Best Places to Invest in Real Estate: 7 Cities with Highest Returns

Every one of our users asks us this. No. Every investor asks this question. Where are the best places to invest in real estate with the highest returns? Well, here you have it.

We looked at our data, and looked at cities with the highest ROI values. From there, we selected metropolitan cities or cities that were close to other urban cities. This selection is to help investors find areas that have a booming atmosphere but offer something that other metropolitan cities don’t — high returns with home prices lower than the national average, which is currently $244,100.

You can start searching properties in these cities on Mashvisor.

Best Places to Invest in Real Estate #1:

Kansas City, KS

The Kansas City real estate market was very strong in 2015, especially for sellers. Inventory was very low, causing home prices to go up by 5.6%. There’s been a long shortage of inventory so when homes have good prices, they can go the same day they are listed.

If you already have a rental property in Kansas, 2016 is definitely a seller’s market. If inventory stays low along with the possibility of interest rates going up, home prices will continue to increase. However, that doesn’t mean it’s a market where over-priced homes are getting sold. The ones correctly priced are the ones that make fast sales.

So if it’s a seller’s market, how can you buy a rental property here? Now is the time to explore Kansas City and see which neighborhoods would meet your personal criteria. You can do this by searching for properties on Mashvisor.

The people of Kansas City enjoy a low cost of living and a beautiful city. Apparently, the city has more fountains than any other city in the world, excluding Rome. And, of course, they love watching their hometown baseball team, the Kansas City Royals.

  • Traditional ROI: 8.64%
  • Traditional Cap Rate: 14%
  • Traditional Monthly Income: $1,493
  • Airbnb ROI: 8.67%
  • Airbnb Cap Rate: 14%
  • Airbnb Monthly Income: $1,328
  • Median Home Price: $109,925

Related: Top 7 Cheapest Cities for Buy-and-Hold Investment Properties

Best Places to Invest in Real Estate #2:

Oklahoma City, OK

Thanks to the growing oil and gas industries and low property tax in Oklahoma City, the real estate market is strong in this community. The oil and gas industries have created many jobs and there is a high correlation between the home value index and the number of employees in these industries.

The overall real estate market is healthy. There are not many foreclosure properties and more than half of the city’s residents are homeowners. The median home prices is $163,500 although there are properties listed on Cragistlist that are under $20,000, making great potential rental properties.

The job market is strong and will likely continue to stay so. The population is increasing, and more companies are investing in this city. These are the kind of criteria investors should be looking for when researching markets.

  • Traditional ROI: 7.98%
  • Traditional Cap Rate: 12%
  • Traditional Monthly Income: $1,696
  • Airbnb ROI: 8.63%
  • Airbnb Cap Rate: 13%
  • Airbnb Monthly Income: $1,776
  • Median Home Price: $163,500

Best Places to Invest in Real Estate #3:

Altamonte Springs, FL

“Alta monte” is Spanish for “high mountain.” This city is about a 20 minute drive from Orlando, which means this location provides an amazing opportunity to invest close to one of the most popular cities in the nation at a much lower cost. With the amount of tourists, students at the University of Central Florida, and locals looking to get away from the hustle and bustle, this could be the perfect spot for a rental property.

This city center has lots of high rise condos and luxury apartment buildings. Lots of parks can be found here and are used for weddings, festivals, and holiday celebrations. The park area is very appealing to residents and bring people from outside of the area. In fact, there are plans to build residential buildings in this area, which is a good sign for investors.

This city has hosted several of Orlando’s events, such as the Red, Hot, & Boom firework festival which is an annual Fourth of July celebration, although it actually takes place every July 3rd. This is a great event for an Airbnb rental, as it brings in thousands and thousands of people from Central Florida.

According to Coldwell Banker, the number of active listings in Altamonte Springs went down 37% from 2015. The median listing price took a bit of a jump from $129,000 to $170,000 although the median sale price as of now is around $144,000.

Despite the fact that home prices are going up, the amount of days a property sits on the market in this area has decreased by 22%, with an average of 53 days.

