Buying Investment PropertyTop Real Estate Markets with High Cap Rate Properties for Sale by Eman Hamed June 22, 2018June 20, 2018 by Eman Hamed June 22, 2018June 20, 2018Looking for high cap rate properties for sale? Here’s where and how to find them in the US housing market.Property investors make their investment decisions based on different metrics and criteria. One real estate investor might be looking to buy an income property with high cash on cash return, while another might be more interested in finding high cap rate properties for sale. Either way, every real estate investor aims to find investment properties with the highest expected return on investment. In this article, we break down what is cap rate, why it is an important metric in real estate, in addition to where and how to find high cap rate properties for sale in the US housing market. Let’s dive right in!What Is Cap Rate in Real Estate? The cap rate is one of the most widely used real estate metrics to measure the return on investment or the profitability of an income property. What makes the cap rate a popular metric among property investors is that it measures the rate of return regardless of the investment property financing method – whether you’re making the purchase using all cash or a mortgage loan.There is a pretty simple formula which any real estate investor can use to calculate the cap rate of an income property, which is:Cap Rate = NOI/Property Price (NOI = Monthly Rental Income x 12 – Annual Operating Costs). Savvy property investors use this formula to estimate the cap rate of investment properties before making the purchase to ensure finding high cap rate properties for sale.Why is it smart to find high cap rate properties for sale? Well, in real estate investing, the cap rate corresponds to the level of risk associated with the investment property. Thus, a low cap rate corresponds to a lower level of associated risks while a high cap rate corresponds to a higher level of associated risks. But why would a real estate investor buy an income property with high risks? Simply because higher risks yield higher profitability while, on the other hand, lower risks will yield lower profitability.Therefore, high cap rate properties for sale are desirable investments for savvy property investors looking for the highest profits and a good return on investment.Related: Cap Rate in Real Estate Investing: Everything You Need to KnowWhat Is a Good Cap Rate?Some property investors believe that a good cap rate should be approximately 10%. However, cap rates differ from one housing market to another. Thus, what might be a bad cap rate in a certain market could be a good one in a different market. This depends on a number of factors including the type of investment property, income property price, monthly rental income, and annual operating expenses. All these factors alter from one location to another, making high cap rate properties for sale a subjective topic among property investors.One real estate investor might consider 1% a good cap rate while another will not buy an income property if it doesn’t promise him a cap rate of 12%. Nonetheless, cap rate remains an important metric in real estate investing that should be estimated before making any investment decisions. Just make sure to study the housing market in which you’re looking for high cap rate properties for sale, and don’t forget to conduct an investment property analysis as well.Related: How to Do Investment Property AnalysisConsidering today’s competitive real estate market, we created a list of cities in the US housing market with a cap rate in the rage of 4 – 5%. We believe this number is a good average cap rate which will yield a good return on investment. To find these real estate markets, we used Mashvisor’s investment property calculator to estimate the cap rates on investment properties (both traditional and Airbnb) across the US housing market. So, without further ado, here’s a list of where to find high cap rate properties for sale with regards to traditional investments, followed by Airbnb investments.To learn more about our product and how we help income property investors make smart investment decisions, click here.Top 5 Cities with Traditional High Cap Rate Properties for Sale High Cap Rate Properties for Sale in Eight Mile, ALMedian Property Price: $116,144Traditional Rental Income: $1,134Occupancy Rate: N/ATraditional Cap Rate: 5.78%High Cap Rate Properties for Sale in Camden, NJMedian Property Price: $83,858Traditional Rental Income: $998Occupancy Rate: 35.06%Traditional Cap Rate: 4.74%High Cap Rate Properties for Sale in Wareham, MAMedian Property Price: $331,064Traditional Rental Income: $2,656Occupancy Rate: N/ATraditional Cap Rate: 4.47%High Cap Rate Properties for Sale in Toledo, OHMedian Property Price: $86,480Traditional Rental Income: $1,012Occupancy Rate: N/ATraditional Cap Rate: 4.1%High Cap Rate Properties for Sale in Fairbanks, AKMedian Property Price: $256,561Traditional Rental Income: $1,814Occupancy Rate: 2%Traditional Cap Rate: 4.09%Top 5 Cities with Airbnb High Cap Rate Properties for Sale High Cap Rate Properties for Sale in Sonoma, CAMedian Property Price: $1,355,975Airbnb Rental Income: $7,257Occupancy Rate: 86%Airbnb Cap Rate: 5.27%High Cap Rate Properties for Sale in Cathedral City, CAMedian Property Price: $314,840Airbnb Rental Income: $3,050Occupancy Rate: 19%Airbnb Cap Rate: 5.26%High Cap Rate Properties for Sale in Key West, FLMedian Property Price: $948,095Airbnb Rental Income: $7,659Occupancy Rate: 78%Airbnb Cap Rate: 5.22%High Cap Rate Properties for Sale in Ypsilanti, MIMedian Property Price: $212,426Airbnb Rental Income: $1,461Occupancy Rate: 24%Airbnb Cap Rate: 4.6%High Cap Rate Properties for Sale in Lake Worth, FLMedian Property Price: $305,070Airbnb Rental Income: $2,243Occupancy Rate: 36%Airbnb Cap Rate: 4.54%To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.How to Find the Best Investment Property with High Cap RateWe understand the difficulties real estate investors face while searching for the right income property, and we offer the solution! Mashvisor helps property investors find the best investment properties in any city or neighborhood based on different criteria which you can set to match your preference or goals. To find high cap rate properties for sale in the US housing market, make use of our:Investment Property Finder: A heavily customizable search tool that allows you to search for rental properties using different filters, such as finding rental properties in a certain neighborhood with a certain cap rate. This makes it easier to compare different investment properties in the same location and determine which one has the highest cap rate.Heat Map Function: The heat map function for the property finder tool allows you to find investment properties much faster using visual cues. For example, you can set the heat map to indicate the areas with the highest cap rate, and it will highlight which areas are hot or cold for this feature. This makes it easier to compare different neighborhoods and see which one has more profitability for real estate investing.Investment Property Calculator: A versatile tool that allows you to calculate the different values related to an income property, including the cap rate, cash on cash return, cash flow, and occupancy rate (for both traditional and Airbnb investment). This will help with your investment property analysis.Related: Mashvisor: A Real Estate Investing Tool for All Your Investment NeedsSign up with Mashvisor to find the best investment properties in any city or neighborhood across the US housing market in 15 minutes! To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here. Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL Camden NJCathedral City CAEight Mile ALFairbanks AKKey West FLLake Worth FLSonoma CAToledo OHWareham MAYpsilanti MI 0FacebookTwitterGoogle +PinterestLinkedin Eman HamedEman is a Content Writer at Mashvisor. With a focus on market reports, she enjoys researching the state of the real estate market in different cities across the US. Eman also writes about trends, forecasts, and tips for beginner investors to gain the confidence and knowledge they need to make wise decisions. 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