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, including one in our backyard.
Among the rankings for top 20 ZIP codes for real estate investors seeking five-year returns, Flower Mound's 75022 comes in at No. 14. Clear Lake City's 77059, outside of Houston, comes in at No. 15. Both cities have an annualized rate of return of 5.6 percent, while Flower Mound's school rating is 84 and Clear Lake City's is 76.
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 was required to rank 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).