The situation on the market can become highly unpredictable at times. For someone new to investing, this process of figuring out where to put their money instantly becomes ten times harder.
Today’s top location for investment can very quickly become yesterday’s news. Either way, if you’re not up to date with a particular area’s real estate trends, advantages – and yes, even the disadvantages – your money and investment opportunities could very quickly go to waste.
Luckily, we’re keeping up with the trends on the market – and that’s why we’ll be pointing out the ten best places to buy an investment property.
So, what’s the best place to buy investment property?
You’ll have to keep reading to get your answer!
Top 10 Places To Buy Investment Property
Here’s the list:
- Austin, Texas
- Birmingham, Alabama
- Boise, Idaho
- Chicago, Illinois
- Detroit, Michigan
- Durham, North Carolina
- Independence, Missouri
- Jacksonville, Florida
- Los Angeles, California
- Youngstown, Ohio
You may be familiar with some locations; you may even find it strange that some you thought were a great opportunity are not in the top 5.
Not to worry; we’ll explain everything briefly.
1st Place: Austin, Texas
With careful thought, the 1st place goes to Austin, Texas. It’s officially the best place to buy investment property.
Now, to elaborate on our first choice:
Major credit for why Austin became a hotspot on the market is its rapid population growth. In numbers, Austin’s population has skyrocketed by almost 200,000 in just a decade – making it a favorable place to invest when considering the US housing market.
However, the evident increase doesn’t apply to the entire territory of Austin. We are referring to specific neighborhoods that stand out and give potential investors (you) a chance to make a good return on investment.
More specifically, we’re talking about Milwood, Northwest Austin.
The area of Milwood, located in Northwest Austin, is a great place to invest – and this is due to many attractive places such as parks, good schools, and major employers.
The average purchase price is around $260,000.
The second neighborhood to consider is Windmill Run, southwest Austin.
It’s arguably one of the best places to buy multifamily properties. Windmill Run is known for its charming and welcoming community and AISD schools for families who are currently searching.
The purchase price is also around $265,000 – not a big difference from the previous one.
Austin, Texas Real Estate Investment Data
- Median Property Price: $536,000
- Price Per Square Foot: $225
- Cash-On-Cash Return: 10.7%
- Traditional Rental Income: $1,372
- Top Neighborhood For Investing: Millwood
- Type of Market: Renter’s market
- Real Estate Forecast: 4.7% bump in sales
2nd: Birmingham, Alabama
Birmingham is our second best place to buy investment property. For a long time, this city has been a desirable location due to its thriving community and constant progress in economic terms.
Some of the reasons that support our investment property analysis as far as Birmingham is concerned include:
- Ranked second place for the lowest income property taxes
- Most affordable for first-time investors
- Home to almost 500 technology companies
- One of the most extensive banking centers
Before investing in a real estate property, do your homework – and learn to distinguish A and B properties from the lower-ranked ones. Class A and B properties are Homewood, Vestavia Hills, and Mountain Brook in Birmingham; keep those in mind.
Birmingham, Alabama Real Estate Investment Data
- Median Property Price: $200,000
- Price Per Square Foot: $178,52
- Cash-On-Cash Return: 5.43%
- Traditional Rental Income: $1,343
- Top Neighbourhood For Investing: Homewood
- Type of Market: Seller’s market
- Real Estate Forecast: Combined sales and price increase by 13%
3rd: Boise, Idaho
Boise, Idaho, ranks as the third best place to buy investment property. The real estate market has gone through a major breakthrough in the last couple of years – and this got the investors hooked on allocating their finances somewhere nearby.
But where exactly should you invest in Boise?
You should be looking at:
- East Boise
- Northend
- Downtown
- Central Bench
- West Boise
- Meridian
Like Alabama, Boise has been known for being the largest market for multifamily real estate, and all of its popularity is credited to the inflow from California.
