SOURCE: BiggerPockets, Inc.

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October 14, 2015 15:54 ET

BiggerPockets Reveals the 10 Markets That Produced the Best Results for Real Estate Investors, 2015

BiggerPockets Real Estate Investment Market Index Combs Markets for Both Cash-Flow and Appreciation Potential

DENVER, CO--(Marketwired - October 14, 2015) - BiggerPockets (www.biggerpockets.com), the world’s largest online hub for real estate investors, today released its 2015 BiggerPockets Real Estate Investment Market Index. This Index analyzed the 50 largest US MSAs to determine those that were most likely to produce outsized returns for residential real estate investors between 2014 and 2015. BiggerPockets also breaks out those markets of the top 50 MSAs that were most likely to produce the worst returns for real estate investors.

"If you can afford to buy a home in your local market, then by definition you can afford to buy investment properties of the type studied in this dataset," says study author Scott Trench. "This should be a good rear-view look at the returns achieved by ordinary Americans who purchased homes or investment properties in the largest U.S. markets."

Dallas, TX tops the list of real estate markets over the period studied, exhibiting strong price appreciation, while remaining a market in which investors saw strong rents relative to property values. Investors in Dallas stood to earn an almost 20% unleveraged return for residential real estate investments before expenses.

Falling closely behind Dallas, Denver, CO takes the number two spot, with gains driven largely by the strongest appreciation in home values of any major market studied over the period. Residential real estate prices increased a staggering 13.4% year over year across the Denver metro region.

Rounding out the top 10 are three Florida markets, including Miami, Tampa, and Orlando; the two Texas cities of Houston and Austin; as well as Detroit, Las Vegas, and Atlanta.

The chart below shows the 10 metropolitan statistical areas with the most favorable combinations of gross rents and appreciation for investors:

Top 10 Cities Offering the Most Opportunity for Real Estate Investors, 2015

1) Dallas, TX
2) Denver, CO
3) Miami, FL
4) Houston, TX
5) Atlanta, GA
6) Tampa, FL
7) Detroit, MI
8) Austin, TX
9) Las Vegas, NV
10) Orlando, FL

"Some investors are looking for cash flow from rental income, while others are hoping for greater gains from appreciation -- really the key is to combine the two," says, Joshua Dorkin, CEO and Founder of BiggerPockets, and host of the BiggerPockets Podcast. "It all depends the investor’s risk tolerance and preferred type of return."

BiggerPockets looked at historical sales price data to determine average price increases across residential real estate (0-4 units) in each of the 50 largest U.S. MSAs. Those sale prices were then compared with average Fair Market Rents across each of the markets to determine the areas that offered the highest potential for real estate investors over the period studied.

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