Recent data has shown that Huntsville might trail the rest of the state when it comes to investing in rental properties. Real estate experts at Agent Advice analyzed home value and typical rent prices across the country to establish where investors can currently expect the highest return on their investment. The data was collected using tools from the popular housing site, Zillow.com.

The Zillow Housing Value Index (ZHVI) indicates the typical housing value in a given geography, and Zillow Observed Rent Index (ZORI) measures asking rent prices. The study uses these measures to identify locations with the highest rental values, compared proportionally to the cost of a property.

Using this data, the study shows how quickly investors can reasonably expect to have a return on rental property investments. A representative from Agent Advice compiled the data for some of Alabama’s largest cities and supplied it to HBJ for this story. The data can be seen on the table below. Screen Shot 2023 06 01 at 20.28.26

Dothan, located in southern Alabama, showed the most promise among Alabama cities in this study and even ranked second nationally with just a 21.5 month payback period. Dothan has a typical property value of $166,459, this is a mere 52% of the national average property value.

An average asking rent price of $1,553 is equivalent to 0.93% of typical property value, a 75% increase on the national average proportion of 0.53%. This makes for a potential down payment payback period for a typical investment property (20% down payment) slightly longer than 21 months, 45% shorter than the national average period.

With a much higher Typical Property Value, Huntsville’s payback period came in at a little over 38 months, compared to the state average of 32 months. Could that change in the future? Rent is up in Huntsville 4.74% over a year. That’s actually a moderate increase compared to some. Rent jumped 13.68% in Florence, the highest jump in the state. Rent in Decatur increased 13.08%. Mobile saw an 8.54% increase. Birmingham saw rent jump 5.02%. Nationally, rent increased 6.9%.

For more information regarding housing data locally and nationally, the data – along with other reports- is available at here.