As the year comes closer to an end, many investors are now looking ahead and wondering what the best places to invest in real estate 2023 are.
Table of Contents
- Is Real Estate a Good Investment in 2023?
- What Makes a City Good for Real Estate Investment?
- 20 Places to Invest in Real Estate in 2023
We just entered the last quarter of 2022, and typically, around this time of year, investors are looking for leads to which places are worth looking into for the following year. Usually, in the year’s last few months, we also start seeing several real estate investing forecasts and market predictions.
But more than knowing about the different market conditions and what each one can offer in 2023, investors want to know the best places to buy real estate. They’re looking for names of promising places that can give them a good return on investment.
In this article, we will show you the best places to invest in real estate in 2023. In addition, we will also discuss why real estate investing is still a sound strategy for any investor despite the current global economic climate. We hope that at the end of this post, you will be able to discern where and how to make an investment that will give you a positive cash flow.
Let’s get down to business and talk about real estate investing in 2023.
Related: What Is Real Estate Investing and How Does It Work?
Is Real Estate a Good Investment in 2023?
Investing, in general, is a common wealth-building and management strategy a lot of folks get into. Many people invest in different things, such as stocks, mutual funds, precious metals, and other alternative investments to generate wealth for the long term.
Real Estate Investing Benefits in 2023
Investing in real estate is considered one of the soundest forms of investment overall. Unlike the stock market, it is less volatile and a lot more stable. There are other benefits associated with real estate investing, such as the following:
Portfolio Diversification
As an investment vehicle, real estate gives you a more diverse portfolio. You will often hear investors talk about not putting all your eggs in one basket. Diversification allows you to have several fallbacks in case one investment channel is upended.
In this case, real estate investing gives you a less volatile portfolio because of its very low correlation to the stock market. It provides an added layer of protection for your assets.
Passive Income
Real estate investing, especially if you invest in rental properties, gives you great opportunities to build wealth and equity with very minimal risk and effort. For instance, if you do your homework and do things right, your rental property will take care of itself and make you enough money to take to the bank.
Home Appreciation
Nearly all real estate properties come with the potential to increase in value as the years go by. It is why a lot of investors like getting into real estate. Even if they don’t rent out their properties, all they need to do is hold on to it for a little while. When the investment property increases in value, they can sell it at the current fair market value and already make a good profit.
Tax Benefits
Real estate investing comes with several tax benefits you can take advantage of. Investment properties allow you to make certain deductions to lower your taxable income. They include maintenance and repairs, leasing fees, and property management fees, among other things.
Inflation Hedge
Lastly, real estate investments serve as great hedges against inflation. As inflation causes commodity prices to go up, it also causes property value and rental prices to increase, too. If you sell your property, the appreciation alone will already give you more than what you initially invested.
If you rent it out, you can increase your rental rates appropriately and reasonably to allow the property to take care of itself, taking you through the inflation-induced high operating costs.
Investing in Real Estate in 2023
Given the abovementioned benefits of investing in real estate, there is no doubt that investing in real estate in 2023 is still a wise move for you. It is one of the best ways to build wealth and expand your portfolio.
Despite the present economic crisis and high inflation, real estate investing will still fare a lot better compared to more volatile forms of investment like stocks and cryptocurrencies.
However, to be successful at real estate investing, you need to find the right place to invest in. Location plays a crucial role in real estate investments. The best income properties are found in places that offer higher investment returns.
For those interested in starting a rental property business, you need to find the best places with high rental income and cash on cash return. Let’s talk about the qualities of a great investment place in the next section.
Related: How to Find Profitable Rental Investment Properties for Sale
What Makes a City Good for Real Estate Investment?
A location plays a significant role in a real estate investment’s success. If you’re new to investing, you should know that more than the property type or its characteristics, the place you are investing in will determine your success.
It is pointless if you find the best single-family or condo unit online, complete with all the bells and whistles, but it is located in a place that is far from ideal for a real estate investment. That being said, what makes a place ideal for real estate investing? What does it take for a place to become the best for such investment types?
Qualities of the Best Real Estate Investment Places
When you’re considering investing in rental properties, you need to take note of certain characteristics of each place to know if it’s worth investing in or not. Here are a few things you need to look out for when choosing the best place to invest in traditional and vacation rental properties in 2023 and beyond:
Growing Economy
The best places to invest in rental properties – both traditional and Airbnb – are those with a growing economy. A location’s economy is one of the best determining factors if your investment will turn out to be a success or not.
