Key Highlights

  • 24 of 30 top investment properties located in South or Southeast, according to IPX1031 Financial Services Company
  • The top five locations for new investment properties were in North Charlotte SC, Winston-Salem NC, Chattanooga TN, High Point NC and Tuscaloosa AL

IPX 1031 Investment Property Exchange Services recently released its latest list of the 30 best locations for new investment properties.

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IPX 1031, a subsidiary of Fidelity National Financial, structures real estate exchanges in order to defer capital gains taxes that are associated with the sale of businesses or real estate properties. Such 1031 exchanges can defer up to 35%-40% of capital tax gains.

(You and/or your clients may want to discuss structuring your/their investment property as a 1031 exchange with your attorney or tax advisor.)

IPX 1031 included 310 cities with populations of 100,000+ residents to determine the best locations for new investment properties. The cities were ranked on the following criteria:

  • Median home values
  • Home value growth y/y
  • 10-year population growth
  • Annual property taxes
  • Annual returns

IPX 1031 found that the top 30 cities had an average home value increase of +6% with an average annual yield of $6,150, after payments for mortgages, property taxes and homeowners insurance. IPX 1031 also considered the number of rent payments it would take to pay for the home based on median rents and median home values based on a 30-year fixed mortgage with a rate of 4%.

IPX 1031 2020 List of Best Cities for New Investment Properties:

  1. North Charleston SC
    1. Median home value- $177,000
    2. Value to gross rent ratio – 122
    3. Annual property tax – $857
    4. Population growth – 14%
    5. Annual return – $8,323
  2. Winston-Salem NC
    1. Median home value = $142,000
    2. Value to gross rent ratio – 114
    3. Annual property tax – $1,389
    4. Population growth – 7%
    5. Annual return – $6,951
  3. Chattanooga TN
    1. Median home value – $154,200
    2. Value to gross rent ration – 115
    3. Annual property tax – $1,354
    4. Population growth – 6%
    5. Annual return – $7,622
  4. High Point NC
    1. Median home value – $132,500
    2. Value to gross rent ratio – 108
    3. Annual property tax – $1,447
    4. Population growth – 7%
    5. Annual return – $7,097
  5. Tuscaloosa AL
    1. Median home value – $154,100
    2. Value to gross rent ratio – 123
    3. Annual property tax – $584
    4. Population growth – 10%
    5. Annual return – $7,387
  6. Odessa TX
  7. Greensboro NC
  8. Lakeland TX
  9. Tyler TX
  10. Clearwater FL
  11. Kansas City KS
  12. Murfreesboro TN
    1. Median home value – $245,400
    2. Value to gross rent ratio – 104
    3. Annual property tax – $1,865
    4. Population growth – 23%***
    5. Annual return – $4,735
  13. San Angelo TX
  14. Beaumont TX
  15. Clarksville TN
  16. Midland TX
    1. Median home value – $260,000
    2. Value to gross rent ratio – 155
    3. Annual property tax – $3,778
    4. Population growth – 22%***
    5. Annual return – $5,560

Remaining cities include…

– Columbia SC

– Lancaster CA

– Athens GA

– Brownsville TX

– Cincinnati OH

– Grand Rapids MI

– Killeen TX

– Knoxville TN

– Laredo TX

– Palm Bay FL

– Savannah GA

– Colorado Springs CO

– Orlando FL

– Port St. Lucie FL

 

Thanks to InmanNews’ Lillian Dickerson for source data and IPX 1031.

Also read: What the Imbalance of Supply & Demand Looks Like, 10 Best Cities to Move to NOW – Part II, Zillow’s Crystal Ball Gazing into 2020