties in the county.

To calculate the annual gross rental yields we used the median sales price for January 2014 except in states where the sales prices is not required to be disclosed on the sales deeds. In those non-disclosure states we used the  median list price for January 2014. The rental rates we used were the average fair market rent on three-bedroom home for 2014 from the U.S. Department of Housing and Urban Development. A total of 1,586 counties had sufficient data for the analysis. We limited the Top 20 and Bottom 20 lists to counties with a population of at least 50,000 or more.

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I would like to know if this analysis takes into account property tax rates. Posted: February 21, 2015 by: mtnr
I would like to know if this analysis takes into account property tax rates. Posted: February 21, 2015 by: mtnr
I would like to know if this analysis takes into account property tax rates. Posted: February 21, 2015 by: mtnr
My partner and I used an investment property calculator when we planned our first move into the rental investment market. It gave us an idea of how much money we could expect to make and if that particular market was a good option for us. I can recommend this tool Posted: September 3, 2014 by: vaughney
I own over 30 properties in Clayton and I can attest that prices are rising fast. Townhomes/foreclosures that were sold for $30,000 few years ago are now being appraised above $60,000. The momemtum is growing and prices are steady. One main reason is the inventory of foreclosures is extremely low. Many investors have purchased from banks and holding those properties as rentals and/or future sales Posted: June 24, 2014 by: People's Landlord
These statistics are just math. They are no real indication of where the best investment markets are, simply a starting point. For instance, in Wayne County, MI; 1 out of every 5 people are below the poverty level. The population has dropped over 25% in the last 15 years. So how long is your great rental house going to be vacant? Who exactly is going to rent it? Number 2 on the list Clayton County... the numbers for this county are skewed by the College Park area. I lived in Atlanta for 18 years and I can assure you that College Park (NW Clayton) would be one of the bottom 3 on my list in terms of target investment areas in metro Atlanta. Sandy Springs is in N Fulton County and Marietta is in Cobb County, not Clayton. Both of these counties while much better areas than Clayton have a much higher price per square foot average therefore a lower yield. I suspect that if I had the time, many of these top counties would have fatal flaws as well. I would like to see these statistics re-run with "a days on rental market" and a "vacant zombie home" overlay. I bet the result would be drastically different. Posted: April 3, 2014 by: Cashflow

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