Where Investors Get the Biggest Returns

Diana Olick  |   May 8, 2017

Soaring home prices aren't denting investors' appetite in many markets. "We are seeing more investors and new investors," says Steve Hovland, director of research at HomeUnion, a real estate investment marketplace. "The Fed has really been helping us out. Interest rates are not as high as they have been in past cycles. Commercial real estate is overheated. The bull stock market has been running for a long time, so investors are looking to diversify." But the markets with the highest rents do not always offer the highest rental returns. HomeUnion ranked the nine best markets for real estate investing in the first quarter of this year, based on first-year returns or the "capitalization rate." Cleveland Average investment-home price: $75,500 Year-over-year change: 16.2% Cincinnati Average investment-home price: $87,100 Year-over-year change: 11.4% Columbia, S.C. Average investment-home price: $94,400 Year-over-year change: 4.9% Memphis Average investment-home price: $87,000 Year-over-year change: 1.1% Richmond, Va. Average investment-home price: $121,700 Year-over-year change: 5.8% Oklahoma City Average investment-home price: $98,000 Year-over-year change: 22.4% Indianapolis Average investment-home price: $101,900 Year-over-year change: 6.5% St. Louis Average investment-home price: $96,400 Year-over-year change: 8.3% Pittsburgh Average investment-home price: $95,500 Year-over-year change: -4.5%

Source: CNBC