You need to take a look at what each city or neighborhood offers in terms of job opportunities. Is the job market growing in the area? Or is the unemployment rate high?
Generally, places with struggling economies don’t offer investors much by way of cap rate and cash on cash return, as well as occupancy rates. It is simply because economically-challenged places do not attract as many migrants or visitors.
On the other hand, places with a thriving economy are attractive to people looking to relocate and get a new start. They also generate more visitor traffic annually because healthy economies directly affect their tourism and hospitality industries.
Population Growth
Jumping off the previous point, one of the things that contribute to an expanding economy is a healthy population growth rate. If you’re thinking about starting a rental property business, it is best to look for a place where the population is at a constant growth rate.
A place with a good population density and growth means that there will also be a good demand for rental properties, especially long-term rentals.
Positive Home Valuation
Another thing that the best places for real estate investing share is a very good home valuation increase. It is common knowledge, even to non-investors, that real estate properties appreciate as the years pass. The most ideal investment places experience the best growth rate in market value.
It works well for real estate investors, regardless of investment strategy. Whether you decide to rent out your property or do the BRRRR strategy, property prices will inevitably go up as time goes by. It’s just a matter of finding the right place where the increase gets you the most out of your investment.
Good Rental Rates
With inflation showing no signs of slowing down, it would be best for investors to look for places with good rental rates going into 2023. As already mentioned, real estate investments give you some sort of inflation hedge. On top of the appreciation, you can offset the operating costs of your rental property by increasing your rent price.
In places where rental rates are at least $2,000, it means you are more likely to find a positive cash flow property despite inflation.
Moderate Income Levels
When it comes to finding the ideal place to invest in real estate, many people confuse high-income levels with high investment returns. It is not exactly the case.
Keep in mind that places with high-income levels are usually home to properties with higher price tags. On the flip side, low-income level areas do come with lower property prices, but you’re also at the risk of higher turnover and vacancy rates.
The best solution is to look for a place where there is a moderate income level. You can find plenty of low-price point properties that offer a potentially great return on investment in such types of neighborhoods.
School Districts
Some of the best places for real estate investing come with access to strong school districts. A lot of families looking to relocate usually look into accessibility as one of their priorities in deciding where to move.
Traditional rental property owners will do well to find real estate properties that are near good school districts. It especially works well for college towns.
College towns are some of the best places to buy real estate properties and rent them out to transient students during the school year. During breaks, the properties can be converted into Airbnb rentals to minimize vacancies. In such a way, rental property owners still get to earn a considerable amount outside of the regular school year.
Related: 10 Best College Towns for Student Housing Investment in 2022
Access to Public Amenities
A successful real estate investment also depends on how accessible the place is to public amenities. Public places like parks, libraries, museums, restaurants, and shopping centers help make a neighborhood an ideal investment location not just now but in 2023 and beyond.
Before you set out to buy real estate in any location, make sure you find out if a subject property is easily accessible to the abovementioned public places and other similar spots. Real estate investors also keep an eye out for a location’s walk score. The higher the walk score, the lesser the need for transportation to get to public places.
The best investment locations are those that have public spaces near them.
Accessibility
Speaking of accessibility, the best real estate investment locations are easily accessible. It means that mobility and transportation are never a major concern.
One of the things that are popular with tenants and Airbnb guests is how easy it is to get to a rental property and go around town, whether on wheels or on foot.
Development Plan
Lastly, the best indicator that a neighborhood is a great place for real estate investing is what the future holds for it. Development plans can either add or take away value from a real estate property.
If, for instance, a certain residential neighborhood is located very near a vast vacant land that is proposed to be turned into an industrial zone in 2023, it will greatly affect the cost of real estate in the said neighborhood. Whether the impact is positive or negative will greatly depend on the kind of development within the immediate vicinity.
As a real estate investor, you should make it a part of your due diligence to find out about any future developments for a neighborhood you’re considering. You don’t want to end up with real estate that will cause you to lose money just because you failed to do your homework.
The Importance of Due Diligence
Any real estate investor knows that a certain amount of time and effort needs to be given if the real estate investment is to be a success. Since real estate investing costs a lot of money, you don’t want to approach things recklessly. Otherwise, you might end up losing your hard-earned money in 2023.
It is why performing due diligence is so important. The goal of every real estate investor is to get their ROI as fast as they can so they can start making money off of their investments soon. The chances of you achieving it are improved by putting in the work and doing your due diligence.
