best cities for real estate investing by GRM

The last 12 months have not been kind to gross rent multipliers around the country. 

Home prices have skyrocketed 9.12% nationwide, while rents barely budged upward at 0.34%. In other words, real estate investors are paying far more for the same rental income. 

Which means yields and returns on new acquisitions have plummeted. 

Still, some cities offer far better yields than others. Below you’ll find the top 100 cities in the US by population, mapped with their GRM, median rent, and median home price.

 

What Is GRM (Gross Rent Multiplier)

Gross rent multiplier is one of those real estate terms that sounds more complicated than it is. It’s actually one of the easiest concepts in real estate investing.

Quite simply, gross rent multiplier is the ratio between a home’s price and its gross annual rental income. Just divide the price by the gross annual rents, and you get the ratio:

GRM = Price of Property/Gross Annual Rental Income

For example, if a property costs $150,000, and it generates gross rental income of $15,000 per year, the GRM is 10 ($150,000 / $15,000 = 10). Lower is better for GRM, indicating higher rents and lower prices. 

Here’s a quick GRM calculator in case you don’t love math:

Another way to think of GRM is the number of years it would take for a property to pay for itself in gross rents. If a property generates $15,000 per year, and costs $150,000 to buy, it would take 10 years to pay for itself. Not including expenses, that is. 

Which makes an important point: GRM doesn’t include expenses the way cap rates do. That makes it a simpler — but less accurate — calculation. 

 

Best Cities for Real Estate Investing by GRM

The following map shows the top 100 cities in the country by population: 

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Note that there are many smaller cities and towns in the US with better cap rates. These are simply the 100 most populous cities in the US. I used these because Zillow makes this data easily available. 

Personally, I don’t see GRMs dropping lower any time soon. Home prices continue to jump all over the US, while rents remain muted. Between low interest rates, fears over inflation, and a hunger for more space, Americans have snapped up properties in record numbers since the pandemic began. 

If you want to invest in real estate long-distance, consider buying turnkey properties through a platform like Roofstock. The majority of the investors there buy the properties sight-unseen, and feel comfortable doing so given the massive amount of third-party data provided with each listing. 

We will be updating this map (and the following data table) once every quarter, to keep you informed about the best cities for real estate investing. 

 

Table: GRM in the 100 Largest Cities in the US

Want the raw data? Here’s a data table of the top 100 largest cities in the US by population, using Zillow data as of March 31, 2021 (the most recent available as of April 2021): 

