Pawtucket is home to the best residential real estate investment market in Rhode Island.
The 02861 zip code in Pawtucket presents the greatest opportunity for the best real estate investments among the 212 individual real estate markets in Rhode Island we evaluated. We looked at property values, population trends, and six other metrics for each market. We used that data to calculate each market's InvestScore.
5 best places to invest in Rhode Island
| Rank | City | InvestScore | Affordability | Property value appreciation |
|---|---|---|---|---|
| 1 | Pawtucket | 100 | 4.5 | 59.37% |
| 2 | Providence | 96.8 | 5.4 | 67.78% |
| 3 | Cranston | 95.1 | 4.2 | 56.84% |
| 4 | Warwick | 93.2 | 4.7 | 57.25% |
| 5 | West Warwick | 91.8 | 5.0 | 62.58% |
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1. Pawtucket
We've identified the 02861 zip code in Pawtucket as Rhode Island's best real estate investment market. Here's why.
🔎 Key data about Pawtucket
| Data point | Value | Rank in state (of 212 markets) |
|---|---|---|
| Zip code | 02861 | N/A |
| InvestScore | 100 | Highest |
| Typical property value | $357,321[1] | 6th lowest |
| Five-year appreciation | 59.37%[2] | 22nd highest |
| Household income | $78,977[3] | 39th highest |
| Affordability ratio | 4.5 | 9th most affordable |
| Five-year population growth | 9.4%[4] | 6th highest |
| Unemployment rate | 5.4%[5] | 23rd lowest |
| Property taxes | $4,007[6] | 8th lowest |
| Educational attainment | 18.7%[7] | 51st highest |
Pawtucket (zip code 02861) is the best residential real estate investment market in Rhode Island. It has the 22nd highest property value appreciation among markets we evaluated, with a 59.37% appreciation of the typical property over the last five years.
Pawtucket is the 9th most affordable market among the 212 Rhode Island markets we evaluated, with an affordability ratio of 4.5.
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2. Providence
The 02908 zip code in Providence is the runner-up spot for the best real estate investments in Rhode Island.
🔎 Key data about Providence
| Data point | Value | Rank in state (of 212 markets) |
|---|---|---|
| Zip code | 02908 | N/A |
| InvestScore | 96.8 | 2nd highest |
| Typical property value | $365,898[8] | 10th lowest |
| Five-year appreciation | 67.78%[9] | 4th highest |
| Household income | $68,268[10] | 43rd highest |
| Affordability ratio | 5.4 | 29th most affordable |
| Five-year population growth | 4.8%[11] | 21st highest |
| Unemployment rate | 5.4%[12] | 23rd lowest |
| Property taxes | $3,863[13] | 5th lowest |
| Educational attainment | 30.6%[14] | 38th highest |
The 02908 zip code in Providence features a typical property value of $365,898, the 10th lowest in the state.
Property values have appreciated 67.78% over the past five years, the 4th highest increase among evaluated markets in the state. Providence homes have an affordability ratio of 5.4, the 29th most affordable in the state.
3. Cranston
The 02910 zip code in Cranston comes in at No. 3 in our ranking of the best residential real estate investment markets in Rhode Island.
🔎 Key data about Cranston
| Data point | Value | Rank in state (of 212 markets) |
|---|---|---|
| Zip code | 02910 | N/A |
| InvestScore | 95.1 | 3rd highest |
| Typical property value | $362,241[15] | 9th lowest |
| Five-year appreciation | 56.84%[16] | 28th highest |
| Household income | $86,709[17] | 31st highest |
| Affordability ratio | 4.2 | 4th most affordable |
| Five-year population growth | 9.2%[18] | 7th highest |
| Unemployment rate | 6.6%[19] | 35th lowest |
| Property taxes | $4,425[20] | 15th lowest |
| Educational attainment | 27.9%[21] | 41st highest |
With a typical property value of $362,241, Cranston's 02910 zip code features the 9th lowest property values in the state.
Cranston homes have an affordability ratio of 4.2, the 4th most affordable among the markets we evaluated.
4. Warwick
The 02886 zip code in Warwick ranks No. 4 among Rhode Island's residential real estate investment markets.
