How do you find the best cities to invest in real estate in 2021? And is real estate investing still a profitable strategy?
Just like other markets, the housing market was severely impacted by the Coronavirus pandemic. With the economic uncertainty and stay-at-home orders, most areas experienced a major drop in home sales. Due to the eviction moratorium issued by the Federal Government, many landlords lost rental income.
So ‘Is real estate a good investment in 2021? has become a burning question for many who were considering this strategy prior to the pandemic. ’ The answer is: Yes, in 2021 owning rental property is still a great strategy for making money and building wealth. The US housing market is experiencing resurgence, especially after the release of the Covid-19 vaccine. During a recent NAR real estate forecast summit, experts predicted that GDP will grow by 3.5% in 2021. In the same period, median home prices are expected to rise by 8%. Therefore, if you want to make a rental property investment, 2021 is a good year.
Knowing where to invest in rental property is crucial for your success in the real estate business. In this post, we will be looking at some of the best cities to invest in real estate.
What to Consider When Looking for the Best Places to Invest Money
Location is a very important for the success of any real estate business. This is why every journey how to invest in real estate starts with finding the right location. You need to do your research to find the best places to buy rental property.
Here are some important things you need to consider when choosing the best cities to invest in real estate:
- An affordable median listing price – When looking for the best locations to invest in real estate, you should first figure out what you can realistically afford. Do you have enough savings to make the down payment? Can you qualify for a loan if it is required? Your financial situation will determine which city you can invest in. As you can imagine, property prices vary widely from one city to another.
- Vibrant tourism industry – If you are thinking of investing in a vacation rental, the state of tourisms should be a major part of your research. Does the location have attractions like beaches, parks, mountains, and resorts? Do people travel there for business? How many visitors does the city attract annually? These are some of the questions to ask yourself when doing your research on the top cities to invest in real estate in 2021.
- Growing job market – Another important factor to consider is the state of the economy. Ideally, you should only focus on cities that have a flourishing economy and a growing job market. When many job opportunities are being created, people will be attracted to such markets. This means that there will be a higher demand for traditional rentals, thus driving home prices and rents up. To learn about the current employment statistics of a city, visit the U.S. Bureau of Labor Statistics (BLS) website.
- Low crime rate – The crime rate of a city will have an impact on your real estate business. If you invest in a city that has a low crime rate, it will be easier to attract tenants and retain them. On the other hand, buying property in an unsafe location is likely to result in low occupancy rates. Watch the news or read publications like NeighborhoodScout to stay abreast of the security situation in the best cities to invest in real estate.
- Favorable Airbnb regulations – When it comes to short-term rental properties, you should also consider the Airbnb regulations of the city. Just because a location has numerous attractions doesn’t mean that it would be ideal for an Airbnb investment property. Do your research to learn about the local Airbnb regulations. For instance, some cities don’t allow non-owner occupied vacation rentals.
How to Find the Best Neighborhoods
After analyzing the best cities to invest in real estate and narrowing down your options, you need to research the best neighborhoods for investment. The best places to invest in real estate should have amenities like hospitals, good schools, shopping malls, and public transportation. In addition, areas should be potentially profitable for real estate investment.
One of the best property search tool for investors to assess profitability is the Mashvisor real estate heatmap. You can narrow down your investment property search using the following filters: listing price, traditional and Airbnb rental income, Airbnb occupancy rate, and traditional and Airbnb cash on cash return. For example, if you want to know the best places to invest based on cash on cash return, all you need to do is set ‘cash on cash’ return as the filter. Those areas with the highest cash in cash return will be marked in green, while those with the lowest CoC return will be marked in red.
To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.
Now that we have established that real estate is a good investment, the question is ‘What are the best investments right now?’ Let us look at some of the best cities to invest in real estate in the US real estate market this year.
Where to Invest in Rental Homes in 2021
The following are some of the best places to buy rental property in 2021. These cities have been selected based on the highest cash on cash return, as provided by Mashvisor’s nationwide real estate data analysis.
Best Cities to Invest in Real Estate: Traditional Rental Properties
Watch our video below to find out the top locations for long-term rentals properties in the US market in 2021:
1. Toledo, Ohio
- Median Property Price: $101,700
- Price per Square Foot: $88
- Price to Rent Ratio: 9
- Monthly Traditional Rental Income: $910
- Traditional Cash on Cash Return: 6.49%
2. Minot, North Dakota
- Median Property Price: $224,300
- Price per Square Foot: $149
- Price to Rent Ratio: 18
- Monthly Traditional Rental Income: $1,040
- Traditional Cash on Cash Return: 6.36%
3. Gary, Indiana
- Median Property Price: $137,600
- Price per Square Foot: $90
- Price to Rent Ratio: 12
- Monthly Traditional Rental Income: $970
- Traditional Cash on Cash Return: 6.30%
4. Camden, New Jersey
- Median Property Price: $150,100
- Price per Square Foot: $94
- Price to Rent Ratio: 10
- Monthly Traditional Rental Income: $1,250
- Traditional Cash on Cash Return: 6.26%
5. Barre, Vermont
- Median Property Price: $172,000
- Price per Square Foot: $62
- Price to Rent Ratio: 9
- Monthly Traditional Rental Income: $1,550
- Traditional Cash on Cash Return: 6.16%
Best Cities to Invest in Real Estate: Airbnb Rental Properties
1. Berkeley, New Jersey
- Median Property Price: $243,500
- Price per Square Foot: $190
- Average Airbnb Daily Rate: $283
- Monthly Airbnb Rental Income: $4,480
- Airbnb Cash on Cash Return: 9.21%
- Airbnb Occupancy Rate: 59%
2. Englewood, Colorado
- Median Property Price: $459,000
- Price per Square Foot: $396
- Average Airbnb Daily Rate: $124
- Monthly Airbnb Rental Income: $ 5,260
- Airbnb Cash on Cash Return: 8.22%
- Airbnb Occupancy Rate: 59%
To get access to our real estate investment tools, click here to sign up for Mashvisor today.
3. Levittown, Pennsylvania
- Median Property Price: $292,900
- Price per Square Foot: $218
- Average Airbnb Daily Rate: $104
- Monthly Airbnb Rental Income: $3,990
- Airbnb Cash on Cash Return: 7.98%
- Airbnb Occupancy Rate: 78%
4. Covington, Georgia
- Median Property Price: $266,400
- Price per Square Foot: NA
- Average Airbnb Daily Rate: $164
- Monthly Airbnb Rental Income: $2,620
- Airbnb Cash on Cash Return: 7.30%
- Airbnb Occupancy Rate: 61%
5. Abilene, Texas
- Median Property Price: $275,700
- Price per Square Foot: $130
- Average Airbnb Daily Rate: $172
- Monthly Airbnb Rental Income: $2,820
- Airbnb Cash on Cash Return: 7.06%
- Airbnb Occupancy Rate: 67%
Conclusion: The Best Cities to Invest in Real Estate in 2021
Investment opportunities are everywhere in the US housing market. Real estate investors only need to know what to look for before buying an investment property for sale. When performing a neighborhood analysis, be sure to use the Mashvisor real estate heatmap to assess profitability.
Once you’ve identified an ideal location for buying the best real estate investments, you can find the cheapest places to buy a house on the Mashvisor Property Marketplace. You could go further to analyze the profitability potential of specific rental homes using the Mashvisor rental property calculator. With the Mashvisor real estate investment tools, you can’t go wrong in finding the best cities to invest in real estate in 2021.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.