The US property market is popular with international investors. But as the country is so large and varied, one given location can offer investment opportunities entirely different from those found in another. The market is also undergoing a period of change, leaving many who had previously done their homework uncertain as to the best places to invest.
A recent report has identified the best and worst counties in the USA for buy-to-let property investment. This report was derived solely from rental return figures, and examined over 1,500 different counties.
Across the US, house prices were 12.2% higher in February this year than they had been twelve months earlier. Some particularly strong-performing areas put even this figure to shame, such as Riverside, California which saw growth of 22%. Atlanta also saw excellent growth, with 17% overall. However, in the current US investment climate equity growth is not enough. In order to be truly competitive with other opportunities, investment properties for sale in the USA have to provide solid rental returns for investors. This was the focus of the recent report.
Detroit, Michigan came out as number one. Buy-to-let investors in Detroit can expect a full 30% annual yield in gross terms. This figure was based on the median sales price for a 3 bedroom Detroit home – an affordable $45,000 – and the 2014 fair market rent for the same type of property.
Wayne County in Michigan came in close behind Detroit, with similarly high levels of rental return. Clayton County in Georgia followed, and was in some ways a surprise entry. It is surrounded by expensive real estate markets, but due to a large number of foreclosures this particular county ranked as one of the cheapest places to purchase.
Other top states for buy-to-let investment included Washington County in Mississippi, Bibb County in Georgia and Baltimore City County in Maryland. Wyandotte in Kansas and several counties in the high-demand state of Florida also featured on the list of best investment counties. Florida properties for sale are very popular with tourists and retirees, contributed Putnam, Hernando and Pasco counties to the list.
The single worst market in the US for buy-to-let investment, according to the report, is New York County. A high median sales price of $887,000 and monthly rents averaging $1,800 mean that investors can only expect something like 3% gross yields from rental returns. This is just one tenth the proportion expected by investors in the country’s best market.
Kinds County, also in the state of New York, also featured on the list of worst counties to invest in. California contributed a number of markets to the list of poor performers, specifically San Francisco, Marin, San Mateo and Santa Cruz counties. Other weak markets were Eagle County in Colorado, Gallatin County in Montana, Williamson County in Tennessee and Arlington, Virginia.