Are you wondering how to identify the best places to invest in real estate in 2020? One of the best ways to do that is to look at the cap rates by city. While the capitalization rate might not be a perfect measure of the rate of return on rental properties, it is definitely a solid indicator of whether a housing market might be a good place for buying an investment property.
In this article we will show experienced and beginner real estate investors what rental cap rates by city they should expect in 2020. Moreover, we will provide them with the average monthly rental income and the median home values predicted for the best 100 real estate markets for 2020 as well as a few other relevant metrics. All real estate data below has been generated by Mashvisor’s investment property calculator based on nationwide big data and predictive analytics. Last but not least, the real estate cap rate figures have been separated by long term rentals and short term rentals because they vary significantly, even within the same location.
2020 Residential Cap Rates by City: Traditional Rentals
For starters, let’s have a look at the city-level capitalization rates for long term rental properties which investors should expect to see in the US housing market in 2020. These predictions, provided by our rental property calculator, include all property types (single family homes, multi family homes, townhouses, condos, apartments, and others) and all property classes (Class A, Class B, and Class C). As such, they intend to give those interested in real estate investing in 2020 a general idea of where to direct their real estate market analysis and investment property search.
Table 1: 2020 Cap Rates by City for Traditional Rental Properties, All Property Types
| City and State | Traditional Cap Rate | Traditional Rental Income | Median Property Price | Price to Rent Ratio | |
| #1 | Pittsburgh, PA | 3.36% | $1,237 | $230,803 | 16 |
| #2 | Cathedral City, CA | 3.20% | $1,919 | $342,039 | 15 |
| #3 | Detroit, MI | 2.87% | $1,031 | $168,689 | 14 |
| #4 | Palm Springs, CA | 2.86% | $2,941 | $609,978 | 17 |
| #5 | Baltimore, MD | 2.86% | $1,540 | $250,475 | 14 |
| #6 | Philadelphia, PA | 2.55% | $1,456 | $319,776 | 18 |
| #7 | Cincinnati, OH | 2.52% | $1,200 | $248,009 | 17 |
| #8 | Honolulu, HI | 2.41% | $2,532 | $935,626 | 31 |
| #9 | Lake Worth, FL | 2.24% | $1,938 | $306,726 | 13 |
| #10 | Fort Wayne, IN | 2.16% | $1,157 | $214,240 | 15 |
| #11 | Indianapolis, IN | 2.08% | $1,146 | $225,583 | 16 |
| #12 | Saint Petersburg, FL | 2.06% | $1,453 | $357,275 | 20 |
| #13 | Atlanta, GA | 2.03% | $2,055 | $426,507 | 17 |
| #14 | Memphis, TN | 2.02% | $985 | $215,733 | 18 |
| #15 | Gatlinburg, TN | 2.00% | $1,685 | $404,267 | 20 |
| #16 | Bradenton, FL | 1.99% | $1,736 | $349,661 | 17 |
| #17 | Clearwater, FL | 1.95% | $1,642 | $365,025 | 19 |
| #18 | Nashville, TN | 1.94% | $1,752 | $432,415 | 21 |
| #19 | Denver, CO | 1.93% | $1,886 | $436,513 | 19 |
| #20 | Chandler, AZ | 1.86% | $1,818 | $411,556 | 19 |
| #21 | Washington, DC | 1.84% | $2,688 | $685,320 | 21 |
| #22 | Jacksonville, FL | 1.82% | $1,299 | $257,396 | 17 |
| #23 | Orlando, FL | 1.78% | $1,695 | $337,263 | 17 |
| #24 | Tampa, FL | 1.78% | $1,727 | $377,888 | 18 |
| #25 | New Orleans, LA | 1.77% | $1,621 | $401,957 | 21 |
| #26 | Arlington, VA | 1.77% | $2,508 | $671,184 | 22 |
| #27 | Colorado Springs, CO | 1.76% | $1,556 | $411,194 | 22 |
| #28 | Davenport, FL | 1.76% | $1,439 | $242,107 | 14 |
| #29 | Fayetteville, NC | 1.76% | $1,020 | $182,071 | 15 |
| #30 | Scottsdale, AZ | 1.75% | $2,951 | $917,462 | 26 |
| #31 | Louisville, KY | 1.72% | $1,226 | $254,514 | 17 |
| #32 | Cleveland, OH | 1.70% | $1,042 | $163,522 | 13 |
| #33 | Columbus, OH | 1.69% | $1,213 | $229,846 | 16 |
| #34 | Oklahoma City, OK | 1.65% | $1,161 | $271,897 | 20 |
| #35 | Lexington, KY | 1.64% | $1,303 | $304,620 | 19 |
| #36 | Las Vegas, NV | 1.61% | $1,371 | $380,727 | 23 |
| #37 | Richmond, VA | 1.61% | $1,331 | $333,708 | 21 |
| #38 | Alexandria, VA | 1.60% | $2,360 | $624,135 | 22 |
| #39 | Charleston, SC | 1.59% | $1,811 | $658,242 | 30 |
| #40 | Tempe, AZ | 1.56% | $1,663 | $354,764 | 18 |
| #41 | Columbia, SC | 1.54% | $1,110 | $226,403 | 17 |
| #42 | Virginia Beach, VA | 1.54% | $1,541 | $372,238 | 20 |
| #43 | Sarasota, FL | 1.52% | $2,166 | $568,993 | 22 |
| #44 | Kissimmee, FL | 1.50% | $1,465 | $270,216 | 15 |
| #45 | St. Louis, MO | 1.49% | $1,150 | $245,916 | 18 |
| #46 | Durham, NC | 1.44% | $1,460 | $354,543 | 20 |
| #47 | Auburn, AL | 1.44% | $1,282 | $325,152 | 21 |
