10 best cities to buy a rental property

Low home prices and relatively strong rents are expected to make real estate investors in these cities some healthy profits over the next few years.

Las Vegas has long been a Mecca for gamblers, but now it's the go-to place for real estate investors who want to clean up on rental properties.

Nationwide, the opportunities for this kind of investing haven't been this good in years. Not only are home prices way down but interest rates are near all-time lows and rents are climbing.

In May, according to the National Association of Realtors, 19% of home purchases were for investment, up from 17% in 2010.

Nowhere are potential profits better than in Las Vegas, according to a new survey by Local Market Monitor, a North Carolina-based firm that specializes in forecasting real estate prices. Local Market Monitor put together the survey for HomeVestors, a franchise real estate investing company. The survey ranked 316 markets by estimated returns on investment in single-family home rental properties.

"Overall, the highest ratings are in markets where home prices have fallen substantially," said Ingo Winzer, founder of Local Market Monitor. "Home prices in these markets are also below average, so empty homes are easily turned into competitive rental properties."

The cities were ranked by estimated future returns compared with the projected national average return. According to Local Market Monitor's data, for example, investors in Las Vegas who rent out the properties they buy now will have a 4.7% higher return than the 5.3% national average.

The potential for profits has to be high for investors to enter into this risky market: Winzer expects home values to fall another 7% over the next three years.

Here are the top 10 markets ranked highest in investment return.

By Les Christie - Last updated July 12 2011: 10:25 AM ET
Join the Conversation
Find Homes for sale
  • Property Type
  • Find a home in:
    New York | Atlanta | Chicago | Los Angeles
    Washington D.C | Houston | Philadelphia | More options
Most Popular

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.