Size RankMetro AreaMedian Price as of 3/31/21Median Rent as of 3/31/21GRMYoY Price ChangeYoY Rent Change
1New York, NY$524,096$2,52317.318.90%-9.24%
2Los Angeles-Long Beach-Anaheim, CA$769,422$2,52025.449.48%-0.28%
3Chicago, IL$265,880$1,70113.038.19%-2.80%
4Dallas-Fort Worth, TX$283,123$1,57315.009.93%2.54%
5Philadelphia, PA$284,287$1,63114.5312.40%2.19%
6Houston, TX$237,566$1,45613.608.50%0.55%
7Washington, DC$490,277$2,03920.0410.43%-3.32%
8Miami-Fort Lauderdale, FL$330,883$1,96414.048.50%2.88%
9Atlanta, GA$275,143$1,64613.9311.64%6.33%
10Boston, MA$554,870$2,28720.2210.61%-6.12%
11San Francisco, CA$1,218,653$2,87935.275.43%-8.83%
12Detroit, MI$206,340$1,35112.7310.72%6.55%
13Riverside, CA$449,524$2,21916.8814.45%10.51%
14Phoenix, AZ$351,461$1,57518.6020.19%9.15%
15Seattle, WA$615,755$1,89927.0213.28%-4.48%
16Minneapolis-St Paul, MN$328,752$1,56117.559.68%0.71%
17San Diego, CA$715,058$2,38425.0014.73%4.47%
18St. Louis, MO$201,852$1,17114.3610.38%4.09%
19Tampa, FL$265,813$1,60913.7714.68%7.12%
20Baltimore, MD$328,179$1,70816.019.98%2.58%
21Denver, CO$506,159$1,74424.1911.26%0.63%
22Pittsburgh, PA$182,385$1,20012.6711.24%1.78%
23Portland, OR$473,852$1,66623.7011.60%1.71%
24Charlotte, NC$277,147$1,54914.9113.20%3.61%
25Sacramento, CA$498,193$1,93821.4212.89%7.55%
26San Antonio, TX$228,975$1,33014.358.68%2.31%
27Orlando, FL$280,496$1,63514.307.90%2.32%
28Cincinnati, OH$215,386$1,31713.6313.82%5.44%
29Cleveland, OH$180,849$1,20412.5212.60%4.79%
30Kansas City, MO$237,092$1,23016.0612.55%4.77%
31Las Vegas, NV$325,152$1,47918.328.93%7.56%
32Columbus, OH$240,524$1,32815.0911.67%5.99%
33Indianapolis, IN$209,258$1,33713.0412.96%7.13%
34San Jose, CA$1,338,212$2,89438.5311.08%-6.95%
35Austin, TX$422,984$1,51523.2717.65%-0.46%
36Virginia Beach, VA$270,876$1,42515.849.35%6.34%
37Nashville, TN$315,414$1,62516.1810.19%1.88%
38Providence, RI$371,083$1,61719.1214.03%8.31%
39Milwaukee, WI$228,687$1,19615.9313.31%2.84%
40Jacksonville, FL$261,390$1,41615.3810.69%6.23%
41Memphis, TN$178,764$1,41910.5012.54%9.32%
42Oklahoma City, OK$173,234$1,12912.798.12%3.96%
43Louisville-Jefferson County, KY$202,462$1,08415.569.85%4.84%
44Hartford, CT$269,788$1,45715.4312.07%5.66%
45Richmond, VA$276,517$1,35616.999.68%4.39%
46New Orleans, LA$229,056$1,28114.909.12%4.06%
47Buffalo, NY$198,388$1,15214.3513.02%5.21%
48Raleigh, NC$319,884$1,53317.3911.22%3.44%
49Birmingham, AL$194,338$1,17413.7910.61%4.54%
50Salt Lake City, UT$454,676$1,45925.9716.15%4.14%
51Rochester, NY$179,082$1,25511.8912.01%7.17%
52Grand Rapids, MI$254,192$1,29916.3111.31%4.93%
53Tucson, AZ$261,311$1,35916.0216.89%9.60%
54Urban Honolulu, HI$762,471$2,19828.916.47%0.64%
55Tulsa, OK$166,404$1,17511.809.74%5.57%
56Fresno, CA$309,672$1,64715.6713.26%8.07%
57Worcester, MA$352,612$1,51519.4014.89%5.87%
58Stamford, CT$479,020$2,24117.8114.33%6.41%
59Albuquerque, NM$247,354$1,27016.2314.39%7.90%
60Albany, NY$229,860$1,29814.7611.36%3.67%
61Omaha, NE$226,400$1,24315.189.78%4.81%
62New Haven, CT$276,213$1,52015.1416.11%5.56%
63Bakersfield, CA$267,976$1,37516.2413.23%8.70%
64Knoxville, TN$223,764$1,39513.3713.30%8.31%
65Greenville, SC$226,879$1,29114.649.61%4.45%
66Ventura, CA$680,962$2,84119.9710.79%5.77%
67Allentown, PA$245,439$1,51913.4614.20%8.89%
68El Paso, TX$153,599$1,15711.0611.79%6.73%
69Baton Rouge, LA$197,719$1,23413.353.51%3.44%
70Dayton, OH$157,449$1,06712.3013.68%6.06%
72Columbia, SC$178,202$1,21712.209.28%6.29%
73Greensboro, NC$180,376$1,30011.5612.77%7.44%
74Akron, OH$172,811$98314.6510.72%5.70%
75North Port-Sarasota-Bradenton, FL$311,929$1,94613.3611.06%5.76%
76Little Rock, AR$165,419$95814.397.52%5.97%
77Stockton, CA$448,453$2,20116.9815.91%8.80%
78Charleston, SC$302,983$1,57216.069.19%3.49%
79Syracuse, NY$165,076$1,16811.7811.96%6.47%
80Colorado Springs, CO$392,142$1,63120.0414.72%6.67%
81Winston-Salem, NC$183,491$1,33111.4913.25%6.48%
82Wichita, KS$159,921$85215.6410.98%3.65%
83Springfield, MA$267,918$1,49814.9012.66%4.83%
84Fort Myers, FL$266,205$1,71012.979.80%5.62%
85Boise City, ID$424,150$1,46024.2129.06%11.88%
86Toledo, OH$142,035$97112.1911.52%6.59%
87Madison, WI$316,086$1,38219.068.76%3.29%
88Lakeland, FL$215,972$1,50611.9510.11%6.28%
89Ogden, UT$395,777$1,39823.5917.88%5.99%
90Daytona Beach, FL$247,441$1,48913.859.85%6.36%
91Des Moines, IA$221,920$1,17915.697.68%2.52%
92Jackson, MS$155,907$1,29310.057.70%2.70%
93Youngstown, OH$116,194$75212.8817.16%6.97%
94Augusta, GA$175,381$1,17812.4111.81%7.97%
95Scranton, PA$138,265$97111.8713.60%5.20%
96Harrisburg, PA$212,524$1,20814.669.67%4.77%
97Melbourne, FL$255,905$1,55913.6810.83%6.20%
98Chattanooga, TN$202,342$1,29713.0013.93%5.36%
99Spokane, WA$340,233$1,34621.0616.57%9.52%
100Provo, UT$424,288$1,40825.1115.98%6.67%
101Durham, NC$304,411$1,45517.439.94%2.97%

