During the second quarter of 2015, large West Coast cities offered the best return on investment (ROI) for owners and sellers of rental properties.
Four of the top five markets for overall ROI performance last quarter were San Francisco, Seattle, San Jose and Portland, Oregon, according to a report released by All Property Management. Denver occupied the other spot in the top five.
The report finds that the Western U.S. is “by far and away the best region for rental property investment,” citing impressive rent increases and property value appreciation in the region.
Of note is that five California markets ranked in the top 15 for ROI performance. Besides San Francisco and San Jose, other metros included San Diego (11), Los Angeles (13) and Riverside (14). Sacramento also came in at 18.
The top five to 10 cities for ROI consisted of metros often considered secondary markets: Raleigh, North Carolina; Louisville, Kentucky; Minneapolis; Salt Lake City and the late recovering market of Las Vegas.
These rental rankings take into account a number of variables including: vacancy rate, rent variance, cap rates, property appreciation, job growth, days on market, future rental availability, job availability and tax/insurance costs.
All Property Management notes that the previous report saw several small metros — notably Grand Rapids, Michigan and Poughkeepsie, New York — attain high ROI rankings. During the second quarter, however, smaller, tertiary-type markets especially in the Northeast occupied the bottom of the ROI rankings.
Poughkeepsie, Albany and Syracuse, New York, along with Hartford, Connecticut, ranked as some of the lowest-performing markets. The report cites woeful property value appreciation and job growth in these areas. Other markets offering unattractive ROI included New Orleans and El Paso, Texas.
The report eyes 75 metros. For a detailed list, visit: www.allpropertymanagement.com/rental-ranking/2015-q1.