| #48 | Gilbert, AZ | 1.43% | $1,666 | $413,964 | 21 |
| #49 | Aurora, IL | 1.41% | $1,567 | $231,326 | 12 |
| #50 | Houston, TX | 1.39% | $1,856 | $413,842 | 19 |
| #51 | Riverside, CA | 1.37% | $1,921 | $478,243 | 21 |
| #52 | Delray Beach, FL | 1.36% | $1,958 | $488,001 | 21 |
| #53 | Sacramento, CA | 1.35% | $1,527 | $360,167 | 20 |
| #54 | Minneapolis, MN | 1.33% | $1,850 | $385,911 | 17 |
| #55 | Cape Coral, FL | 1.32% | $1, #509 | $331,631 | 20 |
| #56 | Phoenix, AZ | 1.31% | $1,479 | $392,127 | 22 |
| #57 | Fort Worth, TX | 1.28% | $1,641 | $289,998 | 15 |
| #58 | Kansas City, MO | 1.27% | $1,190 | $255,372 | 18 |
| #59 | Los Angeles, CA | 1.26% | $3,503 | $1,007,009 | 24 |
| #60 | Raleigh, NC | 1.25% | $1,536 | $427,618 | 23 |
| #61 | Redding, CA | 1.25% | $1,459 | $397,687 | 23 |
| #62 | Seattle, WA | 1.24% | $2,345 | $683,240 | 24 |
| #63 | Savannah, GA | 1.23% | $1,297 | $380,750 | 24 |
| #64 | Charlotte, NC | 1.22% | $1,518 | $386,198 | 21 |
| #65 | San Jose, CA | 1.22% | $3,102 | $949,572 | 26 |
| #66 | Tucson, AZ | 1.21% | $1,148 | $267,810 | 19 |
| #67 | San Diego, CA | 1.19% | $2,687 | $811,881 | 25 |
| #68 | Hollywood, FL | 1.15% | $2,105 | $454,389 | 18 |
| #69 | Oakland, CA | 1.14% | $2,902 | $823,208 | 24 |
| #70 | Fort Myers, FL | 1.13% | $1,563 | $312,275 | 17 |
| #71 | Miami, FL | 1.12% | $2,313 | $537,027 | 19 |
| #72 | Greenville, SC | 1.08% | $1,323 | $380,161 | 24 |
| #73 | San Antonio, TX | 1.07% | $1,564 | $282,101 | 15 |
| #74 | Destin, FL | 1.07% | $1,771 | $645,567 | 30 |
| #75 | Pompano Beach, FL | 1.05% | $1,799 | $357,152 | 17 |
| #76 | Long Beach, CA | 1.03% | $2,931 | $802,427 | 23 |
| #77 | Chicago, IL | 0.99% | $1,970 | $423,786 | 18 |
| #78 | Breckenridge, CO | 0.99% | $3,492 | $1,087,730 | 26 |
| #79 | Reno | 0.92% | $1,636 | $536,971 | 27.36 |
| #80 | Dallas, TX | 0.90% | $1,885 | $412,799 | 18 |
| #81 | Bend, OR | 0.88% | $1,859 | $662,092 | 30 |
| #82 | Berkeley, CA | 0.87% | $3,854 | $1,293,094 | 28 |
| #83 | Union City, CA | 0.85% | $2,845 | $808,699 | 24 |
| #84 | Boston, MA | 0.82% | $2,728 | $895,787 | 27 |
| #85 | Irvine, CA | 0.81% | $3,479 | $1,024,282 | 25 |
| #86 | Fort Lauderdale, FL | 0.81% | $2,620 | $664,861 | 21 |
| #87 | Portland, OR | 0.80% | $2,019 | $543,408 | 22 |
| #88 | Boulder, CO | 0.80% | $2,565 | $1,008,697 | 33 |
| #89 | New York, NY | 0.77% | $2,792 | $1,114,494 | 33 |
| #90 | Madison, WI | 0.74% | $1,519 | $352,021 | 19 |
| #91 | Boise, ID | 0.68% | $1,427 | $463,403 | 27 |
| #92 | Austin, TX | 0.64% | $2,079 | $553,120 | 22 |
| #93 | Naples, FL | 0.61% | $1,902 | $569,267 | 25 |
| #94 | El Paso, TX | 0.60% | $1,155 | $209,604 | 15 |
| #95 | Jersey City, NJ | 0.50% | $2,225 | $676,032 | 25 |
| #96 | South Lake Tahoe, CA | 0.50% | $1,630 | $606,982 | 31 |
| #97 | San Francisco, CA | 0.48% | $4,291 | $1,648,307 | 32 |
| #98 | Fresno, CA | 0.45% | $1,133 | $354,896 | 26 |
| #99 | Joshua Tree, CA | 0.31% | $869 | $315,021 | 30 |
| #100 | Panama City Beach, FL | 0.11% | $1,553 | $393,864 | 21 |
Related: How to Calculate Price to Rent Ratio? A Real Estate Investor’s Guide
According to these US housing market predictions 2020, the city-level rap rate for long term rentals is expected to range between 0.11% and 3.36%. Importantly for first-time real estate investors in search of high return on investment, the Pittsburgh real estate market emerges as the top location for buying rental property as it offers the highest capitalization rate. Meanwhile, the Panama City Beach real estate market is the worst among these 100 places as it has the lowest cap rate. Another significant trend which transpires from this data is that the majority of cities and towns across the US will offer cap rates between 1% and 2% in 2020.
Is this a good cap rate for real estate investments? Should you invest in a long term rental property in the US in 2020?
The answers to these and many other real estate investment questions will follow in a bit.
For comparison, you can take a look at the 2019 cap rates by city in the US real estate market.
While having forecasts of the cap rates by city for all property types to be expected in the US housing market in 2020 is good, it is not enough for beginners to make profitable real estate investing decisions. The reason is simple: different property types offer widely varying return on investment. So, in order to get started in real estate investing in 2020, you’d need some extra help to identify the best property type – whether a single family home, a condo, an apartment, or a multi family home – in each of the best places to buy rental property.