Considering that almost everything can be done digitally nowadays, performing due diligence in real estate investing is a lot easier now compared to a decade ago. Perhaps, the best thing about real estate investing today is you can utilize the internet to make real estate investing a lot more efficient.
Case in point, real estate website Mashvisor. Mashvisor has been around since 2015. In its seven years of existence, the real estate platform has already helped countless real estate investors find the best investment properties for sale in the best neighborhoods.
Mashvisor has several of the best real estate investing tools available for 2023 and beyond. Some of the real estate website’s most notable features include:
Regularly Updated Database
The real estate website gives its users access to a very massive database that covers almost every location of the 2022 US housing market.
Access to such data and information with just a few clicks or taps makes finding the best real estate properties in 2023 a lot quicker. It is more efficient compared to the conventional way of hunting down profitable real estate properties.
Mashvisor’s data is taken from some of the best and most reliable sources of real estate information, such as Zillow, Realtor.com, and Airbnb. Knowing where its data comes from should give you greater confidence in subscribing to the website and its services.
Real Estate Heatmap
One of the major advantages of Mashvisor over other real estate platforms is its real estate heatmap. The heatmap can be easily accessed using the Property Search tool. All you need to do is input a location (address, city, neighborhood, or zip code). After entering the information, you will be shown a map of the location.
The heatmap features can be turned on by clicking on the dropdown menu located in the upper left corner. You can select the following filters for the heatmap:
- Traditional Monthly Rental Income
- Airbnb Monthly Rental Income
- Airbnb Cash on Cash Return
- Traditional Cash on Cash Return
- Listing Price
- Airbnb Occupancy Rate
Once the heatmap feature is activated, the map will automatically be color-coded to reflect areas where numbers for a particular filter are the best (darker), the worst (lighter), and everything else in between.
Mashvisor’s real estate heatmap shows investors a color-coded representation of a particular location’s investment performance.
Investment Property Calculator
Lastly, as a real estate investment tool, Mashvisor also offers an investment property calculator, which lets you crunch numbers faster yet more accurately. The system is aided by artificial intelligence and is highly customizable. Since it is run by AI, the system is also very interactive and intuitive, making doing the math a lot more fun.
The calculator uses real estate data found in the system to give you the most accurate and realistic ROI projections. It will prove especially useful going into 2023 and beyond.
All of the above, and more, are what make Mashvisor one of the best – if not the best – real estate websites today. As a real estate investing site, Mashvisor improves your real estate investing confidence because of the tools at your disposal.
To learn more about how Mashvisor can help you find profitable real estate properties in 2023, schedule a demo.
Mashvisor’s investment property calculator allows investors to skip manual calculations and obtain the most accurate and realistic ROI projections.
20 Places to Invest in Real Estate in 2023
Going into 2023, investors are curious about which places offer the most in terms of ROI and profit. We combed through Mashvisor’s September 2022 location report to find the best investment locations for both traditional and vacation rental properties for 2023.
From the report, we came up with a top ten list for each rental property category. We used the following filters to identify which ones should be included in our list:
- Each location should have at least a hundred long term or short term rental listings.
- Median property prices for each location should be below the million-dollar mark.
- Each location should have a monthly rental income of at least $2,000. This applies to both rental property types.
- Each location must have a 2.00% cash on cash return or higher. This goes for both long term or short term rentals.
- For long term rental locations, each place should have a high price to rent ratio of 20 and above.
- Short term rental locations must have an Airbnb occupancy rate of at least 50%.
The locations are ranked from the highest cash on cash returns to the lowest. That said, here are the top 20 locations ideal for real estate investing in 2023, according to Mashvisor.
