DENVER, Oct. 19, 2016 /PRNewswire/ -- BiggerPockets Real Estate Investment Market Index combs markets for both cash-flow and appreciation potential.
BiggerPockets (www.biggerpockets.com), the world's largest online hub for real estate investors, today released its 2016 BiggerPockets Real Estate Investment Market Index. This Index analyzed the 50 largest US MSAs to determine those that were most likely to produce outsize returns for residential real estate investors between 2015 and 2016. BiggerPockets also breaks out those markets of the 50 most populous MSAs that were most likely to produce the worst returns for real estate investors.
"This index looks at homes that are accessible to Americans capable of purchasing median housing in their local markets," says Joshua Dorkin, Founder and CEO of BiggerPockets, and host of the BiggerPockets Podcast, "this study isn't showing the gains available only to the big boys in the commercial space -- the data here is applicable to everybody, including the small time investor that's trying to buy his first rental property."
Dallas, TX tops the list of real estate markets over the period studied for the second year running, showing another year of rapid price appreciation, coupled with housing that still produces fairly strong rents relative to property values. Investors in Dallas stood to earn an over 20% unleveraged cash on cash return for residential real estate investments before expenses.
Falling closely behind Dallas, Portland, OR (19.9% combined return) takes the number two spot, with even stronger appreciation than Dallas. Portland investors can expect far less rent per dollar invested, however, than many other major metro populations. Portland edged out Denver, CO last year's runner up, for the number two spot. Denver came in third with a 19.2% return.
Rounding out the top 10 are two Florida markets in Miami and Tampa, two southern markets in Atlanta, GA, and Nashville, TN, two additional Texas markets in Houston and Austin, and Portland neighbor Seattle, WA.
"There's been some really explosive price increases in some Southern and Northwestern markets over the past couple of years," says study author and Denver real estate investor Scott Trench, "but it looks like some northeastern and midwestern metros are seeing more sluggish growth. We'll have to see if that trend reverses or continues in the coming years."
The chart below shows the 10 markets with the most favorable combinations of gross rents and appreciation for investors.
The 10 Cities Offering the Most Opportunity for Real Estate Investors, 2016:
- Dallas, TX
- Portland, OR
- Denver, CO
- Miami, FL
- Tampa, FL
- Seattle, WA
- Nashville, TN
- Atlanta, GA
- Houston, TX
- Austin, TX
BiggerPockets looked at historical sales price data to determine average price increases across residential real estate (0-4 units) in each of the 50 largest U.S. MSAs. Those sale prices were then compared with average Fair Market Rents across each of the markets to determine the areas that offered the highest potential for real estate investors over the period studied.
Access all of the raw data is available to all members of BiggerPockets, free or with paid accounts.
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SOURCE BiggerPockets, Inc