We’ve run some further calculations on Mashvisor’s real estate investment tools to provide you with reliable estimates of the cap rates to be expected in 2020 not only by city but also by property type in each city. For simplicity, we’ve included the three most popular investment property types in the US real estate market: 1) single family homes, 2) condos and apartments, and 3) multi family homes. Furthermore, we are also showing you what capitalization rates you can expect for foreclosed homes in each market as investing in a foreclosure is one of the best ways to boost your rate of return.
Table 2: 2020 Cap Rates by City and by Property Type for Traditional Rental Properties
| City and State | Traditional Cap Rate for Single Family Homes | Traditional Cap Rate for Condos & Apartments | Traditional Cap Rate for Multi Family Homes | Traditional Cap Rate for Foreclosures | |
| #1 | Detroit, MI | 4.16% | NA | 2.38% | 21.43% |
| #2 | Las Vegas, NV | 3.56% | 2.29% | 1.21% | 1.84% |
| #3 | Pittsburgh, PA | 3.54% | 1.67% | 2.83% | 6.87% |
| #4 | Saint Petersburg, FL | 3.00% | NA | NA | 1.84% |
| #5 | Baltimore, MD | 2.91% | 0.02% | 2.71% | 8.30% |
| #6 | Delray Beach, FL | 2.78% | 2.50% | 1.78% | 4.86% |
| #7 | Cincinnati, OH | 2.76% | NA | 2.61% | 5.03% |
| #8 | Philadelphia, PA | 2.56% | 1.84% | 2.19% | 6.37% |
| #9 | Atlanta, GA | 2.51% | 1.25% | 1.91% | 3.80% |
| #10 | Pompano Beach, FL | 2.51% | 0.40% | NA | 2.03% |
| #11 | Chicago, IL | 2.50% | 0.03% | 2.87% | 2.16% |
| #12 | Gatlinburg, TN | 2.46% | 0.16% | NA | NA |
| #13 | Lake Worth, FL | 2.45% | 1.56% | 1.77% | 2.42% |
| #14 | Panama City Beach, FL | 2.34% | NA | NA | NA |
| #15 | Fort Wayne, IN | 2.33% | 0.61% | 1.09% | NA |
| #16 | New Orleans, LA | 2.20% | 1.25% | 1.42% | 4.71% |
| #17 | Lansing, MI | 2.19% | NA | NA | 1.03% |
| #18 | Denver, CO | 2.14% | 1.79% | NA | 2.95% |
| #19 | Palm Springs, CA | 2.11% | 3.73% | NA | 3.33% |
| #20 | Cleveland, OH | 2.10% | NA | 1.86% | 11.03% |
| #21 | Indianapolis, IN | 2.09% | 2.23% | 1.50% | 5.01% |
| #22 | Hollywood, FL | 2.09% | 0.43% | 4.09% | 2.03% |
| #23 | Memphis, TN | 2.01% | NA | NA | 7.66% |
| #24 | Miami, FL | 2.00% | 0.56% | 1.79% | 2.95% |
| #25 | Columbus, OH | 1.96% | NA | 1.86% | 3.96% |
| #26 | Bradenton, FL | 1.96% | 2.28% | NA | NA |
| #27 | Davenport, FL | 1.96% | 1.22% | NA | NA |
| #28 | Tampa, FL | 1.95% | 1.66% | 1.30% | 3.35% |
| #29 | Tempe, AZ | 1.94% | 0.25% | NA | 1.01% |
| #30 | Fort Lauderdale, FL | 1.94% | NA | NA | 1.39% |
| #31 | Minneapolis, MN | 1.93% | 0.56% | 0.91% | 2.70% |
| #32 | Washington, DC | 1.93% | 1.91% | 0.67% | 3.23% |
| #33 | Columbia, SC | 1.92% | NA | 0.25% | 5.88% |
| #34 | El Paso, TX | 1.89% | NA | NA | NA |
| #35 | Orlando, FL | 1.88% | 1.71% | 2.36% | 2.69% |
| #36 | Chandler, AZ | 1.88% | 2.19% | NA | 4.25% |
| #37 | Fayetteville, NC | 1.87% | NA | 1.13% | 2.93% |
| #38 | Clearwater, FL | 1.85% | 0.82% | 2.17% | NA |
| #39 | Jacksonville, FL | 1.85% | 1.37% | 4.80% | 2.68% |
| #40 | Oklahoma City, OK | 1.84% | NA | 2.28% | 3.79% |
| #41 | Lexington, KY | 1.84% | NA | 1.23% | NA |
| #42 | Kissimmee, FL | 1.84% | 1.18% | NA | 2.81% |
| #43 | St. Louis, MO | 1.79% | NA | 1.52% | 5.10% |
| #44 | Louisville, KY | 1.78% | 1.15% | 3.16% | 0.74% |
| #45 | Dallas, TX | 1.77% | NA | 1.37% | NA |
| #46 | Sarasota, FL | 1.75% | 1.27% | 2.30% | 3.63% |
| #47 | Charleston, SC | 1.72% | 1.30% | 0.83% | NA |
| #48 | Colorado Springs, CO | 1.72% | 2.51% | 1.20% | 2.36% |
| #49 | Richmond, VA | 1.68% | 1.31% | 0.63% | 4.50% |
| #50 | Boston, MA | 1.67% | 0.63% | NA | NA |
| #51 | Scottsdale, AZ | 1.65% | 2.01% | NA | 2.14% |
| #52 | Fort Myers, FL | 1.59% | 0.27% | 2.07% | 4.22% |
| #53 | Cathedral City, CA | 1.57% | 2.27% | NA | NA |
| #54 | Phoenix, AZ | 1.57% | NA | 0.97% | 2.71% |
| #55 | Oakland, CA | 1.55% | 0.22% | 1.06% | 1.81% |
| #56 | Auburn, AL | 1.48% | 1.22% | NA | NA |
| #57 | Cape Coral, FL | 1.48% | 0.05% | 0.57% | 2.62% |
| #58 | Kansas City, MO | 1.47% | NA | 1.39% | 3.24% |
| #59 | Gilbert, AZ | 1.40% | NA | NA | 0.47% |
| #60 | Virginia Beach, VA | 1.39% | NA | 0.71% | 2.45% |
| #61 | Greenville, SC | 1.38% | NA | NA | NA |
| #62 | Fort Worth, TX | 1.36% | NA | 1.56% | NA |
