So I was up late one night over Memorial Day weekend and thought it would be fun to aggregate the top 100 US cities by population and compile median home price, median rent, and rent to price ratio (which can be helpful in figuring out affordable cash flow markets). Yes, I’m weird like that…
I then decided to share it on Twitter, asking people to comment on my post if they wanted to get access to the data.
To my overwhelming surprise, over 100 people left a comment wanting to get their hands on it:
Thought it would be fun to aggregate the top 100 US cities by population and compile median home price, median rent, and rent to price ratio (which can be helpful in figuring out cash flow markets).
If you want a copy, comment here and I’ll send it over. Here’s a sneak peek: pic.twitter.com/lvMzr7RNPw
— emilshour (@emilshour) May 24, 2020
So I figured I’d share it here too. Here’s the link (if you want to filter and sort this data, just make a copy or download).
More importantly, I want to share how I’d look at this list if you’re looking to invest remotely and you’re in the process of honing in on a market.
1. If you’re looking for cash flow, it’s harder to make the markets with a low rent to price ratio work
You’ll notice that a lot of the coastal markets (and hot markets like Austin) have a sub 0.50 ratio. Typically that means it’s much harder to find properties that cash flow well unless you put a lot of money down. And given the fact that these markets are expensive, you’re going to have to bring a lot of cash to the table.
Obviously, these markets are great if you want something a lot more upside in appreciation and equity potential.
2. On the other side of the spectrum, be cautious investing in markets with super high ratios
Someone messaged me after reviewing this list asking if the takeaway is that they should go invest in Detroit or Cleveland – the 2 cities with the highest rent to price ratio. My thoughts: not necessarily.
Yes, you can pull in a great cash flow return in these markets. But you should also be weary of a city where the median home price in 2020 is ~$36k. That basically means you can kiss any hope of appreciation goodbye. I’m a cash flow investor, but not completely at the expense of having no appreciation over the long haul.
3. My personal preference are those markets where median price is at least ~$150k and the rent to price ratio is at least 0.70
Having invested in a couple of the markets that meet this criteria, you’ll see that you can get good cash flowing rentals in cities that are seeing steady but modest price appreciation. At least as of this writing 🙂
Hope this helps!
P.S. If you’re looking at this data a little differently, let me know in the comments. Interested to hear what your takeaway is.