🔎 Key data about Warwick
| Data point | Value | Rank in state (of 212 markets) |
|---|---|---|
| Zip code | 02886 | N/A |
| InvestScore | 93.2 | 4th highest |
| Typical property value | $385,074[22] | 15th lowest |
| Five-year appreciation | 57.25%[23] | 26th highest |
| Household income | $81,788[24] | 26th highest |
| Affordability ratio | 4.7 | 16th most affordable |
| Five-year population growth | 6.4%[25] | 14th highest |
| Unemployment rate | 3.2%[26] | 7th lowest |
| Property taxes | $4,596[27] | 20th lowest |
| Educational attainment | 34.8%[28] | 29th highest |
Property values in Warwick's 02886 zip code have seen the 26th highest increase among evaluated markets in the state, with an appreciation of 57.25% over the past five years.
Warwick's affordability ratio of 4.7 makes it the 16th most affordable among the 212 markets we evaluated.
5. West Warwick
The 02893 zip code in West Warwick rounds out our top five residential real estate investment markets in Rhode Island.
🔎 Key data about West Warwick
| Data point | Value | Rank in state (of 212 markets) |
|---|---|---|
| Zip code | 02893 | N/A |
| InvestScore | 91.8 | 5th highest |
| Typical property value | $357,536[29] | 7th lowest |
| Five-year appreciation | 62.58%[30] | 12th highest |
| Household income | $71,851[31] | 12th highest |
| Affordability ratio | 5.0 | 24th most affordable |
| Five-year population growth | 5.6%[32] | 18th highest |
| Unemployment rate | 4.4%[33] | 17th lowest |
| Property taxes | $4,861[34] | 28th lowest |
| Educational attainment | 25.2%[35] | 45th highest |
Property values in West Warwick's 02893 zip code rose 62.58% over the last five years, ranking the city 12th highest among evaluated markets in Rhode Island.
West Warwick homes have an affordability ratio of 5.0, the 24th most affordable among the markets we evaluated.
Investing in residential real estate can be one of the best passive real estate investments in Rhode Island.
Residential real estate offers accessible passive income and the potential to compound your original investment.
Renting out residential units is the top way to invest in real estate. House hacking also offers a great opportunity for passive real estate investment income.
How we rank residential real estate markets in Rhode Island
To determine the best real estate investments in Rhode Island we evaluated 212 markets on eight metrics, and then assigned an InvestScore based on their weighted and combined rankings. Each market corresponds to a specific zip code in Rhode Island.
What is InvestScore?
InvestScore is a score on a scale of 0 (worst in state) to 100 (best in state) that estimates the residential real estate investment potential of a given market. It takes into account a suite of key data points for each city.
- Typical property value: This measures the typical home value in this zip code, according to the Zillow Home Value Index. It reflects the typical value for homes in the 35th to 65th percentile range, including all homes, with the numbers smoothed and seasonally adjusted. We prefer lower property values, which indicate both more room for growth and a greater ease of purchase. We assign a weight of 20% to typical property values.
- Property value appreciation: This measures how much property values have increased in the area over the past five years, according to the Zillow Home Value Index. We prefer a higher appreciation, as it indicates better returns on housing. However, past performance isn't indicative of future results. We assign a weight of 20% to property value appreciation.
- Median household income: This is the inflation-adjusted median household income in the zip code, according to U.S. Census American Community Survey data. We prefer a higher household income, as it indicates local residents have more income to spend on housing. We assign a weight of 10% to median household income.
- Affordability ratio: This is the ratio of the typical home value to the median household income in the area. A lower ratio is better because it means more households can afford a home, which indicates higher demand. We assign a weight of 15% to the affordability ratio.
- Population growth: This is how much the area's population has grown over the past five years, according to U.S. Census estimates. Higher is better, as it indicates residents are moving into the area at a rapid clip. We assign a weight of 10% to population growth.
- Unemployment rate: This is the unemployment rate in the area, according to U.S. Census data. We prefer a lower rate, as it indicates the availability of steady employment in the area, meaning residents will find it much easier to afford homes. We assign a weight of 15% to unemployment rate.
- Property tax: This is the median real estate property tax paid in the area, according to U.S. Census estimates. We assign a weight of 10% to property tax.
- Educational attainment: This is the percentage of residents in the area that have obtained a bachelor's degree or better, according to U.S. Census estimates. We prefer a higher rate because it indicates local residents who have higher earning potential and thus should be able to afford homes. We assign a weight of 15% to educational attainment.
🚨 Disclaimer: The information contained in this article isn't intended as, and shall not be understood or constituted as, financial advice. The information in this article isn't a substitute for financial advice from an investment professional or real estate agent who is aware of the facts and circumstances of your financial situation or the specifics of any individual property.