| #63 | Savannah, GA | 1.34% | 0.05% | 1.06% | NA |
| #64 | Breckenridge, CO | 1.34% | 0.42% | NA | NA |
| #65 | Sacramento, CA | 1.33% | 1.54% | 1.11% | 1.42% |
| #66 | San Jose, CA | 1.32% | 1.28% | NA | 1.65% |
| #67 | San Antonio, TX | 1.27% | NA | 0.46% | 2.36% |
| #68 | Charlotte, NC | 1.25% | 0.75% | 1.41% | 2.06% |
| #69 | Myrtle Beach, SC | 1.24% | NA | NA | 2.85% |
| #70 | Jersey City, NJ | 1.24% | 0.42% | 0.23% | 1.07% |
| #71 | Redding, CA | 1.23% | NA | 0.74% | NA |
| #72 | Houston, TX | 1.23% | 2.85% | NA | NA |
| #73 | Miami Beach, FL | 1.23% | NA | 0.54% | 0.68% |
| #74 | San Diego, CA | 1.17% | 1.04% | 1.01% | 2.01% |
| #75 | Los Angeles, CA | 1.12% | 0.45% | 2.11% | 1.36% |
| #76 | Tucson, AZ | 1.11% | 2.18% | 1.59% | 0.08% |
| #77 | Honolulu, HI | 1.11% | 2.74% | 0.07% | NA |
| #78 | Portland, OR | 1.10% | 0.01% | 0.32% | 1.39% |
| #79 | Raleigh, NC | 1.09% | 1.82% | NA | NA |
| #80 | Seattle, WA | 1.07% | 1.54% | NA | 1.83% |
| #81 | Reno, NV | 1.05% | NA | 0.78% | NA |
| #82 | Destin, FL | 1.03% | 0.93% | NA | NA |
| #83 | Naples, FL | 1.02% | NA | 5.94% | 1.65% |
| #84 | Alexandria, VA | 1.02% | 2.56% | NA | NA |
| #85 | Arlington, VA | 1.00% | 2.29% | NA | NA |
| #86 | Berkeley, CA | 0.93% | NA | NA | NA |
| #87 | Madison, WI | 0.92% | 0.04% | 0.99% | NA |
| #88 | New York, NY | 0.92% | 0.72% | 0.47% | 2.25% |
| #89 | Long Beach, CA | 0.84% | 0.16% | 2.26% | 1.14% |
| #90 | Union City, CA | 0.83% | NA | NA | NA |
| #91 | San Francisco, CA | 0.77% | 0.36% | 0.49% | NA |
| #92 | Austin, TX | 0.71% | 0.43% | 0.28% | NA |
| #93 | Boise, ID | 0.67% | NA | NA | NA |
| #94 | Bend, OR | 0.65% | NA | NA | NA |
| #95 | South Lake Tahoe, CA | 0.64% | NA | 1.07% | NA |
| #96 | Boulder, CO | 0.64% | 1.48% | NA | NA |
| #97 | West Palm Beach, FL | 0.54% | 0.14% | 1.50% | 2.17% |
| #98 | Fresno, CA | 0.49% | NA | 0.38% | 1.29% |
| #99 | Nashville, TN | 0.43% | 1.82% | 1.19% | 3.28% |
| #100 | Joshua Tree, CA | 0.30% | NA | NA | NA |
The real estate data above is organized in descending order for single family cap rates by city as single family homes for sale will be the predominant property type in most top US real estate markets in 2020.
We know that looking at all these numbers can be extremely overwhelming for real estate investors, and especially beginners, who are considering buying a rental property in 2020. That’s why we’ve prepared a quick summary of the above data which should help you get a good idea of which markets you should focus on for your first – or next – rental property purchase.
Long Term Rentals Cap Rate Data by Property Type Summary
Single Family Homes for Sale in 2020
- Single Family Cap Rates by City Range: from 0.30% to 4.16%
- Highest Single Family Cap Rate: Detroit real estate market, 4.16%
- Lowest Single Family Cap Rate: Joshua Tree real estate market, 0.30%
Condos and Apartments for Sale in 2020
- Condo and Apartment Cap Rates by City Range: from 0.01% to 3.73%
- Highest Condo and Apartment Cap Rate: Palm Springs real estate market, 3.73%
- Lowest Condo and Apartment Cap Rate: Portland real estate market, 0.01%
Multi Family Homes for Sale in 2020
- Multifamily Cap Rates by City Range: from 0.07% to 5.94%
- Highest Multifamily Cap Rate: Naples real estate market, 5.94%
- Lowest Multifamily Cap Rate: Honolulu real estate market, 0.07%
Foreclosed Homes for Sale in 2020
- Foreclosure Cap Rates by City Range: from 0.08% to 21.43%
- Highest Foreclosure Cap Rate: Detroit real estate market, 21.43%
- Lowest Foreclosure Cap Rate: Tucson real estate market, 0.08%
2020 Real Estate Cap Rates by City: Airbnb Rentals
After the establishment of Airbnb.com in 2008, vacation rentals became an independent, full-scale real estate investment strategy which is frequently more profitable than traditional, long term rental properties. Thus, no US real estate market analysis 2020 is complete without taking a look at what return on investment investors can expect for short term rentals. Once again, we’ve used Mashvisor’s rental property calculator to estimate the average cap rates by city in 2020 for Airbnb rental properties of all types across the US housing market. Here are the results:
Table 3: 2020 Cap Rates by City for Airbnb Rental Properties, All Property Types
