Online real estate investment management firm, HomeUnion, has put together a list of the top ZIP codes in 20 metros that maximize real estate returns while minimizing risk over a five-year period of time — and two are in Texas.
Among the rankings for top 20 ZIP codes for real estate investors seeking five-year returns, Clear Lake City (77059) in southeast Harris County is No. 15 and Flower Mound (75022), located northwest of Dallas and northeast of Fort Worth, comes in at No. 14. Both cities have an annualized rate of return of 5.6 percent, while Clear Lake City has a school rating of 76 and Flower Mound's school rating is 84.
To rank the neighborhoods, HomeUnion analyzed the attractiveness of a neighborhood for investing in single-family rentals (SFRs) over five years, as well as school quality.
In order to qualify, each ZIP code must have schools ranked in the 70th percentile for school quality by Maponics, a company that produces geographic boundary data.
“Typically, SFRs in areas with good schools have been attractive to long-term investors, though those areas have been more challenging to locate for remote investors in today’s heated housing market,” says Steve Hovland, director of research for HomeUnion.
Alternatively, areas with good schools are easier to attract renters during economic expansions and recessions. Any investor looking for long-term real estate investments should consider how the asset will perform during each stage of the economic cycle to mitigate risk.
Hamptons at Boca Raton, Florida (33434), came in at No. 1, followed by Gladwyne, Pennsylvania (19035), and West Bloomfield Township, Michigan (48322).
Last on the list were Edmond, Oklahoma (73003), North Hollywood, California (91602), and North Indianapolis (46280).