10 US Locations with the Highest Real Estate ROI

Choosing a city with the highest return on real estate investment can be a challenge in today's fluctuating real estate market. What are the current hot spots?

table of Contents

1. What is ROI in real estate?
2. Top 10 locations with the highest return on investment
3. Mashvisor Investment Tools
4. summarizing

The popularity of specific locations in the U.S. market is bound to change, and real estate investors should be aware of these fluctuations and monitor them.

Return on investment is a financial metric often used in investment planning. It basically indicates whether the investor will make a profit with their strategy. Naturally, real estate investors look for locations with the highest returns on investment. Real estate ROI.

But how do you know where to invest?

It all comes down to following the performance statistics of potentially profitable cities in the US. Sometimes this is easier said than done, but we'll get to that too.

If you're serious about investing in real estate, we've identified the top 10 US locations you should consider this year, along with all the key metrics you need to keep in mind.

With this in mind, you may want to scroll down to see the latest updates on the US housing market.

What is ROI in real estate?

Return on investment (ROI) is a type of financial metric (a formula) that helps investors with strategic planning. In simple terms, it helps real estate investors plan and predict the “financial outcome” of their investment.

As noted, by focusing on real estate ROI, the investor can see their potential profit margin if they choose to invest in real estate by purchasing properties and renting them out or reselling homes, depending on their preferred strategy. With this in mind, ROI is a crucial value metric for the investor, regardless of their prior experience in real estate.

Return on investment is calculated in percentages and is closely related to return on assets (ROA) and return on equity (ROE). However, today we will focus primarily on helping investors maximize their return on investment, so we will leave the discussion of ROA and ROE for another time.

The formula for calculating ROI

Taking into account our previous points, the next step will be to use the real estate ROI formula in practice and see how it is calculated:

To calculate your return on investment, you basically need to divide the amount of money you made on the investment (commonly known as net profit) by the cost of the investment and then multiply it by 100.

Here is the formula described:

ROI = (Net profit / Cost of investment) x 100

It is worth noting that there is another way to calculate ROI:

ROI = (Current Value – Investment Cost / Investment Cost) x 100

Now that you know the basics of the formula, how do you use it?

Investors use the real estate ROI (return on investment) calculator to evaluate their portfolios, or they can also apply it to accurately evaluate different types of expenses.

What is also essential for investors to know is that the ROI result is only as accurate as the numbers that are put into the calculation. The ROI formula alone cannot eliminate or account for risk and uncertainty. Therefore, if you use real estate ROI to evaluate your future investments, you will need to take the risk factor into account separately. There is no need to be too pessimistic or too optimistic at this point.

Is there an average ROI in real estate?

Given the changing climate of the real estate market, especially a large-scale one like the United States, there is no general average for return on investment. Rather, it is more about the nature of the property being invested in, whether it is rental properties, luxury homes, or otherwise.

Reflections prior to calculation

Before you continue with the real estate ROI calculator, be sure to take a minute to think about it and ask yourself the following questions:

• How much risk can I take at this point?
• Is my financial situation strong enough? What will I do if I lose money?
• How much profit do I expect to make from this investment?
• What else can I do with the money?

Which places in the US offer the highest return on real estate investment??

It’s time to get straight to the point and list the top ten most profitable locations for traditional and Airbnb real estate investments. Here is an updated list of attractive spots for investors based on the latest data from Mashvisor.

Top 5 Cities for Traditional Rentals

The following are the top 5 cities for real estate investment, arranged in descending order in terms of traditional cash return:

1. Vero Beach, Florida

• Average property price:$779,075
• Average price per square foot:$353
• Days on the market:106
• Number of traditional listings:844
• Monthly income from traditional rental:$2,919
• Traditional cash return: 4.09%
• Traditional capitalization rate: 4.15%
• Price/rent ratio:22
• Walking Score:78

2. Joplin, Missouri

• Average property price:$558,591
• Average price per square foot:$174
• Days on the market:152
• Number of traditional listings:259
• Monthly income from traditional rental:$1,960
• Traditional cash return: 4.04%
• Traditional capitalization rate: 4.12%
• Price/rent ratio:24
• Walking Score:77

