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The Hidden Wealth in America’s Affordable Housing Markets

While investors chase luxury properties in Miami and Los Angeles, I’ve built a portfolio of 120 affordable homes that consistently outperform them.

House price appreciation follows a simple rule: homes only increase in value when people are buying – and can therefore afford to buy them. If people can’t afford it, houses don’t sell, inventory piles up, and eventually sellers start to drop prices as the market rebalances.

In general, there are four fundamental factors that drive housing affordability…

1. House prices
2. Income
3. Mortgage rates
4. Personal debt

The properties in my portfolio that have performed best share one critical characteristic: they’re all located in affordable housing markets where these metrics support sustainable buyer demand. I think these are the best US property markets for investors!

Let me show you what this looks like in practice…

Related: US Housing Affordability is the Gold Standard Metric for Property Investors

The 38% ROI Case Study

I recently sourced an off-market turnkey investment property in Kansas City for an overseas client.

The purchase price was $175,000 – well below the national average – and well within reach of local buyers earning the median household income.

This property generates approximately $20,000 in annual rental income.

Using a 75% loan-to-value mortgage, my client invested $50,000 in cash to close. With conservative projections of 5% annual appreciation and 3% rent growth, this property will return about 38% ROI annually over a ten-year period across equity and cashflow.

That seems like a lot. But homes in this neighborhood are appreciating at more than 5% p.a. because there is a high demand for good quality housing, and crucially, homes are affordable for local buyers.

Meanwhile, luxury coastal markets in Florida and California are facing a very different reality right now. Homes there have become chronically unaffordable for most residents, and prices have started to drop accordingly.

Related: Top US Housing Markets for First Time Investors in 2025

What Makes Affordable Markets Sustainable

When evaluating any market, I look for stability first. A stable (or growing) population, steady job market, and a healthy regional economy form the foundation.

Most importantly, I look at the relationship between median household income and median house price. In Cleveland, for example, renters spend about 27% of their income on housing. In California, that figure jumps to 50%.

This affordability gap explains why Cleveland has seen an average annual appreciation rate of 7.03% over the past decade, totalling 93.4% growth according to the St Louis Federal Reserve Bank. Today the Greater Cleveland market still offers median sales prices around $213,200 (NAR May 2025) with an impressive 10.2% gross rental yield.

When mortgage rates rise, expensive markets suffer disproportionately while affordable markets are more resilient and remain relatively stable. This creates a significant advantage during market cycles or short term shocks.

Related: Top 10 US Counties for Single Family Home Investors

The Foreign Investor Advantage

Financing for non-U.S. residents has never been more accessible. With a good cash-flowing property, foreign investors can readily secure 75% LTV DSCR (Debt Service Coverage Ratio) foreign national mortgage loans that focus on the property’s income potential rather than personal credit history.

That said, the remote investing process requires thorough due diligence. Perhaps even more so than for local investors.

I commission multiple independent inspections: general, roof, sewer scope, plumbing, wiring, HVAC, and furnace. In my experience, these are the things that will cost you big time to replace, so verifying their condition and useful life before you buy is essential.

But it’s not just the property. Building a reliable team on the ground is half the battle in real estate. After ten years in this business, I’ve built networks of high-quality operators in each market where I invest. Successful property investing has three main ingredients: Money, people and time. If you don’t have good people, you’re going to have problems!

Related: The Top 10 Most and Least Affordable Housing Markets in the US in 2025

Cheap vs. Affordable: A Critical Distinction

One of the biggest mistakes out-of-state and foreign investors make is confusing cheap property with a good deal. A suspiciously high rent-to-price ratio should raise red flags, not excitement.

Extremely cheap properties are often in poor condition underneath the new paint and LVP flooring. And they also come with problematic tenants. These kind of houses very quickly become money pits rather than wealth generators.

A big part of my overall strategy is focussing on high quality renovations. While the fundamentals like a new roof, wiring and plumbing are essential, aesthetic touches like new kitchens, updated bathrooms, and modern interior remodels attract a better class of tenants who tend to stay longer.

Less vacancies and turnovers mean more consistent cashflow and less capital outlay and management costs. It all adds up to create a more stable, reliable – and ultimately more profitable – asset.

These markets in and of themselves are also pretty good for vacancy rates. Recent data shows Midwest markets experiencing occupancy rates reaching 95.4% and 70.4% of renters renewing their leases, according to RentCafe’s 2025 report.

Related: Growing Housing Affordability Gap Creating Golden Opportunity for Investors

The Long-Term Perspective

We always take a long-term view with our USA property investments. Our financial models incorporate a conservative 5% annual appreciation projection.

In reality, many properties appreciate faster, but this moderate expectation allows us to ride out market cycles with some degree of confidence. Patient investors are rarely disappointed with this approach.

Cleveland exemplifies our ideal market. Houses rank among the most affordable in the U.S., with a stable job market and a population that has stabilized and begun growing in recent years.

Research confirms this stability advantage. Cleveland consistently ranks among the most undervalued markets to both purchase and rent, with a mortgage payment-to-income ratio significantly below the national average according to U.S. News & World Report.

Related: Top 5 Riskiest US Property Markets in 2025

Your Next Steps as a Foreign Investor

If you’re considering U.S. property investment from abroad, focus on building a professional team first. make sure to get multiple home inspections, obtain an independent appraisal, and work with an agent or buyer representative who’s experienced with international investors.

Partner with mortgage lenders who understand the unique challenges foreign buyers face during underwriting and closing.

Most importantly, look beyond the fame and glamour of luxury coastal markets. The real wealth-building opportunities are in affordable cities where the fundamental metrics support sustainable growth.

The numbers don’t lie. Fairly-prices affordable properties in the right markets consistently deliver superior returns with lower risk. That’s why they form the backbone of my property portfolio, and why they should be on every foreign investor’s radar.

FREE DOWNLOAD: 10 Costly Mistakes Foreigners Make Buying U.S. Real Estate