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Looking to Buy an Investment Property? Here Are 15 States Where Your Dollar Will Stretch the Furthest

Andrew DePietro

This article originally appeared on GOBankingRates.com: Looking to Buy an Investment Property? Here Are 15 States Where Your Dollar Will Stretch the Furthest

Home prices have been on the rise across the United States thanks to low inventory. In some states, prices are reaching levels not seen since before the financial crisis. Though home prices have been increasing nationwide, the pace of growth has varied significantly from state to state.

In many states, home values have exceeded the growth in home prices, which is ideal for prospective buyers. Different states also have different costs of living, which can increase the purchasing power of your money if living costs are generally lower than the rest of the country.

GOBankingRates conducted a study to help determine where you can stretch your investment property dollars the furthest. The study’s analysis is based on the average home price across the three largest real estate markets in each state, home value growth from 2017 to 2018 and the relative value of $100 in each state — otherwise known as the local purchasing power of your money.

Find out which states are the best for investing in real estate.

15. Utah

  • Average price of three largest markets: $350,465
  • Average one-year home value change: 12.6%
  • Relative value of $100: $102.77

Utah’s three largest real estate markets — Salt Lake City, Ogden and Provo — combined have an average listing price of $350,465. Although that might be on the pricier side, Utah’s impressive growth in home values makes up for this. Those three markets boast an average increase in property values of 12.6 percent from 2017 to 2018, tied for the largest increase in the study. Utah has other things going for it, too — it’s also one of the best states to start a business.

14. Montana

  • Average price of three largest markets: $343,167
  • Average one-year home value change: 11.1%
  • Relative value of $100: $106.27

Similar to Utah, Montana’s three largest markets combine for an average price of $343,167, which is pricier than most of the 15 best states in the study. However, like Utah, Montana’s home value growth and better local purchasing power more than compensate for somewhat pricier property.

13. Maine

  • Average price of three largest markets: $230,983
  • Average one-year home value change: 10.7%
  • Relative value of $100: $101.63

Maine’s three largest real estate markets are Portland, Bangor and Augusta, whose median prices are $339,000, $159,000 and $194,950, respectively. This makes for an affordable average price of $230,983, which is cheaper than the current U.S. median home price of $275,000, according to Zillow. The added bonus is the robust growth in home values, which increased by just under 11 percent year-over-year.

The Good Life: Best and Worst States for the Middle Class

12. Nebraska

  • Average price of three largest markets: $221,467
  • Average one-year home value change: 7%
  • Relative value of $100: $110.50

Nebraska has much to offer for prospective investment property owners. Nebraska’s cost of living is cheaper than the U.S. overall, meaning your dollar goes further. Home values are growing while home prices are still affordable, even in a prospering city like Omaha. Lincoln, home of the University of Nebraska, is also a great place to retire.

11. Kentucky

  • Average price of three largest markets: $225,967
  • Average one-year home value change: 6%
  • Relative value of $100: $113.90

Kentucky has been on the rise lately, with cities like Louisville leading much of the growth. Property prices are affordable, with the price of a home across Kentucky’s three largest markets averaging out to $225,967, less than the national price of $275,000.

10. Georgia

  • Average price of three largest markets: $249,613
  • Average one-year home value change: 8.8%
  • Relative value of $100: $108.58

Georgia rounds out the top 10 states in our investment property study. Many southern states have been experiencing robust economic growth in recent years, and Georgia is among them.

Georgia’s prosperity helps boost home values, which rose 8.8 percent in one year. At the same time, potential investment property owners can still find affordable residences to buy and rent out, especially in a city like Atlanta, where rent prices increased from $1,180 in September 2015 to $1,725 in September 2018, according to Zillow.

Read More: Best and Worst States If You’re Unemployed — and Want a Job

9. Michigan

  • Average price of three largest markets: $205,417
  • Average one-year home value change: 8.5%
  • Relative value of $100: $107.18

Michigan suffered a lot when the American auto industry nosedived back in 2008-2009. Since then, there’s been a revival of sorts as the state has been forced to diversify its economy. Grand Rapids, for example, has always been a manufacturing city, but employment now is more evenly spread across manufacturing, healthcare and social assistance, retail and education services.

8. Ohio

  • Average price of three largest markets: $207,330
  • Average one-year home value change: 7.2%
  • Relative value of $100: $111.98

Ohio has experienced a similar economic trajectory to Michigan, as deindustrialization led to a decline of its major cities and industries. But like Michigan, Ohio has proven resilient and capable of diversifying its economy.