| City and State | Airbnb Cap Rate | Airbnb Rental Income | Airbnb Occupancy Rate | Median Property Price | |
| #1 | Fort Wayne, IN | 10.35% | $2,109 | 63.86% | $214,240 |
| #2 | Savannah, GA | 9.19% | $3,894 | 73.20% | $380,750 |
| #3 | Cincinnati, OH | 8.92% | $2,539 | 56.94% | $248,009 |
| #4 | Auburn, AL | 8.54% | $3,909 | 41.85% | $325,152 |
| #5 | Columbia, SC | 8.30% | $2,777 | 51.59% | $226,403 |
| #6 | Memphis, TN | 8.11% | $2,050 | 65.24% | $215,733 |
| #7 | Charleston, SC | 7.86% | $4,770 | 64.88% | $658,242 |
| #8 | Pittsburgh, PA | 7.39% | $2,088 | 51.37% | $230,803 |
| #9 | Gatlinburg, TN | 7.22% | $3,832 | 70.27% | $404,267 |
| #10 | Myrtle Beach, SC | 6.78% | $3,056 | 57.36% | $241,617 |
| #11 | Virginia Beach, VA | 6.70% | $3,596 | 53.51% | $372,238 |
| #12 | Joshua Tree, CA | 6.65% | $2,960 | 55.07% | $315,021 |
| #13 | Oklahoma City, OK | 6.50% | $2,615 | 69.79% | $271,897 |
| #14 | Las Vegas, NV | 6.46% | $3,277 | 57.73% | $380,727 |
| #15 | Fayetteville, NC | 6.41% | $1,949 | 61.35% | $182,071 |
| #16 | Louisville, KY | 6.33% | $2,610 | 54.06% | $254,514 |
| #17 | Indianapolis, IN | 5.94% | $2,056 | 50.56% | $225,583 |
| #18 | Richmond, VA | 5.72% | $2,707 | 58.17% | $333,708 |
| #19 | Madison, WI | 5.52% | $3,578 | 61.42% | $352,021 |
| #20 | Nashville, TN | 5.39% | $3,589 | 63.13% | $432,415 |
| #21 | Lexington, KY | 5.33% | $2,454 | 54.20% | $304,620 |
| #22 | Columbus, OH | 5.25% | $2,276 | 55.98% | $229,846 |
| #23 | Detroit, MI | 5.20% | $2,034 | 51.03% | $168,689 |
| #24 | New Orleans, LA | 5.19% | $2,889 | 55.95% | $401,957 |
| #25 | Fresno, CA | 5.16% | $3,118 | 70.22% | $354,896 |
| #26 | Kansas City, MO | 5.05% | $2,185 | 58.08% | $255,372 |
| #27 | Fort Worth, TX | 5.01% | $3,001 | 59.22% | $289,998 |
| #28 | Cathedral City, CA | 5.00% | $3,089 | 44.43% | $342,039 |
| #29 | Saint Petersburg, FL | 4.88% | $2,307 | 59.85% | $357,275 |
| #30 | Tucson, AZ | 4.88% | $2,495 | 60.44% | $267,810 |
| #31 | Reno, NV | 4.80% | $ 4,071 | 60.78% | $536,971 |
| #32 | Honolulu, HI | 4.79% | $4,141 | 71.76% | $935,626 |
| #33 | Destin, FL | 4.55% | $3,780 | 62.27% | $645,567 |
| #34 | Cleveland, OH | 4.50% | $2,017 | 53.46% | $163,522 |
| #35 | El Paso, TX | 4.46% | $2,396 | 66.25% | $209,604 |
| #36 | Colorado Springs, CO | 4.41% | $2,897 | 60.20% | $411,194 |
| #37 | South Lake Tahoe, CA | 4.31% | $4,110 | 61.69% | $606,982 |
| #38 | Clearwater, FL | 4.19% | $2,619 | 54.24% | $365,025 |
| #39 | Jacksonville, FL | 4.11% | $2,131 | 54.81% | $257,396 |
| #40 | Gilbert, AZ | 4.09% | $3,131 | 60.34% | $413,964 |
| #41 | Baltimore, MD | 4.04% | $1,998 | 52.09% | $250,475 |
| #42 | Orlando, FL | 3.93% | $2,742 | 62.16% | $337,263 |
| #43 | Palm Springs, CA | 3.93% | $3,985 | 57.67% | $609,978 |
| #44 | Redding, CA | 3.93% | $2,805 | 69.16% | $397,687 |
| #45 | Kissimmee, FL | 3.75% | $2,497 | 68.82% | $270,216 |
| #46 | Panama City Beach, FL | 3.73% | $3,263 | 64.66% | $393,864 |
| #47 | Bradenton, FL | 3.69% | $2,344 | 61.74% | $349,661 |
| #48 | St. Louis, MO | 3.67% | $2,141 | 56.11% | $245,916 |
| #49 | Tempe, AZ | 3.60% | $2,734 | 58.55% | $354,764 |
| #50 | Greenville, SC | 3.59% | $2,540 | 51.82% | $380,161 |
| #51 | Tampa, FL | 3.54% | $2,575 | 52.47% | $377,888 |
| #52 | West Palm Beach, FL | 3.50% | $2,453 | 55.94% | $332,980 |
| #53 | Delray Beach, FL | 3.48% | $2,638 | 54.73% | $488,001 |
| #54 | Phoenix, AZ | 3.46% | $2,632 | 62.90% | $392,127 |
| #55 | Austin, TX | 3.35% | $3,670 | 62.36% | $553,120 |
| #56 | Philadelphia, PA | 3.34% | $1,999 | 54.02% | $319,776 |
| #57 | Miami, FL | 3.28% | $3,547 | 56.92% | $537,027 |
| #58 | Chandler, AZ | 3.27% | $2,906 | 58.00% | $411,556 |
| #59 | Davenport, FL | 3.24% | $2,208 | 55.89% | $242,107 |
| #60 | Denver, CO | 3.22% | $2,901 | 68.73% | $436,513 |
| #61 | Koloa, HI | 3.18% | $6,969 | 76.20% | $1,167,269 |
| #62 | San Antonio, TX | 3.14% | $2,478 | 54.10% | $282,101 |
| #63 | Sacramento, CA | 3.08% | $2,630 | 66.13% | $360,167 |
| #64 | Minneapolis, MN | 3.06% | $2,774 | 54.82% | $385,911 |
| #65 | Raleigh, NC | 2.81% | $2,692 | 61.47% | $427,618 |
| #66 | Bend, OR | 2.68% | $2,979 | 54.23% | $662,092 |
| #67 | Atlanta, GA | 2.67% | $2,427 | 49.90% | $426,507 |
