The RTP is 0.64 percent. That\u2019s a step down from Montgomery\u2019s excellent RTP, but it still means good deals can absolutely be found in Springfield.<\/li>\n<\/ul>\nWhile the population of Springfield has dropped two percent since 2010, home prices are actually appreciating\u2014four percent per year since 2017. This is a curious dynamic worthy fo further investigation. Typically, when a city loses population, demand for housing decreases and housing prices fall.<\/p>\n
That being said, a two percent population loss over 10 years is not a dramatic change. Wage growth could be driving increased rents.<\/p>\n
Akron, OH<\/h3>\n
Of all the cities on our list, Akron offers the lowest entry point for investors, with a median home price of $86,000. That number has risen, on average, seven percent per year since 2017. Investors who have been in this market for a few years have seen fantastic appreciation.<\/p>\n
However, during that time, rent has remained flat\u2014around $700 per month on average. But the 20 percent RTI means that there is potential for rent to increase in the future.<\/p>\n
The population of the city has decreased one percent over the last 10 years. No, that\u2019s not the direction you want to see the population moving, but I don\u2019t think it\u2019s a major red flag, either. Overall, Akron offers promising fundamentals, like its 0.81 percent RTP and 20 percent RTI.<\/p>\n
If rent grows in the coming years, Akron may deliver excellent returns with a relatively inexpensive entry point.<\/p>\n
Cedar Rapids, IA<\/h3>\n
After noticing that many of the cities I\u2019ve pinpointed have seen stagnant or even negative population growth since 2010, I wanted to find a city that boasted both a low RTI and a population increase. That city is Cedar Rapids. <\/p>\n
Cedar Rapids has two major benefits: RTI and population growth. Its 16 percent RTI is the lowest on our list. And the population has grown six percent since 2010, meaning renter demand could provide further upward pressure on prices.<\/p>\n
Where Cedar Rapids lags is its RTP. At 0.52 percent, its the lowest on our list. That lower RTP is because Cedar Rapids has one of the highest median home prices on the list\u2014$154,000. Don\u2019t think this means that deals cannot be found, though. There are likely great cash-flowing deals to be found.<\/p>\n
Independence, MO<\/h3>\n
Of all the markets on the list, Independence offers the most well-rounded metrics. Its 20 percent RTI is well below the national average. It\u2019s especially impressive because Independence has averaged nine percent rent growth since 2017.<\/p>\n
Normally, when I see nine percent rent growth, I think, \u201cThat is not sustainable.\u201d But given that the RTI remains so far below average, this rent growth could be legitimate\u2014and even have further room to grow.<\/p>\n
Independence\u2019s RTP is 0.59 percent. That\u2019s towards the bottom of our list, but still solid. And that lower RTP is offset by the huge price appreciation the city has seen since 2017\u2014a whopping 16 percent! That\u2019s a huge number. Yes, there might be some COVID-related wonkiness there (some markets are seeing huge spikes in prices this year that would be very abnormal in other years), but it\u2019s still encouraging to see. After all, Independence demonstrated 10 percent growth (and more!) in 2017 and 2018, before the wildness of 2020.<\/p>\n
However, with flat population growth since 2010, it’s important to understand what is driving Independence\u2019s property values up\u2014and if it\u2019s likely to continue.<\/p>\n
Remember, when evaluating markets on a high level, we\u2019re just looking at averages. It\u2019s the job of the investor to validate these numbers and find a great deal.<\/p>\n
Do you already use RTI as metric? Is this something you\u2019ll start using when evaluating markets or neighborhoods?<\/strong><\/p>\nComment below and let us know.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"All landlords want reliable tenants\u2014and one key metric that sorts the reliable tenants from the less-so is rent-to-income ratio (RTI). For investors, calculating a market\u2019s overall RTI can identify locations with solid investment potential.<\/p>\n","protected":false},"author":108611,"featured_media":138230,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5528],"tags":[],"class_list":["post-138229","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-news"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/138229","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/108611"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=138229"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/138229\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/138230"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=138229"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=138229"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=138229"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
![\"\"](\"https:\/\/assets2.biggerpockets.com\/uploads\/uploaded_images\/1600192295-image.png\" "\\"\\"")
<\/p>\n