In Boise, you should stick to the 1% Rule. Here’s an example that directly relates to Idaho:
If you invest in a $200,000 property, you’ll be able to retain a $2,000 profit each month if you decide to rent it to tenants.
We’re on a pretty good roll here – but here’s a heads-up anyway. Take time to check out our Mashvisor Property Finder.
Our tools allow you to locate the best hotspots for investment using the latest algorithm that operates on personal factors and patterns. Forget about searches that lead to nowhere. Our tool will help you locate the absolute best place according to YOUR preferences.
Boise, Idaho Real Estate Investment Data
- Median Property Price: $529,900
- Price Per Square Foot: $296
- Cash-On-Cash Return: 3.5%
- Traditional Rental Income: $1,510
- Top Neighbourhood For Investing: North End
- Type of Market: Seller’s market
- Real Estate Forecast: Values will appreciate by more than 17%
4th: Chicago, Illinois
The most striking thing about Chicago – and perhaps the main reason to put this city on our “best place to buy investment property” list – is that you can get cheap capital rates.
If you’re looking to finally put your real estate investment strategy to good use, consider the following areas in Chicago:
Rogers Park
Rogers Park should be your first thought and the destination to look at if you’re considering investing in Chicago. Despite the prices of homes rising in the last couple of years (which is the case everywhere, not just Chicago), Rogers Park is very suitable for first-time investors.
Here, the current average price of homes is $210,000.
This neighborhood is known for its nicely decorated single-family homes, small apartment buildings, and quiet areas.
Humboldt Park
If mid-range property investment is your goal, then you should take a look at the area around Humboldt Park. Although some homes here aren’t in excellent condition – as in Rogers Park – investors still take interest.
Those who have a slightly looser budget might even opt for renovating.
Chicago, Illinois Real Estate Investment Data
- Median Property Price: $329,900
- Price Per Square Foot: $242
- Cash-On-Cash Return: 1.58%
- Traditional Rental Income: $2,019
- Top Neighbourhood For Investing: Rogers Park
- Type of Market: Seller’s market
- Real Estate Forecast: Real estate will remain solid
5th: Detroit, Michigan
Now, moving on to Detroit – our number five on the list. Right up front, here’s why this could also be the best place to buy investment property:
- Rents in Detroit have grown by 25% in the last few years
- Millennials and Gen Z occupy more than 38% of the population
- It has one of the most affordable neighborhoods
- Rents go as high as $2,800 a month (if you decide to invest in a rental property)
Now, the areas you should be focusing on:
East English Village
If you do your research, you may buy a home for less than $200,000 and make an excellent profit. It has a great history, and it’s close to major employers and dozens of grocery stores – a perfect match for families.
Detroit, Michigan Real Estate Investment Data
- Median Property Price: $75,000
- Price Per Square Foot: $68
- Cash-On-Cash Return: 4.12%
- Traditional Rental Income: $990
- Top Neighbourhood For Investing: East English Village
- Type of Market: Buyer’s market
- Real Estate Forecast: Will remain solid
6th: Durham, North Carolina
Roughly speaking, Durham is home to almost 250,000 residents, and the boost in population makes it a valid candidate on our list for the best place to buy investment property.
However, simply choosing Durham because it’s a highly populated city won’t help you much. You need to get into the real estate market and explore it realistically.
First, you should know what you’re looking for – single-family homes, condos, or apartments – and with that in mind, you can put a pin on your desired location. Some good spots include:
Downtown Durham
This neighborhood has gone through substantial economic growth, putting it right on the list of desirable locations for potential investors – especially young professionals living a fast life.
Duke Park
Newly-established investors looking to invest in a property that’ll guarantee a safe return and a peaceful life should be looking at single-family homes in Duke Park.
The median list price for property in Durham is around $299,000.