10 Cities for 2023 With the Highest Long Term Rental Cash on Cash Returns
The best cities for long term rental property investments in 2023 are the following:
1. Vero Beach, FL
- Median Property Price: $707,039
- Average Price per Square Foot: $291
- Days on Market: 80
- Number of Long Term Rental Listings: 614
- Monthly Long Term Rental Income: $2,647
- Long Term Rental Cash on Cash Return: 4.40%
- Long Term Rental Cap Rate: 4.51%
- Price to Rent Ratio: 22
- Walk Score: 78
2. Fountain Hills, AZ
- Median Property Price: $960,907
- Average Price per Square Foot: $377
- Days on Market: 92
- Number of Long Term Rental Listings: 121
- Monthly Long Term Rental Income: $3,508
- Long Term Rental Cash on Cash Return: 3.74%
- Long Term Rental Cap Rate: 3.80%
- Price to Rent Ratio: 23
- Walk Score: 39
3. Bradenton, FL
- Median Property Price: $600,566
- Average Price per Square Foot: $318
- Days on Market: 59
- Number of Long Term Rental Listings: 619
- Monthly Long Term Rental Income: $2,498
- Long Term Rental Cash on Cash Return: 3.53%
- Long Term Rental Cap Rate: 3.62%
- Price to Rent Ratio: 20
- Walk Score: 47
4. Lafayette, LA
- Median Property Price: $401,943
- Average Price per Square Foot: $162
- Days on Market: 124
- Number of Long Term Rental Listings: 110
- Monthly Long Term Rental Income: $1,504
- Long Term Rental Cash on Cash Return: 3.50%
- Long Term Rental Cap Rate: 3.62%
- Price to Rent Ratio: 22
- Walk Score: 85
5. Brunswick, GA
- Median Property Price: $378,723
- Average Price per Square Foot: $1,993
- Days on Market: 75
- Number of Long Term Rental Listings: 171
- Monthly Long Term Rental Income: $1,611
- Long Term Rental Cash on Cash Return: 3.41%
- Long Term Rental Cap Rate: 3.52%
- Price to Rent Ratio: 20
- Walk Score: 84
6. Hampton, VA
- Median Property Price: $350,270
- Average Price per Square Foot: $173
- Days on Market: 50
- Number of Long Term Rental Listings: 252
- Monthly Long Term Rental Income: $1,479
- Long Term Rental Cash on Cash Return: 3.35%
- Long Term Rental Cap Rate: 3.46%
- Price to Rent Ratio: 20
- Walk Score: 38
7. Stuart, FL
- Median Property Price: $694,342
- Average Price per Square Foot: $356
- Days on Market: 61
- Number of Long Term Rental Listings: 360
- Monthly Long Term Rental Income: $2,778
- Long Term Rental Cash on Cash Return: 3.31%
- Long Term Rental Cap Rate: 3.38%
- Price to Rent Ratio: 21
- Walk Score: 39
8. Wilmington, DE
- Median Property Price: $448,538
- Average Price per Square Foot: $216
- Days on Market: 132
- Number of Long Term Rental Listings: 210
- Monthly Long Term Rental Income: $1,915
- Long Term Rental Cash on Cash Return: 3.30%
- Long Term Rental Cap Rate: 3.40%
- Price to Rent Ratio: 20
- Walk Score: 80
9. Williamsburg, VA
- Median Property Price: $542,435
- Average Price per Square Foot: $220
- Days on Market: 58
- Number of Long Term Rental Listings: 171
- Monthly Long Term Rental Income: $2,094
- Long Term Rental Cash on Cash Return: 3.30%
- Long Term Rental Cap Rate: 3.38%
- Price to Rent Ratio: 22
- Walk Score: 81
10. Riviera Beach, FL
- Median Property Price: $695,505
- Average Price per Square Foot: $415
- Days on Market: 84
- Number of Long Term Rental Listings: 278
- Monthly Long Term Rental Income: $2,821
- Long Term Rental Cash on Cash Return: 3.27%
- Long Term Rental Cap Rate: 3.35%
- Price to Rent Ratio: 21
- Walk Score: 43
To start looking for and analyzing the best locations for traditional rental properties in any city and neighborhood of choice for 2023, click here.
