Which Cities are the Best to Invest in Real Estate?


Should you follow everyone and invest in the hot appreciating markets the media and everyone talks about?

The media has a much different approach in that they look at hot markets speculatively as ones that will appreciate, our approach is much different. I previously wrote on the topic where to invest and identified many smaller cities, the Midwest and OH as areas that hit on all 4 of my criteria: Little chance of depreciation, lots of available deals, low competition, multiple exit strategies.

Here I will identify specific cities that have an oversupply of opportunity for savvy investors, using the PMI U.S. Market Risk Index that I talked about in that previous post.

PMI US Market Risk Index

      PMI US Market Risk Index
    Risk Rank 1st qtr 2009 4th qtr 2008
Riverside-San Bernardino-Ontario CA  CA  High  99.9 99.9
Miami-Miami Beach-Kendall FL  FL  High  99.9 99.9
Los Angeles-Long Beach-Glendale CA  CA  High  99.9 99.9
Fort Lauderdale-Pompano Beach-Deerfield Beach FL  FL  High  99.9 99.9
Las Vegas-Paradise NV  NV  High  99.9 99.8
West Palm Beach-Boca Raton-Boynton Beach FL  FL  High  99.9 99.8
Orlando-Kissimmee FL  FL  High  99.9 99.6
Tampa-St. Petersburg-Clearwater FL  FL  High  99.9 99.7
Santa Ana-Anaheim-Irvine CA  CA  High  99.9 99
Phoenix-Mesa-Scottsdale AZ  AZ  High  99.9 98.8
Jacksonville FL  FL  High  99.9 98.9
Sacramento–Arden-Arcade–Roseville CA  CA  High  99.9 97.9
San Diego-Carlsbad-San Marcos CA  CA  High  99.8 97.2
Providence-New Bedford-Fall River RI-MA  RI  High  99.3 98.3
Detroit-Livonia-Dearborn MI  MI  High  98.8 86.3
Edison-New Brunswick NJ  NJ  High  96.7 89.4
Oakland-Fremont-Hayward CA  CA  High  96.4 80.7
Newark-Union NJ-PA  NJ  High  96 84.1
Nassau-Suffolk NY  NY  High  91.9 78.3
Washington-Arlington-Alexandria DC-VA-MD-WV  DC  High  91.7 88.2
Portland-Vancouver-Beaverton OR-WA  OR  High  89.8 66.4
Baltimore-Towson MD  MD  High  89.6 83.8
Virginia Beach-Norfolk-Newport News VA-NC  VA  High  89 77.6
New York-White Plains-Wayne NY-NJ  NY  High  87.8 67.6
Atlanta-Sandy Springs-Marietta GA  GA  High  80.7 55.8
Boston-Quincy MA  MA  High  79.5 56.6
San Jose-Sunnyvale-Santa Clara CA  CA  High  78.4 51.4
Minneapolis-St. Paul-Bloomington MN-WI  MN  High  74.5 58.5
San Francisco-San Mateo-Redwood City CA  CA  Elevated  66.2 31.6
Warren-Troy-Farmington Hills MI  MI  Elevated  57.9 23.6
Seattle-Bellevue-Everett WA  WA  Moderate  46 30.3
Milwaukee-Waukesha-West Allis WI  WI  Moderate  44.6 27.5
Cambridge-Newton-Framingham MA  MA  Moderate  40.6 27.3
Chicago-Naperville-Joliet IL  IL  Moderate  36.2 13.7
Philadelphia PA  PA  Moderate  30.3 27.5
Indianapolis-Carmel IN  IN  Low  28.8 9.6
Austin-Round Rock TX  TX  Low  28.1 17.4
Cincinnati-Middletown OH-KY-IN  OH  Low  27.4 12.1
Kansas City MO-KS  MO  Low  26.2 11.2
Denver-Aurora CO  CO  Low  21.2 14.2
Nashville-Davidson–Murfreesboro–Franklin TN  TN  Low  16.6 12
Charlotte-Gastonia-Concord NC-SC  NC  Low  15 5.7
St. Louis MO-IL  MO  Low  12.9 13.8
Fort Worth-Arlington TX  TX  Minimal  5.8 2.5
Dallas-Plano-Irving TX  TX  Minimal  3.8 2.5
Houston-Sugar Land-Baytown TX  TX  Minimal  3.7 2.7
San Antonio TX  TX  Minimal  2.8 3.8
Columbus OH  OH  Minimal  2.1 2.4
Pittsburgh PA  PA  Minimal  1.5 1.7
Cleveland-Elyria-Mentor OH  OH  Minimal  1.5 2.3

I am going to focus on markets with Minimal to Low PMI Risk Rank and that hit on my other 3 criteria. 

I did extensive research on 3 of the TX markets and it seemed a screaming deal on a foreclosure was 20% below market.  While you may be able to find a great deal, I found the availability and competition to not be as favorable as some of the other markets.  While the markets are very stable, the TX cities I am passing on but savvy investors can do very well. 

I found the same thing in NC, SC, Kansas City, Oklahoma City and Alabama.  You can find good deals, but it is more difficult to find a great deal or that diamond in the rough.  A great deal I consider to be around 50% LTV and rents are 1.5-3% of Total In (Purchase+Rehab). 

The Best Markets to Invest In

The markets I found to be overflowing with great deals and hit on all 4 criteria are Cleveland, Columbus, Cincinnati, Akron, Toledo, Indianapolis and Memphis.  You can cherry pick from incredible deals that have multiple exit strategies, tremendous cash flow, tremendous equity and you do not run into much competition. 

