Best Places to Invest in Real Estate: An Analysis of 6 Cities

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One huge advantage to having (and/or being part of) an investing club is that you meet smart, like-minded people with similar interests and resources. After hosting my last Denver women’s investment group, I was excited to receive the below chart from one of our participants: Jennifer Ward. Like so many people in the BiggerPockets community, Jennifer Ward wants her investments to be dictated by what makes the most sense, rather than sheer proximity. In other words, just because you live in an expensive city or state (ahem, Denver, ahem, Colorado) doesn’t mean you need to invest there.

The below chart reviews six U.S. cities for investor desirability: Atlanta, Cleveland, Memphis, Kansas City, Indianapolis, and Minneapolis. The final line is an average of the metric for the cities reviewed, and the boxes colored green mean that the city in question has a better score than the average for these six cities. Basically, the more green, the better.

Related: Why “Overpriced” Markets Like San Francisco May Be Healthier Than You Think

An Analysis of 6 U.S. Cities for Investor Desirability

Assuming all metrics are equal, Minneapolis is the clear winner for this data set. It outperforms the other cities in 7 of the 8 metrics, and is followed by Indianapolis, which has strong scores for 5 of the 7 metrics. Two major losers here are Cleveland and Memphis, both of which have high crime stats, poor population growth, and fairly high taxes.

What’s interesting about this chart is the pattern we see in the rent to value column. This is calculated by dividing the median rent by the median house/condo value. So, for Minneapolis, you see that the cost of homes is moving up faster than the cost of rent. On the inverse side, you can command more rent in Cleveland and Memphis compared to the cost of the home. That said, we still think Minneapolis is a better value with less headaches when you look at all the other metrics present here.

Thanks again to Jennifer Ward.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.