10 Cities for 2023 With the Highest Short Term Rental Cash on Cash Returns
As for the best vacation rental locations for 2023, here are the top cities to invest in, based on Mashvisor’s data:
1. Nashville, IN
- Median Property Price: $468,167
- Average Price per Square Foot: $189
- Days on Market: 59
- Number of Airbnb Listings: 140
- Monthly Short Term Rental Income: $4,968
- Short Term Rental Cash on Cash Return: 7.72%
- Short Term Rental Cap Rate: 7.87%
- Short Term Rental Daily Rate: $260
- Short Term Rental Occupancy Rate: 52%
- Walk Score: 50
2. Sweetwater, FL
- Median Property Price: $584,713
- Average Price per Square Foot: $352
- Days on Market: 63
- Number of Airbnb Listings: 411
- Monthly Short Term Rental Income: $5,023
- Short Term Rental Cash on Cash Return: 7.65%
- Short Term Rental Cap Rate: 7.80%
- Short Term Rental Daily Rate: $166
- Short Term Rental Occupancy Rate: 51
- Walk Score: 82
3. Port Ewen, NY
- Median Property Price: $388,960
- Average Price per Square Foot: $234
- Days on Market: 46
- Number of Airbnb Listings: 229
- Monthly Short Term Rental Income: $4,704
- Short Term Rental Cash on Cash Return: 7.61%
- Short Term Rental Cap Rate: 7.80%
- Short Term Rental Daily Rate: $217
- Short Term Rental Occupancy Rate: 56%
- Walk Score: 55
4. Rio Grande, NJ
- Median Property Price: $361,309
- Average Price per Square Foot: $244
- Days on Market: 46
- Number of Airbnb Listings: 721
- Monthly Short Term Rental Income: $4,068
- Short Term Rental Cash on Cash Return: 7.54%
- Short Term Rental Cap Rate: 7.73%
- Short Term Rental Daily Rate: $284
- Short Term Rental Occupancy Rate: 52%
- Walk Score: 52
5. Clawson, MI
- Median Property Price: $280,493
- Average Price per Square Foot: $233
- Days on Market: 28
- Number of Airbnb Listings: 281
- Monthly Short Term Rental Income: $3,531
- Short Term Rental Cash on Cash Return: 7.51%
- Short Term Rental Cap Rate: 7.73%
- Short Term Rental Daily Rate: $175
- Short Term Rental Occupancy Rate: 60%
- Walk Score: 69
6. Del Haven, NJ
- Median Property Price: $449,939
- Average Price per Square Foot: $301
- Days on Market: 47
- Number of Airbnb Listings: 196
- Monthly Short Term Rental Income: $5,010
- Short Term Rental Cash on Cash Return: 7.34%
- Short Term Rental Cap Rate: 7.48%
- Short Term Rental Daily Rate: $282
- Short Term Rental Occupancy Rate: 57%
- Walk Score: 14
7. Reading, OH
- Median Property Price: $234,520
- Average Price per Square Foot: $141
- Days on Market: 51
- Number of Airbnb Listings: 153
- Monthly Short Term Rental Income: $2,865
- Short Term Rental Cash on Cash Return: 7.32%
- Short Term Rental Cap Rate: 7.58%
- Short Term Rental Daily Rate: $100
- Short Term Rental Occupancy Rate: 57%
- Walk Score: 80
8. Robbinsdale, MN
- Median Property Price: $307,235
- Average Price per Square Foot: $160
- Days on Market: 35
- Number of Airbnb Listings: 295
- Monthly Short Term Rental Income: $3,411
- Short Term Rental Cash on Cash Return: 7.15%
- Short Term Rental Cap Rate: 7.35%
- Short Term Rental Daily Rate: $145
- Short Term Rental Occupancy Rate: 63%
- Walk Score: 73
9. Juneau, AK
- Median Property Price: $440,750
- Average Price per Square Foot: $277
- Days on Market: 47
- Number of Airbnb Listings: 211
- Monthly Short Term Rental Income: $4,782
- Short Term Rental Cash on Cash Return: 7.15%
- Short Term Rental Cap Rate: 7.30%
- Short Term Rental Daily Rate: $217
- Short Term Rental Occupancy Rate: 65%
- Walk Score: 84
10. Columbia Heights, MN
- Median Property Price: $304,388
- Average Price per Square Foot: $145
- Days on Market: 34
- Number of Airbnb Listings: 257
- Monthly Short Term Rental Income: $3,580
- Short Term Rental Cash on Cash Return: 7.14%
- Short Term Rental Cap Rate: 7.34%
- Short Term Rental Daily Rate: $135
- Short Term Rental Occupancy Rate: 64%
- Walk Score: 82
To start looking for and analyzing the best Airbnb locations in any city and neighborhood of choice for 2023, click here.
Wrapping It Up
Despite the present global economic climate, investing in real estate in 2023 is still a sound idea. It remains a very financially rewarding investment vehicle, provided you do it right.
Put in the necessary hours and know what the best places to invest in real estate 2023 are. As long as you do your due diligence, you’ll be fine.
Doing your homework is now a lot easier with a website like Mashvisor. Mashvisor helps investors like you find the most promising investment properties in the most profitable locations. The site is very easy to navigate. Search options and even calculations are easily customizable. And given its superior AI, calculations and projections are accurate and more realistic than ever.
Real estate investing is a lot more efficient and quicker today with the help of Mashvisor. Find out what countless other Mashvisor users already know by subscribing to its services.
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.