Homeowners and real estate investors alike share at least one goal: to see their properties appreciate in value.
Yet the run-up in the U.S. housing market in some parts of the country has raised concerns about valuations and whether it still makes sense to buy, said Steve Hovland, director of research for HomeUnion, a real estate investment management firm. The U.S. economy is also in its eighth year of economic expansion, the third-longest expansion in the country's history. That's prompting questions about whether a pullback is on the horizon.
Singling out locations that provide strong investment returns as well as low risk may help mitigate the chances of losing money on a property. The company used school ratings as one way to measure risk, since communities with strong school systems generally keep their appeal even in weaker economic periods.
"A lot of people are worried the market is too hot and whether it's a good time to buy property," Hovland said. "When you buy an investment property, your hold period should be about five years, so most people are looking at the possibility you might have to hold during a recession."
Some of the areas identified by HomeUnion are "hot" real estate markets around the nation that have already seen significant property appreciation, while others are located in rust-belt states where housing prices aren't as rich.
Yet the communities share one trait: They are where the upper-middle-class tend to live. The home values in the zip codes are generally higher than in their greater metropolitan areas, which means not every investor or homebuyer will be able to snap up property within their borders. But looking for a fixer-upper in these communities could be a smart strategy, Hovland said.
"Buying the worst house in the block in a very nice neighborhood will always be beneficial to the homeowner," he added.
Read on to learn about the top 20 zip codes for real estate returns and low risk.
9. Forestville/Cherry Grove, Ohio: 5.9 percent
Forestville/Cherry Grove, or zip code 45255, is a suburb of Cincinnati, not exactly one of the country's hot property markets. Yet the neighborhood has an annualized total return of 5.9 percent, while the schools rate in the 75th percentile for school quality, according to data company Maponics.
The median home value in the Forestville/Cherry Grove zip code is $194,600, according to Zillow. That's actually slightly lower than the median national home value of about $200,000, yet more than 50 percent higher than the typical home value in Cincinnati.
Current for-sale properties range from million-dollar homes with views of the Ohio River to more modest split-level properties.
8. Des Plaines, Illinois: 6 percent
Des Plaines, Illinois -- or zip code 60016 -- is a suburb of Chicago where the annualized total return is 6 percent, according to HomeUnion. Schools earn a score of 76.4. Des Plaines may be known to some as the first franchised McDonald's restaurant.
Median home values in the neighborhood is $246,200, or above the typical national home value of about $200,000. Current properties range from single-family homes priced above $500,000 to townhouses that are in the mid-$200,000 range.
7. Overland Park, Kansas: 6.2 percent
This Kansas City suburb -- whose zip code is 66223 -- sports an annualized total return of 6.2 percent, while schools have a score of 97.4.
The town is known for its local farmer's market and a botanical gardens that's "like a fairytale," according to Movoto. The median home value in the town is $262,500, or well above the national median home value.
6. Fairview, Tennessee: 6.5 percent
This Nashville suburb, zip code 37062, has an annualized total return of 6.5 percent and a school rating of 70.6, HomeUnion said.
The median home value is $243,400, or above the national median home value of $200,000. Properties range from million-dollar estates to more modest colonial-style homes.
5. Weston, Florida: 6.6 percent
Zip code 33327 is Weston, a suburb of Fort Lauderdale, which boasts a median home value of $412,600, or more than twice the national median home value.
The annualized total return in Weston is 6.6 percent, while schools have a rating of 70.5. The city was recently named as one of the best places to live by Money magazine, which cited its bike lanes, parkland and easy commutes to Miami and Fort Lauderdale as attractions.
For-sale homes range from an $8.5 million waterfront estate to more modest properties listed for under $500,000.
4. Palmetto Bay, Florida: 6.8 percent
This Miami-area zip code (33158) has a median home value of $531,000, while HomeUnion estimates the annualized total return at 6.8 percent. Schools have a score of 83.9.
Properties range from multi-million dollar waterfront estates to more affordable homes located farther from Biscayne Bay.
3. West Bloomfield Township, Michigan: 6.9 percent
Detroit has been in the news because of the city's financial distress, but the suburb of West Bloomfield Township has been named as one of the best places to live within Michigan.
The annualized total return of zip code 48322 is 6.9 percent, while schools have a score of 74.4. The median home value in the township stands at $288,200, according to Zillow, while properties range from multi-million dollar estates to homes below $200,000.
2. Gladwyne, Pennsylvania: 6.9 percent
The Philadelphia suburb -- zip code 19035 -- has an annualized total return of 6.9 percent and school rating of 86.9, according to HomeUnion. This Main Line community is valued for its open space and "rural-village feel," according to PhillyLiving.com.
Buying property in Gladwyne isn't cheap, however. The median home value stands at $916,300, according to Zilllow.
1. Hamptons at Boca Raton, Florida: 8.1 percent
Zip code 33434 is a West Palm Beach suburb with an annualized total return of 8.1 percent and a school rating of 87.9, HomeUnion said.
Median home values in Boca Raton stand at $318,900, according to Zillow. While some waterfront properties fetch multi-million price tags, there are also for-sale properties in more modest price ranges.