Everyone’s always talking about the insanely high rents in the New York City and San Francisco housing markets.
But that doesn’t mean people with money should scoop up a 5th Avenue condo and rent it out.
Landlords seeking returns need to consider the differential between the cost of the property and the rent they can potentially bring in.
A report by RealtyTrac found that the average returns were actually the highest in high-risk markets, where unemployment and vacancy rates are higher than national averages.
RealtyTrac ranked these US housing markets based on gross rental yield, which is “the average fair market rent of three-bedroom homes in each county, annualized, and divided by the median sales price of residential properties in the third quarter.”
Although rents are high in New York and San Francisco, the property prices are also high, which means that returns are low.
On the other side, these smaller markets have low property prices, but relatively high rents — which means that returns are high.