Best Real Estate Markets to Invest In

Competing as a real estate investor again big institutions is difficult. But these "hidden gems" may offer opportunities to smaller investors.

Location is important for the average homebuyer, but it’s exceedingly important for investors looking to get into a market to make a good return. For as a real estate investor, not only do you a want sizeable yield, but the ideal location will be lesser known and, therefore, you won’t have to compete with big institutional investors.

RealtyTrac analyzed markets based on things like gross rental yield, the expected return on investment (before accounting for taxes) and maintenance fees. The firm only considered single-family, three-bedroom homes.

Institutional investor purchases in all the markets on the list were at 5% of less of all residential sales in a three-month period. The more competition from these institutions, the more difficult it is for individual investors to find inventory, according to the vice president of RealtyTrac, Daren Blomquist.

“Heavy buying from large institutional investors in some markets contributes to price appreciation and scarcity of listings, leaving small investors and owner-occupiers feeling left out in the cold,” Jake Adger, chief economist of RealtyTrac, said in a statement.

These are the 10 markets that RealtyTrac considers the cream of the crop of the “hidden gem” counties that may

offer

opportunities to smaller investors or owner-occupiers. You can also see the full top 25. Counties are ranked based on their gross yield.

10. Allegheny County, Pa.

Median market value: $126,000

Median rent value: $1,034

Gross yield: 9.8%

Investor sales percent: 3%

Unemployment: 6.9%

Largest city: Pittsburgh

Pittsburgh. Photo copyright Sean Pavone Photo

9. Jefferson County, La.

Median market value: $153,000

Median rent value: $1,260

Gross yield: 9.9%

Investor sales percent: 3%

Unemployment: 7.3%

Largest city: Kenner

Lake Pontchatrain

8. Schenectady County, N.Y.

Median market value: $153,000

Median rent value: $1,278

Gross yield: 10%

Investor sales percent: 2.2%

Unemployment: 6.9%

Largest city: Schenectady

Stockade Historic District in Schenectady.

Photo by Daniel Case.

7. Alachua County, Fla.

Median market value: $139,000

Median rent value: $1,175

Gross yield: 10.1%

Investor sales percent: 4.3%

Unemployment: 5.9%

Largest city: Gainesville

Lake Alice. Photo by Kristopher Anderson.

6. Davidson County, Tenn.

Median market value: $149,000

Median rent value: $1,263

Gross yield: 10.2%

Investor sales percent: 5.3%

Unemployment: 7.1%

Largest city: Nashville

Nashville

5. Monroe County, N.Y.

Median market value: $121,000

Median rent value: $1,043

Gross yield: 10.3%

Investor sales percent: 2.5%

Unemployment: 7%

Largest city: Rochester

Homes in the Browncroft Historic District of Rochester. Photo by Daniel Penfield.

4. Williamson County, Texas

Median market value: $158,000

Median rent value: $1,403

Gross yield: 10.7%

Investor sales percent: 4.7%

Unemployment: 5.7%

Largest city: Austin’s city limits cross into Williamson County.

Blue Hole Park in Georgetown, the county seat.

3. Canadian County, Okla.

Median market value: $131,000

Median rent value: $1,176

Gross yield: 10.8%

Investor sales percent: 3.7%

Unemployment: 4.9%

Largest city: El Reno

El Reno

2. Lubbock County, Texas

Median market value: $111,000

Median rent value: $1,089

Gross yield: 11.8%

Investor sales percent: 4.9%

Unemployment: 6.1%

Largest city: Lubbock

Texas Tech University in Lubbock. Photo by Johan Henrikse.

1. Wichita County, Texas

Median market value: $84,000

Median rent value: $938

Gross yield: 13.4%

Investor sales percent: 4.5%

Unemployment: 6.8%

Largest city: Wichita Falls

The Falls of Wichita River.