The Best Cities for Real Estate Investment ROI in 2025
Houma, Louisiana, has emerged as the US city with the highest return on investment (ROI) for property investors. Dothan, Alabama, and Johnstown, Pennsylvania, follow closely in second and third place, respectively. Notably, both Illinois and Louisiana each have two cities featured in the top ten, highlighting regional strength in the rental property market.
Real estate experts at Agent Advice have conducted an in-depth analysis of home values and typical rental prices across the United States to identify the locations where investors can currently expect the most favorable ROI. This study utilizes the Zillow Housing Value Index (ZHVI), which indicates the typical housing value in a specific geography, and the Zillow Observed Rent Index (ZORI), which measures asking rent prices. By comparing these metrics, the analysis establishes areas with the highest rental yields relative to property costs.
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Houma, Louisiana: The Top Performer
Nestled in Louisiana’s Bayou country, just 55 miles from New Orleans, Houma stands out as the US city offering the highest projected ROI. The housing value index places the typical property value at approximately $149,871, with the observed rent index showing an average monthly rent of $1,441.
This rental income equates to 0.96% of the property’s value, translating to a remarkably short payback period of just 20.8 months for a typical investment property down payment (20%). This is nearly half the national average payback period of 39.6 months, making Houma an exceptionally attractive market for investors seeking quick returns.
Dothan, Alabama: A Strong Contender
Located in southern Alabama, Dothan ranks second on the list with a typical property value of $166,459. The average monthly rental price stands at $1,553, representing 0.93% of the property value. Consequently, the potential payback period for a 20% down payment on an investment property in Dothan is approximately 21.43 months, solidifying its position as a high-ROI market.
Johnstown, Pennsylvania: Affordable Excellence
As the largest city in Cambria County and situated just 57 miles east of Pittsburgh, Johnstown offers the third-highest ROI in the nation. The city boasts a low housing value index of just $83,114, with an observed rent index of $766. This indicates that rent constitutes 0.92% of the property value, resulting in a potential payback period of approximately 21.68 months for a 20% down payment.
Beckley, West Virginia: Steady Growth
Beckley, located in Raleigh County, West Virginia, features a typical property value of $116,252. The observed rent index of $1,000 equates to 0.86% of the property value, yielding a typical investment down payment payback period of 23.25 months. This consistent performance places Beckley fourth on our list.
Decatur, Illinois: Midwestern Value
Decatur, the largest city in Macon County and situated along the eponymous lake in Central Illinois, secures the fifth position. The typical property value here is just $94,537, with an average monthly rent of $808, which represents 0.86% of the property value. This results in a potential down payment payback period of approximately 23.39 months, demonstrating strong value in the Midwest.
Shreveport, Louisiana: Consistent Returns
The third most populous city in Louisiana, Shreveport, has a housing value index of $152,712. With an observed rent index of $1,256, rent equates to 0.82% of the property value, leading to a payback period of approximately 24.32 months for a standard down payment. This consistent performance underscores Louisiana’s strength in the rental market.
Peoria, Illinois: Another Midwestern Gem
Located a few hours from Chicago, Peoria presents a typical property value of $135,229. The observed rent index also represents 0.82% of the property value, with an average rent of $1,110. This results in a potential down payment payback period of approximately 24.35 months, further highlighting the value available in Illinois.
Sumter, South Carolina: Eastern Growth Potential
Situated just 40 miles east of the state capital, Columbia, Sumter, South Carolina, ranks eighth for ROI in the US. The typical property value is approximately $163,176, with an observed rent index of $1,337, equating to 0.82% of the property value. The potential payback period for a down payment here is approximately 24.4 months.
Texarkana, Texas: Border City Opportunity
Straddling the border of Texas and Arkansas, Texarkana makes the penultimate top ten spot for property ROI. The typical property value stands at $148,518, while the observed rent index of $1,212 represents 0.82% of this value, resulting in a potential down payment payback period of approximately 24.5 months.
Jackson, Tennessee: Final Top Ten Entry
Jackson, Tennessee, closes out the ROI top ten list. Located 70 miles east of Memphis, the city has a typical housing value of $170,667. The observed rent index in Jackson is $1,387, or 0.81% of the property price, making for a potential down payment payback period of approximately 24.6 months.
| Rank | City | Ave. Home Value ($) | Observed Rent Value ($) | Rent as % of Value | Payback Period on 20% Down Payment (months) |
|——|——|———————|————————-|——————-|———————————————|
| National Average | | 319,325.99 | 1,562.89 | 0.53 | 39.64 |
| 1 | Houma, LA | 149,871.66 | 1,441.39 | 0.96 | 20.80 |
| 2 | Dothan, AL | 166,459.92 | 1,553.33 | 0.93 | 21.43 |
| 3 | Johnstown, PA | 83,114.14 | 766.67 | 0.92 | 21.68 |
| 4 | Beckley, WV | 116,252.50 | 1,000.00 | 0.86 | 23.25 |
| 5 | Decatur, IL | 94,537.33 | 808.33 | 0.86 | 23.39 |
| 6 | Shreveport, LA | 152,712.70 | 1,256.08 | 0.82 | 24.32 |
| 7 | Peoria, IL | 135,229.02 | 1,110.83 | 0.82 | 24.35 |
| 8 | Sumter, SC | 163,176.76 | 1,337.50 | 0.82 | 24.40 |
| 9 | Texarkana, TX | 148,518.34 | 1,212.25 | 0.82 | 24.50 |
| 10 | Jackson, TN | 170,667.30 | 1,387.76 | 0.81 | 24.60 |
Cities with the Lowest Property Investment ROI
While the top ten cities offer promising opportunities, some markets present significant challenges for property investors. With generally higher property values drastically increasing payback periods, the following ten cities have emerged as having the least favorable ROI.
San Jose, California: Silicon Valley Sticker Shock
San Jose, the heart of Silicon Valley, boasts a substantial typical property value of $1,428,238. Although observed rent of $3,289 may seem high in absolute terms, it equates to only 0.23% of the home value in this market. Consequently, a 20% down payment on a property here would take as long as 87.46 months, or over seven years, to recoup through rental income.
Missoula, Montana: Natural Beauty, High Cost
The city of Missoula in western Montana sees property values averaging $519,169, with rental rates of $1,353. With rent equating to just 0.26% of property value, the potential payback period comes in at 76.71 months, nearly six and a half years. This highlights the trade-off between Montana