Generally speaking, Durham is a desirable investment spot because of its:
- Economic growth
- Advanced manufacturing
- Tourism
- Safe environment
Durham, North Carolina Real Estate Investment Data
- Median Property Price: $359,900
- Price Per Square Foot: $197
- Cash-On-Cash Return: 3.43%
- Traditional Rental Income: $1,467
- Top Neighborhood For Investing: Downtown Durham
- Type of Market: Buyer’s market
- Real Estate Forecast: National home prices will fall by 8.6%
7th: Independence, Missouri
Independence, Missouri, ranks seventh on this best place to buy investment property list. It might not be the first location to come to mind when you think about potential rental income – but it can serve as a good alternative.
Here’s why:
- Economy: Employment has increased by 1.4%
- Cost of living: Lower by 16% than the US average
- Population: Grown by 1.6% in the last year
- Real estate: The median home price is $163,600
Despite the pros we have listed, many potential investors are turning their backs and wallets on Independence because it didn’t have a reputation as a safe city in the past. However, the situation has changed – and if you’re interested, here is a list of areas you should be looking at:
- Lake City
- Holke Rd
- Route 40
- River Bend
- Selsa
As with other cities and areas we’ve mentioned, geography plays an important role.
Independence, Missouri Real Estate Investment Data
- Median Property Price: $169,900
- Price Per Square Foot: $114
- Cash-On-Cash Return: 5.99%
- Traditional Rental Income: $1,697
- Top Neighbourhood For Investing: Lake City
- Type of Market: Seller’s market
- Real Estate Forecast: Home values will increase by 11%
8th: Jacksonville, Florida
While you may have expected it to be in the top 3, Jacksonville might not be the best place to buy an investment property – but it’s still an option to consider.
Although located in sunny Florida, Jacksonville hid behind a curtain for a while because the economy wasn’t at its peak. However, it can be said that this area has experienced a boost in home construction lately – and made its way up to our list.
The most significant boost was experienced by single-family homes, which now make up to 63% of Jacksonville. Suburban housing is still a vital asset of many experienced and young investors alike.
The average value of homes in Jacksonville is $264,000.
Now that you know this isn’t a risky area, let’s take a look at a couple of hotspots that should grab your attention:
Fleming Island
According to recent reports, this is currently among the fastest-growing and, at the same time, most affordable neighborhoods.
Lakeside
If you’re interested in Lakeside, Florida, you’ll have the benefits of good education, diversity, and a controlled environment for new families. It’s an excellent place for you to spend your retirement years, too.
Jacksonville, Florida Real Estate Investment Data
- Median Property Price: $272,000
- Price Per Square Foot: $168
- Cash-On-Cash Return: 3.17%
- Traditional Rental Income: $1.272
- Top Neighborhood For Investing: Fleming Island
- Type of Market: Seller’s market
- Real Estate Forecast: Prices for properties will increase by 6.2%
9th: Los Angeles, California
Of course, the list could not end without mentioning Los Angeles. This city has gone through several breakthroughs in recent history – however, it still managed to find its place on the list.
For someone who has been on the market for so long, the Los Angeles housing market is a profitable and predictable option.
All things considered, if you’re an experienced investor, there’s always something to invest in – and get a good return. Here, the median home price is close to $700,000.
The most attractive points of Los Angeles are certainly:
- Tourism
- Gaming
- Gambling
It might not be a suitable area for quiet family life, though.
Los Angeles, California Real Estate Investment Data
- Median Property Price: $949,000
- Price Per Square Foot: $620
- Cash-On-Cash Return: 2.19%
- Traditional Rental Income: $3,631
- Top Neighbourhood For Investing: North Hollywood
- Type of Market: Seller’s market
- Real Estate Forecast: house prices will fall by 2%
10th: Youngstown, Ohio
While some find it risky, others deem Youngstown the best place to buy investment property.
One of the primary reasons investors are turning their attention to this place is that the average home prices are generally pretty low. The average home price in Youngstown barely reaches the $45,000 mark – which doesn’t make the investment seem risky at first glance.
