Real estate investors looking for the best return on investment (ROI) may want to take a look at properties in Houma, Louisiana.
Located in Bayou country just 55 miles from New Orleans, Houma is the U.S. city with the highest ROI, according to real estate experts Agent Advice, which analyzed Zillow data on home values and typical rents across the U.S. to determine where investors can expect the greatest return.
The Zillow Housing Value Index puts typical home value in Houma at $149,871, while the Zillow Observed Rent Index estimates the average cost of rent at $1,441.
With rent equating to 0.96% of property value, the payback period on a 20% down payment on an investment property could be as short as 20.8 months — nearly half the national average payback period of 39.6 months.
Dothan, Alabama, is second on the list with an average property value of $166,459 and an average monthly rental price of $1,553, which equates to 0.93% of property value. The potential payback period for a down payment on investment property is 21.43 months.
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Top Cities For ROI
|
Rank |
City |
Ave. home value ($) |
Observed rent value ($) |
Rent as a % of value |
Payback period on 20% down payment (months) |
|
National average |
319,325.99 |
1,562.89 |
0.53 |
39.64 |
|
|
1 |
Houma, LA |
149,871.66 |
1,441.39 |
0.96 |
20.8 |
|
2 |
Dothan, AL |
166,459.92 |
1,553.33 |
0.93 |
21.43 |
|
3 |
Johnstown, PA |
82,114.14 |
766.67 |
0.92 |
21.68 |
|
4 |
Beckley, WV |
111,252.50 |
1,000 |
0.86 |
23.25 |
|
5 |
Decatur, IL |
94,537.33 |
808.33 |
0.86 |
23.39 |
|
6 |
Shreveport, LA |
152,712.70 |
1,256.08 |
0.82 |
24.32 |
|
7 |
Peoria, IL |
135,229.02 |
1,110.83 |
0.82 |
24.35 |
|
8 |
Sumter, SC |
163,176.76 |
1,337.50 |
0.82 |
24.4 |
|
9 |
Texarkana, TX |
148,518.34 |
1,212.25 |
0.82 |
24.5 |
|
10 |
Jackson, TN |
170,667.30 |
1,387.76 |
0.81 |
24.6 |
“With this top 10 revealing some of the best cities for rental property investment, investors and Realtors should keep their eyes on these cities for strong growth,” Agent Advice Co-Founder Chris Heller said.
These Cities Have Longer Payback Periods
At the other end of the scale are the cities with the least desirable ROI. San Jose, California, tops that list. The city’s average property value is $1.4 million and rents average $3,289 or 0.23% of home value. Recouping a 20% down payment on a property would take as long as 87.46 months — more than seven years.
Worst Cities For ROI
|
Rank |
City |
Ave. home value ($) |
Observed rent value ($) |
Rent as % of value |
Payback period on 20% down payment (months) |
|
1 |
San Jose, CA |
1,438,238.28 |
3,389.09 |
0.23 |
87.46 |
|
2 |
Missoula, MT |
519,169.72 |
1,353.53 |
0.26 |
76.71 |
|
3 |
San Francisco |
1,116,046.39 |
3,121.83 |
0.28 |
71.5 |
|
4 |
Logan, UT |
429,880.66 |
1,266.33 |
0.29 |
67.89 |
|
5 |
Boulder, CO |
747,964.25 |
2,229.92 |
0.3 |
67.08 |
|
6 |
Santa Cruz, CA |
1,120,336.91 |
3,364.18 |
0.31 |
66.6 |
|
7 |
Urban Honolulu, HI |
861,629.11 |
2,704.70 |
0.31 |
63.71 |
|
8 |
Salinas, CA |
782,510.09 |
2,493.60 |
0.32 |
62.76 |
|
9 |
Salt Lake City |
538,019.73 |
1,720.94 |
0.32 |
62.53 |
|
10 |
Seattle |
691,947.88 |
2,223.02 |
0.32 |
62.25 |
Looking for a way to boost returns? Benzinga’s Real Estate Offering Screener has the latest private market investments with offerings available for both accredited and non-accredited investors.
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