Top 5 Markets for Investment Potential

July 13, 2011

With rents climbing and rentals in high demand, investors are being lured to investment properties, taking advantage of low housing prices and interest rates.

Nearly 20 percent of home purchases in May were for investment purposes — that’s up from 17 percent in 2010, according to the National Association of REALTORS®.

CNNMoney recently ranked cities by its estimated future investment returns. "Overall, the highest ratings are in markets where home prices have fallen substantially," says Ingo Winzer, founder of Local Market Monitor. "Home prices in these markets are also below average, so empty homes are easily turned into competitive rental properties."

Here are the top 5 markets in terms of investment return:

Las Vegas
Average home price (2011): $130,100
Projected home price (2014): $120,000
Gross rent (2011): $922
Projected gross rent (2014): $966

Detroit
Average home price (2011): $97,800
Projected home price (2014): $94,600
Gross rent (2011): $681
Projected gross rent (2014): $764

Warren, Mich.
Average home price (2011): $97,800
Projected home price (2014): $94,600
Gross rent (2011): $681
Projected gross rent (2014): $764

Orlando, Fla.
Average home price (2011): $165,200
Projected home price (2014): $166,200
Gross rent (2011): $980
Projected gross rent (2014): $1,148

Bakersfield, Calif.
Average home price (2011): $131,000
Projected home price (2014): $128,500
Gross rent (2011): $736
Projected gross rent (2014): $829

See which other cities rounded out the top 10 list.

Source: “10 Best Cities to Buy a Rental Property,”CNNMoney (July 12, 2011)