| #68 | Cape Coral, FL | 2.58% | $2,134 | 53.66% | $331,631 |
| #69 | Dallas, TX | 2.52% | $2,769 | 63.85% | $412,799 |
| #70 | Pompano Beach, FL | 2.49% | $2,661 | 51.43% | $357,152 |
| #71 | Long Beach, CA | 2.46% | $3,593 | 67.76% | $802,427 |
| #72 | Naples, FL | 2.43% | $2,882 | 51.44% | $569,267 |
| #73 | Lake Worth, FL | 2.41% | $2,258 | 48.40% | $306,726 |
| #74 | Alexandria, VA | 2.36% | $3,221 | 56.80% | $624,135 |
| #75 | Arlington, VA | 2.31% | $3,139 | 54.68% | $671,184 |
| #76 | San Diego, CA | 2.29% | $3,762 | 64.98% | $811,881 |
| #77 | Boulder, CO | 2.26% | $4,239 | 63.84% | $1,008,697 |
| #78 | Charlotte, NC | 2.22% | $2,173 | 57.90% | $386,198 |
| #79 | Boston, MA | 2.16% | $4,105 | 65.57% | $895,787 |
| #80 | Portland, OR | 1.87% | $2,941 | 57.01% | $543,408 |
| #81 | Chicago, IL | 1.79% | $2,749 | 55.38% | $423,786 |
| #82 | Washington, DC | 1.79% | $2,994 | 67.33% | $685,320 |
| #83 | Fort Myers, FL | 1.75% | $2,019 | 53.89% | $312,275 |
| #84 | Oakland, CA | 1.74% | $3,605 | 67.94% | $823,208 |
| #85 | Houston, TX | 1.73% | $2,313 | 57.83% | $413,842 |
| #86 | Los Angeles, CA | 1.67% | $4,092 | 70.09% | $1,007,009 |
| #87 | Hollywood, FL | 1.59% | $2,669 | 54.40% | $454,389 |
| #88 | Boise, ID | 1.57% | $2,044 | 60.79% | $463,403 |
| #89 | Scottsdale, AZ | 1.53% | $2,747 | 64.36% | $917,462 |
| #90 | Berkeley, CA | 1.42% | $4,797 | 78.17% | $1,293,094 |
| #91 | Fort Lauderdale, FL | 1.39% | $3,153 | 55.42% | $664,861 |
| #92 | San Francisco, CA | 1.36% | $6,034 | 76.82% | $1,648,307 |
| #93 | Union City, CA | 1.35% | $3,591 | 55.78% | $808,699 |
| #94 | Miami Beach, FL | 1.31% | $3,355 | 61.83% | $802,343 |
| #95 | San Jose, CA | 1.31% | $3,726 | 55.93% | $949,572 |
| #96 | Sarasota, FL | 1.24% | $2,106 | 51.72% | $568,993 |
| #97 | Seattle, WA | 1.13% | $2,545 | 62.65% | $683,240 |
| #98 | New York, NY | 1.12% | $3,618 | 69.32% | $1,114,494 |
| #99 | Jersey City, NJ | 1.00% | $2,847 | 65.48% | $676,032 |
| #100 | Breckenridge, CO | 0.70% | $3,130 | 54.46% | $1,087,730 |
Related: What Airbnb Occupancy Rate Can You Expect in 2020?
In 2020 the city-level capitalization rates will vary between 0.70% in the Breckenridge real estate market and 10.35% in the Fort Wayne real estate market. The real estate data above shows that the majority of top real estate markets in the US will offer an Airbnb cap rate between 1% and 8% in 2020. Moreover, it also reveals that vacation home rentals tend to offer significantly higher rate of return than traditional rentals.
However, before you decide in favor of investing in rental properties in any of these locations, you should keep in mind that many of them face various forms of restrictions on short term rentals. For example, in the Las Vegas real estate market, which used to be one of the top locations for investing in Airbnb properties, renting out on short term basis for less than 30 days is not allowed anymore, while Airbnb long term rentals are still an option. In the Chicago real estate market, only owner-occupied short term rentals are permitted, so house hacking could be a successful real estate investing strategy there. Similarly, in the Los Angeles real estate market only primary residences can be rented out on Airbnb, but homeowners there can still make a good profit by renting out a single room or two due to the good Airbnb occupancy rate and nightly rates. Meanwhile, in the Dallas real estate market and the Phoenix real estate market, non-owner occupied short term rentals are legal which means that both local and out of state real estate investors can operate Airbnb rentals in these locations.
Related: Airbnb Las Vegas Regulations 2018: What Investors Need to Know
Before you decide where to buy an Airbnb investment property in 2020, remember to check out the local Airbnb laws and regulations to avoid troubles with the local authorities.
Related: The Ultimate Guide to Buying an Airbnb Property with Ease
Once again, we’ve calculated the Airbnb expected cap rates by city for 2020 by property type as they vary significantly. The estimates provided by Mashvisor’s cap rate calculator include single family homes and condos & apartments in addition to foreclosure homes.
