Buying a rental property is the biggest decision for a beginner real estate investor.
The first thing to look out for before making such a decision is not the price of the real estate property, but its location. Sure, the price is nice, but the location is better! Successful property investors always ask themselves WHERE they should buy an investment property before actually making the purchase. This is because the location is the main factor for a successful real estate investing career. Where your investment property is located will determine all other aspects related to it such as the purchase price, running costs, and overall return on investment.
The real estate market is constantly changing – what might have been a bad location for buying a rental property years ago could now be an excellent location! Keep reading to find out which cities in the US real estate market made it to the list of the best locations which property investors should keep their eyes on in 2018. But first, let us explain what we based our analysis on.
What Makes the Best Places for Buying a Rental Property?
There are a number of factors that make certain locations favorable for real estate investing and buying a rental property, the first being the population. A city’s population goes hand in hand with demand for real estate investing. As a real estate investor owning a rental property, your goal is to make money through the monthly rent collected from tenants.
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For example, if you’re buying a rental property in a city in which people are moving to, you’ll have a larger pool of potential tenants (high occupancy rate) meaning higher demand. On the other hand, if your investment property is in an area in which population is decreasing, you won’t be able to find anyone to rent out your investment property and pay monthly rent (high vacancy rate).
Another factor that makes the best locations for buying a rental property is the local economy. Investing in a city with a strong local economy means higher rental income, and therefore, a higher return on investing. Property investors should always study the local economy in their real estate market of choice and perform a real estate market analysis. This will ensure them that they’re buying a rental property in a good location where they can earn an attractive rental income.
There are, of course, other important factors that make real estate investing profitable in certain locations over others, like real estate property taxes, cash flow, price-to-rent ratio, etc.
The Best Cities in the US Real Estate Market for Buying a Rental Property
To create this list, we used Mashvisor’s rental property calculator to find not only the median property price and rental income, but also the cash on cash return AND cap rate of rental properties across the US real estate market. Below, we provide you with these numbers to further help you choose exactly where you should consider buying a rental property:
Buying a Rental Property in Eight Mile, AL
- Median Property Price: $116,144
- Traditional Rental Income: $1,134
- Traditional Cash on Cash Return: 5.78%
- Traditional Cap Rate: 5.78%
Buying a Rental Property in Wareham, MA
- Median Property Price: $331,064
- Traditional Rental Income: $2,656
- Traditional Cash on Cash Return: 4.47%
- Traditional Cap Rate: 4.47%
Buying a Rental Property in Camden, NJ
- Median Property Price: $83,858
- Traditional Rental Income: $998
- Traditional Cash on Cash Return: 4.74%
- Traditional Cap Rate: 4.74%
Buying a Rental Property in Toledo, OH
- Median Property Price: $86,480
- Traditional Rental Income: $1,012
- Traditional Cash on Cash Return: 4.1%
- Traditional Cap Rate: 4.1%
Buying a Rental Property in Fairbanks, AK
- Median Property Price: $256,561
- Traditional Rental Income: $1,814
- Traditional Cash on Cash Return: 4.09%
- Traditional Cap Rate: 4.09%
Buying a Rental Property in Santa Fe, NM
- Median Property Price: $566,237
- Traditional Rental Income: $2,804
- Traditional Cash on Cash Return: 3.92%
- Traditional Cap Rate: 3.92%
Buying a Rental Property in Riverhead, NY
- Median Property Price: $477,328
- Traditional Rental Income: $3,205
- Traditional Cash on Cash Return: 3.55%
- Traditional Cap Rate: 3.55%
Buying a Rental Property in Shreveport, LA
- Median Property Price: $216,476
- Traditional Rental Income: $1,257
- Traditional Cash on Cash Return: 3.44%
- Traditional Cap Rate: 3.44%
Buying a Rental Property in Jackson, MS
- Median Property Price: $230,386
- Traditional Rental Income: $1,299
- Traditional Cash on Cash Return: 3.32%
- Traditional Cap Rate: 3.32%
Buying a Rental Property in Eureka, CA
- Median Property Price: $346,172
- Traditional Rental Income: $2,707
- Traditional Cash on Cash Return: 3.13%
- Traditional Cap Rate: 3.13%
Buying a Rental Property in Bartlett, TN
- Median Property Price: $236,846
- Traditional Rental Income: $1,573
- Traditional Cash on Cash Return: 3.1%
- Traditional Cap Rate: 3.1%
Buying a Rental Property in Wynnewood, PA
- Median Property Price: $343,026
- Traditional Rental Income: $1,872
- Traditional Cash on Cash Return: 3.06%
- Traditional Cap Rate: 3.06%
Click here to start looking for and analyzing the best rental properties in your city of choice!
Start Your Search with Mashvisor
To guarantee a successful real estate investing career, property investors have to buy an investment property in the best locations. If you’re interested in buying a rental property in any of the top cities mentioned above, start your property search with Mashvisor! Mashvisor’s platform provides property investors with the best real estate investing tools and data analysis for both traditional and Airbnb rental properties to help them find the best real estate property in the best locations.
To start your search for an investment property in any state and city across the US housing market, just sign up and use our Investment Property Calculator – A versatile tool that allows property investors to calculate the different values related to an investment property, including the Cash on Cash Return, Cap Rate, Cash Flow, and Occupancy Rate.
You’ll also get access to another useful real estate investing tool and that is the Investment Property Finder – A powerful and heavily customizable search tool that allows property investors to search for rental properties based on specific criteria, such as finding properties of a certain type, in a certain neighborhood, or with a certain Cap Rate. This tool also comes with a Heat Map Function that allows property investors to find rental properties much faster using visual cues.
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