Cincinnati, Cleveland and Columbus are the state’s principal real estate markets, offering affordable prices and robust home value growth. Plus, Ohio’s cheaper-than-average cost of living means your money goes further.

Find out the 15 places in America where homes are still affordable.

7. Arkansas

  • Average price of three largest markets: $195,267
  • Average one-year home value change: 5.7%
  • Relative value of $100: $115.07

Arkansas, like many other southern states, has been on the rise economically. According to the latest Census Bureau data, Arkansas’ population has grown to exceed 3 million people. Its GDP grew by 8.3 percent over the last three years, from the second quarter of 2015 to 2018, according to the Bureau of Economic Analysis.

Education and healthcare services are key drivers of the economy in cities like Little Rock and Fayetteville, the latter being home to the University of Arkansas. College towns are conducive to owning investment property since the university’s student population are renters not buyers.

6. Tennessee

  • Average price of three largest markets: $251,133
  • Average one-year home value change: 9.1%
  • Relative value of $100: $110.86

Tennessee’s three biggest real estate markets — Nashville, Memphis and Knoxville — have an average home price of $251,133, with home values rising by 9.1 percent from 2017 to 2018, one of the largest increases in the study. Cost of living is relatively cheap in Tennessee, which helps stretch your dollar further than elsewhere.

5. Missouri

  • Average price of three largest markets: $202,900
  • Average one-year home value change: 8.1%
  • Relative value of $100: $111.73

Missouri has the fourth-lowest cost of living in the U.S., according to the Missouri Economic Research and Information Center. This helps stretch your dollar further in Missouri than in other states. Meanwhile, Missouri’s three largest real estate markets — St. Louis, Kansas City and Springfield — combine for an average home price of $202,900 and home value growth of 8.1 percent.

Find Out: What Homes Will Be Worth in Your State One Year From Now

4. Alabama

  • Average price of three largest markets: $209,600
  • Average one-year home value change: 7%
  • Relative value of $100: $115.47

Like Missouri, Alabama is also among the cheapest states in terms of cost of living. But local purchasing power is even better than Missouri, with the relative value of $100 equivalent to $115.47 in Alabama. The state is also home to Gulf Shores, which a recent study identified as one of the best places to buy a vacation home in the U.S.

3. Idaho

  • Average price of three largest markets: $303,638
  • Average one-year home value change: 12.6%
  • Relative value of $100: $107.53

Idaho takes the No. 3 spot in our study, boasting affordable prices and vigorous growth in home values year-over-year. Home values in Idaho’s three principal real estate markets — Boise, Coeur d’Alene and Idaho Falls — increased 13.5 percent, 15.6 percent and 8.6 percent, respectively. Fortunately for property owners, rental rates are on the rise, especially in the Boise metro area where rent prices increased from $1,150 in September 2016 to $1,400 in September 2018.

2. Mississippi

  • Average price of three largest markets: $191,300
  • Average one-year home value change: 7.4%
  • Relative value of $100: $115.74

Mississippi takes the No. 2 spot in the study. The state has the lowest cost of living in the country. It also offers the most purchasing power for your dollar out of all 50 states.

Mississippi’s three biggest real estate markets are Jackson, Gulfport and Hattiesburg, and their combined average home price is $191,633, which is much more affordable than the national median of $275,000. Meanwhile, Mississippi’s median rent price is $1,152, according to Zillow, which is comparatively high and helps property owners regain their initial buy-in investment.

Related: Here’s What an Average Apartment Costs in 50 US Cities

1. Indiana

  • Average price of three largest markets: $178,663
  • Average one-year home value change: 9.3%
  • Relative value of $100: $110.74

Indiana is the state where your investment property dollars will stretch the furthest, offering the cheapest average property prices in the study as well as good local purchasing power and home value appreciation. Indiana ranks among the top 10 states with the cheapest cost of living.

Click through to find out if your state is richer than these countries.

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Methodology: GOBankingRates determined the 15 states where your investment property money will stretch furthest based on the following factors: 1) the average list price of home across each state’s three largest real estate markets, sourced from Zillow; 2) the one-year increase in median home values for each state’s three largest real estate markets, sourced from Zillow; 3) local purchasing power parity based on value of $100 in each state, sourced from Tax Foundation.