Table 4: 2020 Cap Rates by City and Property Type for Airbnb Rental Properties
| City and State | Airbnb Cap Rate for Single Family Homes | Airbnb Cap Rate for Condos & Apartments | Airbnb Cap Rate for Foreclosures | |
| #1 | Columbia, SC | 12.91% | NA | 31.03% |
| #2 | Lansing, MI | 12.90% | NA | 15.18% |
| #3 | Davenport, FL | 11.03% | 3.72% | NA |
| #4 | Fort Wayne, IN | 10.87% | 4.66% | NA |
| #5 | Cincinnati, OH | 9.83% | 3.05% | 18.66% |
| #6 | Savannah, GA | 9.28% | 7.86% | NA |
| #7 | Auburn, AL | 8.58% | 9.81% | NA |
| #8 | Memphis, TN | 8.11% | NA | 45.75% |
| #9 | Charleston, SC | 7.64% | 6.54% | NA |
| #10 | Pittsburgh, PA | 7.63% | 2.12% | 12.57% |
| #11 | Myrtle Beach, SC | 7.62% | 5.95% | 2.85% |
| #12 | Gatlinburg, TN | 7.12% | 9.77% | NA |
| #13 | Madison, WI | 7.12% | 3.03% | NA |
| #14 | Detroit, MI | 7.03% | NA | 12.92% |
| #15 | Kansas City, MO | 7.02% | 0.61% | 12.56% |
| #16 | Oklahoma City, OK | 6.77% | 2.39% | 10.50% |
| #17 | Fayetteville, NC | 6.74% | 4.20% | 12.77% |
| #18 | Joshua Tree, CA | 6.65% | NA | NA |
| #19 | Virginia Beach, VA | 6.60% | 6.69% | 2.45% |
| #20 | Las Vegas, NV | 6.45% | 6.27% | 7.23% |
| #21 | Louisville, KY | 6.40% | 5.96% | 14.94% |
| #22 | Indianapolis, IN | 6.20% | 4.43% | 12.74% |
| #23 | Cleveland, OH | 6.19% | 0.18% | 16.40% |
| #24 | Columbus, OH | 6.11% | 1.55% | 11.67% |
| #25 | Saint Petersburg, FL | 6.09% | 1.69% | 6.01% |
| #26 | Miami, FL | 6.08% | 1.62% | 7.22% |
| #27 | Richmond, VA | 6.05% | 3.90% | 14.08% |
| #28 | New Orleans, LA | 6.04% | 4.45% | 11.64% |
| #29 | Fort Worth, TX | 5.83% | 0.12% | NA |
| #30 | El Paso, TX | 5.65% | 0.90% | NA |
| #31 | Lexington, KY | 5.56% | 2.02% | NA |
| #32 | Panama City Beach, FL | 5.55% | 2.86% | NA |
| #33 | Reno, NV | 5.48% | 2.28% | NA |
| #34 | Nashville, TN | 5.44% | 4.87% | 7.49% |
| #35 | Fresno, CA | 5.17% | 5.06% | 6.91% |
| #36 | Cathedral City, CA | 5.06% | 1.36% | NA |
| #37 | West Palm Beach, FL | 4.78% | 2.48% | 5.73% |
| #38 | Tucson, AZ | 4.77% | 6.62% | 5.77% |
| #39 | Pompano Beach, FL | 4.69% | 1.49% | NA |
| #40 | South Lake Tahoe, CA | 4.54% | NA | NA |
| #41 | Jacksonville, FL | 4.41% | 3.14% | 8.54% |
| #42 | Tampa, FL | 4.35% | 1.47% | 6.54% |
| #43 | Colorado Springs, CO | 4.30% | 5.96% | 5.22% |
| #44 | Greenville, SC | 4.29% | 1.82% | NA |
| #45 | Clearwater, FL | 4.22% | 4.10% | NA |
| #46 | Hollywood, FL | 4.19% | 0.26% | 3.65% |
| #47 | Orlando, FL | 4.13% | 3.34% | 3.45% |
| #48 | Tempe, AZ | 4.13% | 2.14% | 4.51% |
| #49 | Bradenton, FL | 4.02% | 3.63% | NA |
| #50 | Gilbert, AZ | 4.00% | NA | 3.43% |
| #51 | St. Louis, MO | 4.00% | 2.26% | 9.60% |
| #52 | Kissimmee, FL | 3.91% | 4.68% | 4.99% |
| #53 | Redding, CA | 3.82% | NA | NA |
| #54 | Minneapolis, MN | 3.75% | 2.12% | 4.67% |
| #55 | Destin, FL | 3.74% | 4.77% | NA |
| #56 | Chicago, IL | 3.72% | 1.24% | 4.99% |
| #57 | Phoenix, AZ | 3.67% | 1.72% | 4.22% |
| #58 | Boston, MA | 3.53% | 1.91% | NA |
| #59 | Atlanta, GA | 3.50% | 1.15% | NA |
| #60 | Fort Lauderdale, FL | 3.50% | NA | 3.24% |
| #61 | Chandler, AZ | 3.45% | 2.78% | 4.68% |
| #62 | San Antonio, TX | 3.44% | NA | 4.77% |
| #63 | Austin, TX | 3.38% | 3.20% | NA |
| #64 | Jersey City, NJ | 3.36% | 0.59% | 2.51% |
| #65 | Denver, CO | 3.35% | 3.13% | 4.56% |
| #66 | Dallas, TX | 3.29% | 0.78% | NA |
| #67 | Baltimore, MD | 3.10% | 0.94% | 8.91% |
| #68 | Raleigh, NC | 3.06% | 2.25% | NA |
| #69 | Sacramento, CA | 2.91% | 4.27% | 3.93% |
| #70 | Philadelphia, PA | 2.79% | 2.12% | 7.61% |
| #71 | Naples, FL | 2.76% | 1.90% | NA |
| #72 | Cape Coral, FL | 2.68% | 1.66% | NA |
| #73 | San Francisco, CA | 2.58% | 0.83% | NA |
| #74 | Long Beach, CA | 2.44% | 1.48% | NA |
| #75 | Lake Worth, FL | 2.43% | 1.85% | NA |
| #76 | Fort Myers, FL | 2.40% | 0.07% | 3.24% |
| #77 | Alexandria, VA | 2.35% | 2.90% | NA |
| #78 | Charlotte, NC | 2.32% | 1.57% | 4.72% |
| #79 | Honolulu, HI | 2.28% | 5.14% | NA |
| #80 | San Diego, CA | 2.26% | 1.58% | 3.52% |
| #81 | Portland, OR | 2.22% | 1.28% | 3.08% |
| #82 | Oakland, CA | 2.17% | 0.96% | 2.29% |
| #83 | Bend, OR | 2.08% | 2.17% | NA |
| #84 | Delray Beach, FL | 1.95% | 5.61% | 4.65% |
| #85 | Boulder, CO | 1.92% | 3.38% | NA |
| #86 | Los Angeles, CA | 1.84% | 0.83% | 2.66% |
| #87 | Sarasota, FL | 1.84% | 0.75% | 3.37% |
| #88 | Houston, TX | 1.79% | 2.76% | NA |
| #89 | Boise, ID | 1.60% | NA | NA |
| #90 | San Jose, CA | 1.56% | 0.86% | 1.27% |
| #91 | Scottsdale, AZ | 1.35% | NA | 2.78% |
| #92 | Berkeley, CA | 1.35% | NA | NA |
| #93 | Arlington, VA | 1.34% | 2.89% | NA |
| #94 | Union City, CA | 1.13% | NA | NA |
| #95 | Washington, DC | 1.12% | 2.11% | 2.04% |
| #96 | Breckenridge, CO | 1.09% | 0.32% | NA |
| #97 | Miami Beach, FL | 1.05% | 1.32% | 4.01% |
| #98 | New York, NY | 0.99% | 1.09% | 1.61% |
| #99 | Seattle, WA | 0.50% | 1.60% | 1.87% |
| #100 | Palm Springs, CA | NA | 4.37% | 4.59% |
Related: Where Can You Find the Best Airbnb Rental Data?
