The top 10 markets with best ROI are…
According to that research, the US markets with the highest ROI are: Houma, La.; Dothan, Ala.; Johnstown, Penn.; Beckley, W. Va.; Decatur, Ill.; Shreveport, La.; Peoria, Ill.; Sumter, S.C.; Texarkana, Texas; and Jackson, Tenn.
Researchers touted the dynamics of top-ranked Houma for commercial space investment, noting its housing value index of $149,871 in average property value, with an observed rent index putting the average cost of rent at $1,441. Rent equates to 0.96% of property value, meaning the payback period on a typical investment property down payment (20%) could be as short as 20.8 months, according to the survey, which is almost half the national average payback period of 39.6 months.
Researchers also extolled the virtues of second-ranked Dothan in southern Alabama with its typical property value of $166,459. An average monthly rental price of $1,553 means that rent equates to 0.93% of property value, researchers noted, with the potential payback period for the down payment on an investment property at 21.43 months.
“ROI is always important,” Chris Heller, co-founder of Agent Advice, told Mortgage Professional America. “However, its importance is currently heightened with elevated interest rates presenting affordability challenges for many buyers. Put simply, the stakes are higher for the vast majority of investors as, chances are, the investment will make up a larger proportion of expendable budget. This of course increases the importance of securing a reasonable ROI and avoiding the acquisition of a bad asset.”
Asked if any of the findings came as a surprise, Heller noted the disparity between eastern cities and western ones. West Coast property, he added, is generally accepted to be priced higher for a variety of reasons – including building costs often justified by earthquake risks and sheer demand.