Single-family rental properties can offer a good investment alternative to stocks and bonds, but not all cities offer the same level of returns, according to HomeUnion, an online real estate investment management firm based in Irvine, Calif.
HomeUnion rated cities across the country for rental property returns based on the cap rate, which is the relationship between an investment property’s net operating income (rents minus expenses) and the market value of the property.
These 10 cities, listed along with the cap rate, had the least favorable investment returns. They are listed in reverse order.
No. 10: Portland, Ore., 3.9 percent
No. 9: Sacramento, 3.6 percent
No. 8: San Diego, 3.6 percent
No. 7: Oakland, Calif. 3.5 percent
No. 6: Seattle, 3.5 percent
No. 5: New York City, 3.5 percent
No. 4: Los Angeles, 3.2 percent
No. 3: Orange County, Calif., 3 percent
No. 2: San Jose, 2.7 percent
No. 1: San Francisco, 2.7 percent
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