When it comes to real estate investing, there are two main questions would-be investors should ask: Will I be able to rent this property out quickly and at market rent, and will I be able to make a profit from rising home prices when I decide to sell it? Policygenius looked at data from Zillow and the U.S. Census for the 600 biggest cities in the United States and came up with a list of the top 25 cities for real estate investors right now.
Here are five cities on the list with some of the highest home-value appreciation rates over the last five years. In addition to great property-value appreciation rates, these cities also have low tax rates, relatively low rent-to-home-value ratios (that is: high rents compared to the amount you’ll spend on the house), low rental vacancy rates, and high rent-to-income ratios (that is: renters are likely have good jobs). Interested in knowing more about homeowners insurance and landlord insurance rates for properties? Check out this homeowners insurance calculator.
Meridian, Idaho has a typical home value of $550,130, according to data from Zillow, and over the last five years, home values have appreciated 118%. In addition, Meridian has other factors that make it a top city for real estate investors, including a very low tax rate (.67%), a very low rental vacancy rate (.70%), and a very low rent-to-income ratio (3%).
What can investors find in Meridian other than exciting real estate deals? Lots of exciting growth. What started out as a small farming community outside Boise is now the second-largest city in Idaho and the state’s fastest growing city. It’s also one of the fastest growing cities in the U.S.
Detroit, Michigan has a typical home value of $58,213, and over the last five years, home values have appreciated 103%. Another factor that makes Detroit a good bet for investors: it has a very high rent-to-home-value ratio (16.99%), meaning investors can recoup their costs sooner from rental income.
Detroit is known for its revitalization story, and real estate investors can be part of that by buying properties in Motor City. The city is still home to the “Big Three” auto companies, plus houses headquarters for financial institutions including Quicken Loans and Ally Financial.
Pine Hills, Florida
Pine Hills, Florida has a typical home value of $222,782, and a home value appreciation rate of 97% over the past five years. It has a super low tax rate (.78%) and a very low rental vacancy rate (4.10%), making it attractive to real estate investors.
A suburb of Orlando, Pine Hills has become a vibrant community in its own right, and investors will be excited by opportunities in one of the most ethnically diverse neighborhoods in the region.
Cleveland, Ohio has a typical home value of $96,455 and a home value appreciation over the last five years of 97%. Other factors that make it a good city for investing in real estate right now: A relatively low tax rate (2.08%), a pretty high rent-to-home-value ratio (8.95%), and a pretty low rental vacancy rate (6.7%).
The metropolitan area of Cleveland and surrounding communities is home to over 2 million people, and it’s growing. Cleveland is a hot destination for health technology companies, and investors will be excited by the renters and buyers the sector boom is sure to bring.
Buffalo, New York
Buffalo, New York has a typical home value of $195,767 and an appreciation of 87% over the last five years. The tax rate is low at 1.58%, and rental vacancy is low at 4.10%.
The second-largest city in New York, Buffalo is perhaps best known for being cold, though of course it has other things going for it: the NFL team the Buffalo Bills, the NHL’s Buffalo Sabres, and of course its fast-appreciating housing market.