(article continues below)

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More Maps for Gits & Shingles

If you couldn’t tell, I love interactive maps. 

Here are some useful and relevant maps for real estate investors looking for the perfect place to invest.

 

Top 100 Fastest Appreciating Cities in the US

Where are home prices rising the fastest? 

Most of these are either smaller cities or towns, or satellite towns near larger metropolitan areas. 

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Remember, past performance does not indicate future results, yada yada yada. But it does indicate faster demand growth in these cities than anywhere else in the country. 

 

Year-over-Year Real Estate Appreciation by County

Alternatively, if you prefer to look at appreciation on the county level — and not just in the fastest growing cities — here’s a nationwide county map:

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Note that in larger counties, one area in the county might be appreciating extremely fast, while another area might drag behind.

(article continues below)

What short-term fix-and-flip loan options are available nowadays?

How about long-term rental property loans?

We compare several buy-and-rehab lenders and several long-term landlord loans on LTV, interest rates, closing costs, income requirements and more.

Property Taxes by County

Property taxes aren’t your only ongoing expense as a real estate investor, but they can impact your bottom line. Especially in areas with other high taxes (like income taxes and sales taxes), and especially in states where more Americans are moving out than moving in. See our data analysis comparing total state tax burden with US migration patterns.

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Unemployment Rate by County

High unemployment drags down demand for housing. That means both slower rent growth and slower home price growth. 

Beware of investing in any city or county with extremely high unemployment. 

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Final Word

Gross rent multiplier doesn’t tell you the whole story about the best places to invest in real estate. No one data point can. 

But GRM does help you find cities with relatively higher rents and lower home prices. It can help you identify promising cities to start your hunt for ideal neighborhoods and stellar deals on rental properties. 

Check back frequently, as we’ll continue updating this map and data set!

 

Where are you currently investing in rental properties? How did you choose those cities?

 

 

More Real Estate Investing Reads:

About the Author

G. Brian Davis is a landlord, real estate investor, and co-founder of SparkRental. His mission: to help 5,000 people reach financial independence by replacing their 9-5 jobs with rental income. If you want to be one of them, join Brian, Deni, and guest Scott Hoefler for a free masterclass on how Scott ditched his day job in under five years.

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