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Top 10 markets to buy a rental property

In these metro areas, small real estate investors can expect to find great home deals and double-digit returns on their investment, according to RealtyTrac.

Austin, Texas

mom pop real estate austin texas
It may not be right in Austin, but this Round Rock home offers a lot of space for $155,000.
  • Median home price: $158,000
  • Median rent: $1,403
  • Return on investment*: 10.7%

More than 40% of the Austin metro area's housing stock is rental units thanks, in part, to the giant University of Texas at Austin campus, which enrolls more than 50,000 students.

Occupancy rates are climbing so fast in the area that rents are reaching new highs. But home prices are climbing, too. In June, prices had risen 11% year-over-year by June 30 to a median of about $201,000, according to the National Association of Home Builders and Wells Fargo.

There are some areas where investors can find bargains, however, like suburban Williamson County, which includes the Round Rock, Texas, home of Dell Computer. This 2,400-square-foot brick home in Round Rock is listed for just $155,000, about the median price for that area.

For further information: Trulia

Source: RealtyTrac and RentRange.
*Return on investment is also known as gross rental yield, which is the percentage of profit or loss from an investment that is calculated by dividing the annual gross rental income by the purchase price or market value of the property. Ratings were calculated by comparing gross median rents (the return on investment before accounting for taxes, maintenance fees and other costs) for three-bedroom homes to median home price. All of the markets were relatively strong economically, with unemployment rates below the national average.
  @CNNMoney - Last updated September 30 2013 07:32 AM ET

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