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Best place to own a rental?

By Judy Martel · Bankrate.com
Wednesday, April 9, 2014
Posted: 2 pm ET

Real estate prices are climbing so high in some markets that the income potential from rent can't keep up, causing many investors to seek bargains elsewhere.

According to the S&P/Case-Shiller index of 20 metropolitan areas, single-family home prices rose 23 percent in January from 2012. The biggest increases from December 2013 to January 2014 were in Las Vegas and Miami, while San Francisco and Las Vegas had the biggest year-over-year increases.

To find the best and worst metro areas for rentals, RealtyTrac calculated gross rental yield on a three-bedroom home using 2014 fair market rent values and median home sales prices in various metro markets. Below are the five best and five worst markets for potential rental yield.

5 best markets for rental returns

Metro area Median sales price Average rent Annual gross yield
Detroit $44,900 $1,124 30 percent
Atlanta $50,750 $1,187 28 percent
Greenville, Miss. $42,000 $862 25 percent
Macon, Ga. $50,880 $1,008 24 percent
Baltimore $85,000 $1,599 23 percent

5 worst markets for rental returns

Metro area Median sales price Average rent Annual gross return
Manhattan $887,000 $1,852 3 percent
Edwards, Colo. $525,000 $1,545 4 percent
San Francisco $890,500 $2,657 4 percent
Brooklyn, N.Y. $573,000 $1,852 4 percent
Marin County, Calif. $745,000 $2,657 4 percent

Source: RealtyTrac

Here's a handy way to calculate gross yield on rental properties.

Keep up with your wealth and mortgages and follow me on Twitter @JudyMartel.

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1 Comment
Jerome Manuel
April 30, 2014 at 10:54 am

Hello my parents are still living 2 senior citizens. Both of them have their birthdays coming this month of July 2014 Mom's wish is to live in a descent house, Now they are in a 1 bedroom apartment paying $649.00 from their Social Security Income plus food not enough for both of them. My Moms simple wish is to own a house in which I couldn't give it to them. Hopefully someone out there has a good heart to provide it to them before they perish in this world . I thank you so very much. I Love you all. With Love Jerome ( son).

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