However, an experienced investor knows that price isn’t the only criteria for choosing a place to buy an investment property.
It’s worth noting that the rental vacancy rate here is only about 3.2%.
So, why should you invest in Youngstown, Ohio?
Well, the most apparent reason would be the low living costs; that’s even more beneficial for those looking for long-term rentals. Besides affordable living expenses, Ohio also grants you access to various outdoor activities.
Youngstown, Ohio Real Estate Investment Data
- Median Property Price: $97,000
- Price Per Square Foot: $67
- Cash-On-Cash Return: 3.12%
- Traditional Rental Income: $1,299
- Top Neighbourhood For Investing: Canfield
- Type of Market: Seller’s market
- Real Estate Forecast: See combined growth in sales
Factors to Consider
We’ve successfully listed the best places for buying an investment property, but we feel like we could contribute to your “quest” further by addressing some factors you should consider beforehand.
You could see that all areas vary enormously and that different factors affect how much risk there is in buying property there. So, here are a few guidelines for future investors:
Cash-On-Cash Return
Cash-on-cash return – the measurement of the cash income earned on the cash invested in the property – is by far the most critical factor. It essentially calculates the annual cash return for investors and is often used to measure commercial real estate investment performance.
Naturally, higher the cash-on-cash return puts you in a more favorable financial position.
Traditional Rental Income
Another crucial factor investors should be considering is rental income. Simply put, it refers to the money you get from someone who is using or occupying your property.
Before setting a price, you should be familiar with the marketplace and check comparable properties in the area. If your property ends up bringing in more rental income than you may have initially expected, that’s excellent news – but you should strive to remain competitive.
Location
We’ve indirectly mentioned this factor over a dozen times – but we should still emphasize it here.
You’ve had the opportunity to learn about specific neighborhoods that are in good standing. That’s no accident:
Location plays a critical role in buying an investment property. Potential profit is directly tied to the location of the property.
Fixes and Expenses
In addition to location, potential costs play a significant role in the buying process. That is not just a simple purchase where the money’s transferred from one account to another.
The chances are you’ll have to face costs that you may also have to pay out of pocket – and no one’s too excited about that.
So, before you put your money on the spot, consider the following factors:
- Property taxes
- Homeowners insurance
- HOA fees (if the property has one)
- General upkeep costs (average value)
The 1% Rule
If you scroll up to Boise, Idaho, you’ll see that we’ve mentioned the 1% rule already. Here’s how it goes again:
Since you’re considering investing in real estate property, you’re undoubtedly thinking about the possible revenue – and what you’re going to do with the profit gained. Don’t get ahead of yourself, though, and try to live by this 1% rule.
Let this serve as some kind of basis for you, instead.
Of course, this is unlikely to apply to a property worth $1,000,000 or more. You can put aside your rule book and focus on long-term results in such cases.
Potential Risks
No property is risk-free. Wherever you decide to buy an investment property, you should look at both the pros and cons – and try to equalize them.
Risks that can shape your decision include:
- The chance that you might not get the rental interest that you aspired
- The possibility of property taxes going up
- Bad tenants that could result in poor-housekeeping
- The option of paying too much for expenses
- The risk of the local economy changing and unemployment rates rising
Final Thoughts
As you can see, determining the best place to buy an investment property is not a 15-minute deal you could just scroll through. Instead, it’s a lengthy process that takes time, dedication – and concentration.
We were able to list down the most attractive destinations based on locations, potential risks, expenses, and attractions for different groups of people living there. You should shift your attention towards LA, Austin, Boise – and many more cities throughout the US that offer a stable rental income for potential investors.
Before you decide on your investment location, though, take into account a couple of factors – mainly location, potential risks, expenses, and the famous 1% rule.
Mashvisor is here to guide you through the process of choosing your desired destination. If you’re having any trouble pinning down your potential investment for rental properties, don’t hesitate to reach out to us – we’ll be glad to help!
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