North Charleston, South Carolina, is the best city to buy investment property in 2020, according to a recently released list of Best Cities to Buy Investment Property 2020 from financial services company IPX1031.
The list was dominated by southern cities with Winston-Salem, North Carolina taking second place, followed by Chattanooga, Tennessee; High Point, North Carolina; and Tuscaloosa, Alabama, rounding out the top five.
For its analysis, IPX1031 studied 310 cities around the U.S. that contained a population of 100,000 residents or more. Cities were ranked based on median home value, year-over-year home value growth, 10-year population growth, annual property tax and annual return.
The 30 cities, on average, increased in home value by 6 percent year-over-year and have an average annual yield of $6,150 (potential profit after mortgage, property taxes and homeowner’s insurance). The home value to gross rent ratio in the table below represents the number of rent payments it would take to pay for a home in each city based on median rent and median home value, if the home were financed on a 30-year mortgage with a 4 percent fixed interest rate.
Texas, Tennessee and Florida boasted the largest number of cities on the list, with cities in the Lone Star state comprising nearly a third of inclusions. Texas’ affordable home prices — averaging about $153,000 — coupled with its higher median rent prices allowed for an average annual return of $5,700 among Texan cities that made the list.
For those investors not as keen on heading south, the list did include a few Midwestern and Western options, including Kansas City, Kansas (number 11); Lancaster, California (number 18); Cincinnati, Ohio (number 21); Grand Rapids, Michigan (number 22); and Colorado Springs, Colorado (number 28).