We have found deals around 50% LTV with rents of $1400 for only 60K.  That is great cash flow and equity.  Cleveland, Columbus, Cincinnati, Akron, Toledo, Indianapolis and Memphis are the cities to invest in. 

I welcome and look forward to all comments and questions.

About Author

Ryan is the founder of Real Return Real Estate™ , a company focused on buying property at extreme discounts, selling and renting with cash flow.


  1. I am impressed with your research and that is what I think is key to remember when investing in property you need to make sound decisions that are the best for your money and that you make a good return on investment

  2. Thanks for the comments guys. Clare, I totally agree, it is best to make informed business decisions and stick to your criteria. Steve, I do take into consideration the outlook of the market however the entire market may not tell the story of one single property. My main criteria for a deal is that it must have multiple exit strategies. If the market does drop and you cannot flip then you can rent and cash flow the property. Again it is important to stick to your criteria, competition and lack of available deals can make it hard to find deals with good enough numbers to have multiple exits and be able to withstand surprises, depreciation and mistakes. Happy Investing Guys!!
    .-= Ryan Moeller´s last blog ..3514 W 58th, Cleveland, OH 44113 =-.

  3. Ryan Hinricher on


    Thanks for the good information. It is very timely and I can see you spent quality time in choosing your cities. My company is based in Memphis and I’ve assembled a portfolio of homes there. My sentiments are equal. Although we sell property in Memphis it is good to hear unbiased validation.

    We are seeing the foreclosures affecting specific neighborhoods but the PMI Index seems to be dead on with the overall market. Cheers!

  4. Lawrence adler on

    Hi Ryan
    Read your informative report, but I notice you didn’t mention Detroit, which looks like an investors dream !!! I am an overseas investor and have been watching the Detroit market with interest, but not quite sure if I should dive in.
    Your view would be much appreciated
    Many thanks

  5. Good point Lawrence. I know investors who only invest in Detroit. The auto industry and economy has really affected Detroit, last I heard there was 15% unemployment. But let’s face it, the auto industry and Detroit are not going anywhere and they will rebound. Most investors in Detroit have a long term strategy and can handle vacancies. A 5-10 year plan and I believe you can clean up in Detroit, most investors stay away because they want immediate returns.
    .-= Ryan Moeller´s last blog ..3514 W 58th, Cleveland, OH 44113 =-.

    • Ryan –
      The rust belt has been poised for a recovery for decades, but that never happened. Why are you convinced that Detroit will be any different? I just don’t see anything that sells me on investing, as an individual, in a city in decline.

  6. I don’t anticipate a tremendous recovery and phenomenal appreciation, that would be speculating. Detroit is hurting right now and properties can be purchased for under 10K all day long. Say you purchase 10 properties, fix them up and are in a total of 200K, rent them out and they are worth 500K. Even a steady decline and you should profit. Now if you where in 350K, I would pass in a heartbeat. What I am saying is that you can buy properties at such a low LTV that cash flow tremendously. I would expect some vacancy until the economy and auto industry stabalize, and would not expect appreciation rather expect depreciation. You can still make money. I myself am not sold on Detroit, but I do know many investors that only invest in Detroit and will likely clean up. For anyone that invests there, I recommend they really do their homework and due diligence.
    .-= Ryan Moeller´s last blog ..3514 W 58th, Cleveland, OH 44113 =-.

  7. Hi, my name is Jose Luis and I live in Ecuador, South America.

    My wife and I would love to start investing in the US with single familiy homes. Although we have never been in Cleveland, Columbus, Akron, Cincinnati, Toledo, Indianapolis or Memphis, places in which you recommend to buy for rentals, ( we have only been in Florida ), it seems great advise.

    So, my question is: In this places, do you know a few rental properties administrators that can run and manage our properties if we buy in this Cities ?, thanks, we appreciate it, regards.

  8. Jose,

    My advice is to evaluate a large number of property managers until you find 3-5 good ones. Do research on what to look for in good property managers. We have had good experiences with our property managers but have had to fire some bad ones and replace with good ones. It is hard to recommend without knowing exactly what and where you are purchasing. Ours may focus in certain areas and property types. Feel free to contact me for advice when you do purchase. Best of luck.

  9. Nice article; what key factors should one consider when thinking about investing in an area?

    Also, if do you have an any recommendations for investing in lots/land properties?


  10. Thanks Chris,

    I look for high rent to purchase ratios and strong LTVs. A lot of the smaller, less hyped markets have strong rent to purchase ratios. If there are a lot of foreclosures then there will be plenty of deals to cherry pick from.

  11. Hi Ryan,

    first, thank you for the great article.

    I am not a U.S resident and I would like to invest in the U.S real estate market.
    I know that one of the factores is the neighborhood. can you recomend on some neighborhoods in these cities or refer to a website that does this?


  12. Hey Gilad,

    It requires an expert in each market to determine the specific neighborhoods. If you have a market to focus on you can find an expert, agent and gather the info you need to find those areas. For instance, I have neighborhoods I focus on in my target markets as we have done many deals and know the areas. There is not one source that tells you which neighborhoods in each city, that would take years. I do recommend 1st time home buyer areas. I hope this helps.

  13. Good morning Ryan.

    I was wondering if you had a formula that I could use to find out which would be the best neighborhood for me to Invest in Georgia. I am between Alpharetta, Dunwoody, Sandy Springs or Roswell. I appreciate your help. Thank you and good day!!!

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