  • Traditional ROI: 6.11%
  • Traditional Cap Rate: 11%
  • Traditional Monthly Income: $1,202
  • Airbnb ROI: 6.21%
  • Airbnb Cap Rate: 11%
  • Airbnb Monthly Income: $1,381
  • Median Home Price: $142,400

Related: Best Cities For Airbnb Occupancy Rates

Best Places to Invest in Real Estate #4:

New Haven, CT

Isn’t that where . . . Yes! Yale University is located there! New Haven is also home to the Hopkins School and Albertus Magnus College, and several other reputable universities.

This town is everything you could want — “large enough to be interesting, yet small enough to be friendly.” Award-winning theaters, galleries, the town is flooded with art. There are a lot of recreational and sports events that take place in New Haven including the annual New World Class Tennis tournament, bringing in tennis players from all over the world.

Airbnb anyone?

New Haven’s economy is performing beautifully. A lot of business and job opportunities are coming to the city, thanks to companies taking advantage of the lower costs of Connecticut compared to New York City and Boston. The job market was also rekindled after the recession, even though that was not the case for the rest of Connecticut. New Haven’s biggest employer is Yale University.

New Haven’s distressed property market has many opportunities. Even though foreclosures have decreased by over 60%, there are hundreds on the market. There are properties in good shape that can sell for over $140,000 while worn out properties can go for around $80,000.

Between the booming economy, home prices below the national average, and undergraduate and graduate students looking for off-campus housing, New Haven seems like an ideal place to have a rental property.

  • Traditional ROI: 5.75%
  • Traditional Cap Rate: 11%
  • Traditional Monthly Income: $1,554
  • Airbnb ROI: 7.06%
  • Airbnb Cap Rate: 13%
  • Airbnb Monthly Income: $1,834
  • Median Home Price: $181,083

Best Places to Invest in Real Estate #5:

Baltimore, MD

The largest city in Maryland and home to John Hopkins Hospital and John Hopkins University and just one hour away from D.C. The city is famous for the beautiful Inner Harbor and National Aquarium. Baltimore is fun with festivals, outdoor concerts, parades, and historical with landmarks, museums, and African-American Heritage sites. Don’t forget about Baltimore’s team — the Baltimore Ravens.

Baltimore has over a dozen of colleges and universities, with over 100,000 nearby students, alone, attending.

Despite being such a big city and one of the top tourist cities in the country, the median home price is well below the national average.

  • Traditional ROI: 4.99%
  • Traditional Cap Rate: 9%
  • Traditional Rental Income: $1,554
  • Airbnb ROI: 9.68
  • Airbnb Cap Rate: 14%
  • Airbnb Rental Income: $2,459
  • Median Home Price: $172,585

Best Places to Invest in Real Estate # 6:

Atlanta, GA

You’ve seen this city before on our other blogs. Atlanta is also another city that has everything anyone could need, including affordable homes.

The job market blossoms with major companies being headquartered there. The people living in Atlanta are looking to start their careers here and more importantly, are looking for rentals. The historical sites and the famous landmarks like the Centennial Olympic Park and World of Coca-Cola make this city cultural, diverse, and exciting.

Atlanta home prices have definitely increased in the past year, around 10%. However, you can get a lot more bang for your buck downtown in this sprawling city compared to other major city centers.

So far, 2016 is showing to be a good year for the Atlanta housing market. More sales are occurring and average days on the market is going down.

  • Traditional ROI: 4.89%
  • Traditional Cap Rate: 9%
  • Traditional Monthly Income: $1,554
  • Airbnb ROI: 9.68%
  • Airbnb Cap Rate: 11%
  • Airbnb Monthly Income: $2,459
  • Median Home Price: $310,478

Related: Top 5 Major Cities for Buy-and-Hold Investment Properties

So what do the best places to invest in real estate have in common? Good job market, quality-tenants looking to rent, colleges and universities, tourists, and high returns. Depending on where you’re from, these cities could be the best places to invest in real estate long-distance. Why not take advantage of the lower home prices and higher returns?

Looking to invest in smaller towns? Lawrence, NJ, Coral Spring, FL, Warren, VT, and Aurora, CO also had some of the highest returns. Search these cities on platform.

Where do you want to invest? What are your goals? Make sure to search cities on Mashvisor for more data and for more key calculations.

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