3. Stuart, Florida

• Average property price:$985,236
• Average price per square foot:$407
• Days on the market:106
• Number of traditional listings:520
• Monthly income from traditional rental:$3,125
• Traditional cash return:3.81%
• Traditional capitalization rate:3.87%
• Price/rent ratio:26
• Walking Score:52

4. Tampa, Florida

• Average property price:$763,925
• Average price per square foot:$446
• Days on the market:94
• Number of traditional listings:3.065
• Monthly income from traditional rental:$3,079
• Traditional cash return:3.68%
• Traditional capitalization rate:3.73%
• Price/rent ratio: twenty-one
• Walking Score:46

5. Bethlehem, Pennsylvania

• Average property price:$662,755
• Average price per square foot:$338
• Days on the market:69
• Number of traditional listings: 279
• Monthly income from traditional rental:$2,469
• Traditional cash return:3.62%
• Traditional capitalization rate:3.68%
• Price/rent ratio:22
• Walking Score:84

Top 5 cities to rent on Airbnb

Below are the top 5 cities to invest in Airbnb rentals, ranked from highest to lowest Airbnb cash returns:

1. Bailey, Colorado

• Average property price:$738,226

• Average price per square foot:$453

• Days on the market:125

• Number of listings on Airbnb:119

• Monthly Airbnb rental income:$4,906

• Airbnb cash back:5.09%

• Airbnb capitalization rate:5.14%

• Airbnb daily rate:$225

• Walking Score:3. 4

2. Scarborough, Maine

• Average property price:$807,098

• Average price per square foot:$561

• Days on the market:35

• Number of listings on Airbnb: 107

• Monthly Airbnb rental income:$6,223

• Airbnb cash back:5.09%

• Airbnb capitalization rate:5.13%

• Airbnb daily rate:$320

• Airbnb occupancy rate:60%

• Walking Score:62

3. Erie, Pennsylvania

• Average property price:$307,816

• Average price per square foot:$166

• Days on the market:59

• Number of listings on Airbnb: 237

• Monthly Airbnb rental income:$2,436

• Airbnb cash back:5.08%

• Airbnb capitalization rate:5.22%

• Airbnb daily rate:$149

• Airbnb occupancy rate:54%

• Walking Score:90

4. Ocala, Florida

• Average property price:$352,057

• Average price per square foot:$195

• Days on the market:98

• Number of listings on Airbnb:572

• Monthly Airbnb rental income:$2,857

• Airbnb cash back:5.08%

• Airbnb capitalization rate:5.17%

• Airbnb daily rate:$160

• Airbnb occupancy rate:57%

• Walking Score:62

5. Marion, North Carolina

• Average property price:$363,533

• Average price per square foot:$227

• Days on the market:86

• Number of listings on Airbnb:101

• Monthly Airbnb rental income:$2,776

• Airbnb cash back:5.08%

• Airbnb capitalization rate:5.18%

• Airbnb Daily Rate:$162

• Airbnb occupancy rate:51%

• Walking Score: Sixty-five

Mashvisor Investment Tools

Making the most of your real estate ROI calculator (and your investment) is ten times easier when you have Mashvisor's investment tool at your disposal.

First of all, our real estate blog It helps you stay up to date with current trends in the real estate market, provides you with additional real estate knowledge, and shares expert advice.

For more advanced tools, real estate investors can access Mashvisor. Heat map A tool that allows you to conduct thorough research into the neighborhood of your desired property. It is color-coded and displays average sales price values, traditional and Airbnb rental income, cash return, and more.

On a related note, our Property Finder Helps investors search for investment properties faster and more accurately. You get the chance to explore multiple real estate markets all at the same time.

summarizing

Every investor should be well informed about ROI and how and when to use the ROI formula before deciding on a location. Furthermore, we recommend answering several vital questions before proceeding with the investment.

Once you have decided on the type of property you want to invest in, it is time to review the possible options and decide which one suits your needs and budget.

Of course, Mashvisor's Rental Property Calculator is there to help you choose the right one. The best place to invest in real estate to obtain the highest return on real estate investment.

To gain access to the Rental Property Calculator and other Mashvisor tools, register today.