To help you out in the analysis of the investment opportunities in each of these top 100 real estate markets for vacation rentals in the US in 2020, here’s a summary of the data and analytics:
Short Term Rentals Cap Rate Data by Property Type Summary
Single Family Homes for Sale in 2020
- Single Family Cap Rates by City Range: from 0.50% to 12.91%
- Highest Single Family Cap Rate: Columbia real estate market, 12.91%
- Lowest Single Family Cap Rate: Seattle Tree real estate market, 0.50%
Condos and Apartments for Sale in 2020
- Condo and Apartment Cap Rates by City Range: from 2.40% to 9.81%
- Highest Condo and Apartment Cap Rate: Auburn real estate market, 9.81%
- Lowest Condo and Apartment Cap Rate: Fort Myers real estate market, 2.40%
Foreclosed Homes for Sale in 2020
- Foreclosure Cap Rates by City Range: from 1.27% to 45.75%
- Highest Foreclosure Cap Rate: Memphis real estate market, 45.75%
- Lowest Foreclosure Cap Rate: San Jose real estate market, 1.27%
Cap Rates by Neighborhood in 2020
While knowing the best cap rates by city is very important for real estate investors to narrow down their investment property search, knowing that a particular market as a whole provides good return on investment opportunities is not very helpful in practical terms. A place like the Atlanta real estate market has over 6,000 real estate listings for sale, so how is a beginner real estate investor supposed to know where to focus his/her investment property analysis efforts?
Conducting neighborhood analysis in real estate is crucially important in this regard. Having neighborhood-level cap rates data can help investors narrow down their search even further to find the most profitable investment property. While such data used to be difficult to obtain in the past as it entailed performing neighborhood real estate market analysis, this is no longer the case after the emergence of Mashvisor’s investment property tool, one of the must-have real estate investment tools in 2020. This real estate software tool uses rental comps from the area to estimate the average cap rate as well as other major metrics such as the median property price, the average rental income, the average Airbnb occupancy rate, and the optimal rental strategy (traditional or Airbnb) for all neighborhoods in any US city or town.
Going back to the Atlanta housing market, figures from Mashvisor’s neighborhood analysis show that the average cap rate for long term rental properties in the Carver Hills neighborhood will reach 10.67% in 2020, while it will be only 1.39% in the Cabbagetown neighborhood. Now that’s a major difference, isn’t it?
Here you can have a look at the analysis of the Cabbagetown neighborhood:
Mashvisor’s Investment Property Calculator: Neighborhood Analysis of Cabbagetown in Austin
Cap Rates by Rental Property
21st century real estate investors are tech-savvy, pushing even further the already fierce competition in the rental property investing world. Thus, in order to succeed in 2020, new real estate investors will need to look for efficient ways to find real estate comps and compare investment properties, not only cities and neighborhoods.
Mashvisor has two tools to offer to investors to help them out with this. Our Property Finder allows you to search for the top-performing traditional and Airbnb investment properties in up to 5 real estate markets at a time based on your budget, preferred property type, and ideal number of bedrooms and bathrooms. In this way, in a matter of minutes you can narrow down all rental properties for sale worthy of your attention. You can see what to expect in the image below of Austin homes for sale:
Mashvisor’s Property Finder: Austin Homes for Sale
Once you’ve selected a few properties with Mashvisor’s Property Finder, you can analyze any of them with our investment property calculator and estimate the expected cap rate in 2020 with both the traditional and the Airbnb rental strategy. Moreover, the calculator will show other invaluable information such as the property price, the startup and recurring costs, the monthly rental income, the cash flow, the occupancy rate, and the cash on cash return for both rental options. Below you can have a look at the analysis of one of top-performing properties in the Austin real estate market:
Mashvisor’s Investment Property Calculator: Analysis of an Austin Rental Property
Related: Austin Real Estate Market Forecast 2020
If you are thinking of buying a rental property in 2020, you now know where to start with the highest cap rates by city in the US housing market. While the capitalization rate formula might not be perfect because it does not consider the method of financing, it is still a very good starting point and an excellent indication of the return on investment potential of both an entire real estate market and a specific investment property. To find lucrative rental properties in any of these best places to invest in real estate in 2020, sign up for Mashvisor to get access to our Property Finder and investment property calculator. Let’s make 2020 a profitable one!