Finding places where rents pay best
For a rental property, what matters isn’t how expensive homes are, but how much rent they bring in for what they cost. This tool ranks ZIP codes by gross rental yield, so you can start an investment search where the numbers are most likely to work.
The measures
- Gross yield is a year’s rent divided by the home’s value. A $1,500 monthly rent on a $200,000 home is a 9% gross yield; the same rent on a $400,000 home is 4.5%.
- Price-to-rent is the home value divided by a year’s rent. Under about 15 usually favors buying to rent out; over 20 usually favors renting.
- Estimated DSCR (debt service coverage ratio) is the monthly rent divided by the full monthly payment on a DSCR loan with 25% down. Lenders that qualify rentals on rent instead of your income usually want 1.0 or more, and give their best pricing at 1.25.
Why these are a starting point
The figures come from the Census Bureau, which surveys what all renters pay, including long-time tenants whose rents may be below today’s asking rents, and what owners think their homes are worth. That makes the yields good for comparing places, not for pricing a specific property. Gross yield also ignores costs like repairs, vacancy, management and insurance, which typically take 35% to 50% of rent.
When a ZIP code looks promising, check current listings and rents for the kind of property you want, then run the actual numbers through the DSCR calculator. Look at the market page too: places with very high yields can have slower appreciation, older housing or higher vacancy.
Questions buyers ask
What is a good gross rental yield?
Many investors look for 8% or more gross, which often works out to 4% to 6% after expenses. In high-cost areas, yields of 4% or less are common.
Does this include expenses?
No. Gross yield is rent divided by price. Taxes, insurance, repairs, vacancy and management typically take 35% to 50% of rent, so check the DSCR and run the full numbers for any property.
Why do the rents look low?
Census rents include tenants who have been in place for years and often pay less than today’s asking rents. New leases in the same area are usually higher.
Can I search near a specific city?
Yes. Enter a ZIP code or “City, ST” and a distance, and add a highest home value to match your budget. Results are the 25 ZIP codes with the highest gross yield in that area.