The real estate market has witnessed yet another year of rising home prices coupled with declining inventory across the country, which made it difficult to find a real estate property to lay your money on. Nevertheless, a quick overview of the real estate market shows the best cities to invest in rental properties
The USA real estate property market has remained robust for the last 5 years and seems to be continuing with this trend for the foreseeable future. This means that there are some locations scattered across the nation that offer a combination of a strong economy and population growth, the most important criteria when looking for the best cities to invest in rental properties.
Why invest in rental properties?
Buying a rental property is a real estate investment strategy favored among beginner and professional real estate investors as it offers passive income while allowing you to enjoy a low risk investment. Leverage can be used to finance the investment. In other words, you don’t need to have 100% of the property’s price. This way you increase your return on investment and return on equity.
However, buying the RIGHT rental property depends on many factors, most important of those is the location of the property. You might have heard this a lot, but indeed location is the main win or lose factor when it comes to a rental property investment. In this blog, we provide you with a list of the best cities to invest in rental properties based on current trends in different U.S. housing markets.
Learn more: Is Investing in Rental Properties the Ultimate Way to Succeed in Real Estate Investing?
What do the best cities to invest in rental properties have in common?
As mentioned before, location is the most important factor when buying a rental property, followed by other sub-factors that are somehow intrinsically connected to location. The best cities to invest in rental properties have three things in common:
- Affordability: As a real estate investor, your primary concern is not to overpay for a real estate property. There are several cities across the United States where you can still find a high cash flow rental property for an affordable price.
- A healthy economy: A thriving economy in a city is a good sign of high demand for rental properties. Job growth is strongly proportional to the housing market and its strength.
- Population growth: As the population increases, more people would need a place to stay. Simple.
Other aspects to consider when looking for the best cities to invest in rental properties include:
- Rental appeal
- Limited housing supply
- Neighborhood safety
How to find the best cities to invest in rental properties
Imagine you have a real estate investing adviser that provides you with all the crucial real estate metrics and information about a certain real estate investment whenever you want. That’s in short what a rental property calculator is able to do. The perks of using Mashvisor’s rental property calculator are not limited to providing metrics like property price, rental income, cash on cash return, and cap rate. It goes beyond that by helping real estate investors choose which rental strategy (Traditional vs Airbnb rentals) is more profitable.
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What are the best cities to invest in rental properties?
Note: the list is not in order
1- Rental properties in Orlando, Florida
Affordability: The median price of homes in Orlando is $341,887 with a rise of 9% from last year and a forecasted 3-year price growth of 35%.
Economy: 2-year job growth in Orlando is 7%, while future job growth over 10 years is forecasted at 40%.
Population Growth: 3-year population growth is 7.6%.
2- Rental properties in Jacksonville, Florida
Affordability: The median price of homes in Jacksonville is $287, 694, an 8% increase from last year with a 20% 3-year price growth forecast.
Economy: 2-year job growth in Jacksonville is 6%.
Population growth: 3-year population growth is 5.9%.
Related: Is It a Good Time to Buy Property in Florida for Real Estate Investing?
3- Rental properties in Atlanta, Georgia
Affordability: The median home price in Atlanta is $464,160, an 8% increase from last year and the 3-year price growth forecast is 24%.
Economy: 2-year job growth is 5%.
Population growth: 3-year population growth is 4.9%.
4- Rental properties in Nashville, Tennessee
Affordability: The median home price in Nashville is $426,843, a 10% increase from last year with a 3-year price growth forecast of 27%.
Economy: 2-year job growth is 5.5%.
Population growth: 3-year population growth is 6.1%
For more best cities to invest in rental properties, click here.
5- Rental properties in Minneapolis, Minnesota
Affordability: The median home price in the Minneapolis metropolitan area is $390,264. 8% increase from last year and 3-year price growth forecast of 21%.
Economy: 2-year job growth is 3.9%.
Population growth: 3-year population growth is 2.7%.
6- Rental properties in Springfield, Missouri
Affordability: The average home price in Springfield is $372,858. 5% increase from last year and 3-year price growth forecast of 14%.
Economy: 2-year job growth is 5.1%.
Population growth: 3-year population growth is 2.3%.
7- Rental properties in Fort Worth, Texas
Affordability: The average home price in Fort Worth is $330,135. 11% increase from last year and 3-year price growth forecast of 26%.
Economy: 2-year job growth is 5%
Population growth: 3-year population growth is 5.6%.
8- Rental properties in San Antonio, Texas
Affordability: The average home price in San Antonio is $305,045. 7% increase from last year and 3-year price growth forecast of 20%.
Economy: 2-year job growth is 2.5%
Population growth: 3-year population growth is 6.5%.
9- Rental properties in Charlotte, North Carolina
Affordability: The average home price in Charlotte is $385,666. 9% increase from last and 3-year price growth forecast of 22%.
Economy: 2-year job growth is 4%.
Population growth: 3-year population growth is 3%.
10- Rental properties in Provo, Utah
Affordability: The average home price in Provo is $275,509. 10% increase from last year and a 3-year price growth forecast of 31%.
Economy: 2-year job growth is 6.7%
Population growth: 3-year population growth is 7%.
The Bottom Line
The above list shows the best cities to invest in rental properties based on affordability, economy, and population growth. Other factors to consider when buying a rental property include cap rate, cash on cash return and occupancy rate. For all these metrics make sure to use Mashvisor’s investment property calculator.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.