Money

Top 15 Cities Where People Are Buying Investment Properties


broker with sold sign
Andy Dean Photography / Shutterstock.com

Editor’s Note: This story originally appeared on Stessa.

In the hot residential real estate market in the past two years, real estate investors have to face stiff competition and escalating prices. While many potential homebuyers are lured into the market with historically low interest rates and returns on investment, they often find themselves outbid.

Investors bought a record 18.4% of all U.S. homes sold in the final quarter of 2021, up from 12.6% in the final quarter of 2020. While real estate investment did reaching new highs compared to last year, the number of investors buying has grown steadily since the collapse of the housing bubble and the Great Recession in the mid-2000s.

Between the appreciation of home values ​​and steady income from rent, residential real estate has proven to be an attractive asset class for investors.

These attributes continue to make real estate a desirable investment. But for investors who require a mortgage to purchase a rental property, financing can be more challenging.

For investors who rely on finance to buy real estate, most of the top spots for investment properties are found in the South. These states have some Lowest cost to buy real estate in the country, which makes them easier to obtain for potential real estate investors.

The data used in this analysis are from the Federal Financial Institutions Examination Council (FFIEC) and are based on Home Mortgage Disclosure Act file.

Here are the major US municipalities (population 1 million or more) where people are mortgaged investment properties…

15. San Antonio-New Braunfels, TX

House in San Antonio, Texas
Natalia Silyanov / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 8.7%
  • Total outstanding loans for investment real estate: 1,987
  • Average asset value for investment property: $205,000
  • Average deduction for investment property: 50,000 dollars
  • Average interest rate for investment property: 3.9%

14. Las Vegas-Henderson-Paradise, NV

Las Vegas neighborhood with desert hills in the distance.
Christopher Boswell / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 8.8%
  • Total outstanding loans for investment real estate: 2.361
  • Average asset value for investment property: $285,000
  • Average deduction for investment property: 80,000 dollars
  • Average interest rate for investment property: 4.0%

13. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

Philadelphia's Neighborhood
AnjelikaGr / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 8.9%
  • Total outstanding loans for investment real estate: 5.214
  • Average asset value for investment property: $225,000
  • Average deduction for investment property: $ 60,000
  • Average interest rate for investment property: 4.2%

12. San Diego-Chula Vista-Carlsbad, CA

Rigucci / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 9.0%
  • Total outstanding loans for investment real estate: 2.493
  • Average asset value for investment property: $635,000
  • Average deduction for investment property: 200,000 dollars
  • Average interest rate for investment property: 3.6%

11. Nashville-Davidson – Murfreesboro – Franklin, TN

House in Nashville, Tennessee
eakkarat rangram / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 9.0%
  • BILLIONotal investment real estate loan: 2,932
  • Average asset value for investment property: $265,000
  • Average deduction for investment property: 70,000 dollars
  • Average interest rate for investment property: 4.0%

10. Birmingham-Hoover, AL

Birmingham Alabama House
Carolyn May Wright / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 9.4%
  • Total outstanding loans for investment real estate: 1.274
  • Average asset value for investment property: $125,000
  • Average deduction for investment property: 30,000 dollars
  • Average interest rate for investment property: 4.1%

9. Virginia Beach-Norfolk-Newport News, VA-NC

Virginia Beach, Virginia
JoMo333 / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 10.2%
  • Total outstanding loans for investment real estate: 1,704
  • Average asset value for investment property: $195,000
  • Average deduction for investment property: 50,000 dollars
  • Average interest rate for investment property: 4.3%

8. Kansas City, MO-KS

Kansas City, Missouri
Scruggelgreen / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 10.6%
  • Total outstanding loans for investment real estate: 3.205
  • Average asset value for investment property: $155,000
  • Average deduction for investment property: $40,000
  • Average interest rate for investment property: 4.1%

7. Austin-Round Rock-Georgetown, TX

Austin, Texas
Brandon Seidel / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans:10.9%
  • Total outstanding loans for investment real estate: 4.435
  • Average asset value for investment property: $285,000
  • Average deduction for investment property: 70,000 dollars
  • Average interest rate for investment property: 3.5%

6. Los Angeles-Long Beach-Anaheim, CA

Housing in Los Angeles
divanov / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 10.9%
  • Total outstanding loans for investment real estate: 8.806
  • Average asset value for investment property: $875,000
  • Average deduction for investment property: $310,000
  • Average interest rate for investment property: 3.7%

5. St. Louis, MO-IL

The houses in St.  Louis Missouri
Rob Neville Photo / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 11.8%
  • Total outstanding loans for investment real estate: 4.152
  • Average asset value for investment property: $145,000
  • Average deduction for investment property: $40,000
  • Average interest rate for investment property:4.1%

4. New Orleans-Metairie, LA

Houses in New Orleans, Louisiana
Ellie-Rose Cousins ​​/ Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 12.4%
  • Total outstanding loans for investment real estate: 1.308
  • Average asset value for investment property:$240,000
  • Average deduction for investment property: $ 60,000
  • Average interest rate for investment property: 4.5%

3. Tulsa, okay

House in Tulsa, Oklahoma
Vineyard Perspective / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 13.2%
  • Total outstanding loans for investment real estate: 1.390
  • Average asset value for investment property: $145,000
  • Average deduction for investment property: 30,000 dollars
  • Average interest rate for investment property: 4.4%

2. Memphis, TN-MS-AR

House in Memphis, Tennessee
Steven Frame / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 20.6%
  • Total outstanding loans for investment real estate: 2,560
  • Average asset value for investment property: $115,000
  • Average deduction for investment property: 30,000 dollars
  • Average interest rate for investment property: 4.1%

1. Oklahoma City, OK

Shane Wilson Link / Shutterstock.com
  • Investment real estate loans as a percentage of all purchase loans: 20.9%
  • Total outstanding loans for investment real estate: 3.549
  • Average asset value for investment property: $155,000
  • Average deduction for investment property: $40,000
  • Average interest rate for investment property: 4.3%

Methodology

Serious owner
Pranithan Chorruangsak / Shutterstock.com

The data used in this analysis are from the Federal Financial Institutions Examination Council (FFIEC) and are based on Home Mortgage Disclosure Act file. Only regular home loans approved in 2020 will be considered.

To determine where people are buying investment properties, the researchers calculated investment property loans as a percentage of all loans purchased. In the event of a tie, the location with the larger total investment property loan will be ranked higher. To improve relevance, only urban areas with at least 100,000 residents were included. In addition, municipalities are grouped into groups based on population size: small (100,000 to 349,999), medium (350,000 to 999,999) and large (1,000,000 or more).

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click on links in our stories.



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