How to Find the Best Cities to Invest in Real Estate in 2023

How do you find the best cities to invest in real estate in 2023? Is real estate investing still a profitable strategy? Read on to find out.
Table of Contents

1. What to Consider When Looking for the Best Places to Invest Money
2. How to Find the Best Neighborhoods
3. 20 Best Cities to Invest in Real Estate in 2023

After a couple of years of dealing with the adverse effects of COVID-19, economies have finally reopened. We’re now seeing some semblance of pre-pandemic normals, especially in the real estate industry. In fact, it’s even hotter now than it was before COVID-19 hit.

However, we’ve also seen inflation surge due to certain global economic events, one of which is the Eastern Europe geopolitical conflict that broke out in March 2022. Since then, oil prices have kept going up, affecting the major players in the stock market.

While real estate investments have a low correlation with the overall market movement, everything else surrounding it is impacted. From supply chain challenges to higher costs of maintaining rental properties, inflation has significantly affected the real estate industry.

So ‘Is real estate a good investment in 2023?’ has become a constant question for many who were considering this strategy before the pandemic. The answer is: Yes! In 2023, owning rental property is still an excellent strategy for making money and building wealth. You just have to know where the best cities to invest in real estate are.

Knowing where to invest in rental property is crucial to 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 properties.

Related: What Is Real Estate Investing and How Does It Work?

What to Consider When Looking for the Best Places to Invest Money

Location is crucial to the success of any real estate business. It is why every journey in 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 investment properties.

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 properties, 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.

On top of that, if you’re taking out a loan to purchase investment properties, you also need to shop around for the best deals. So make sure to ask banks, lenders, and other real estate investors for leads.

Vibrant Tourism Industry

If you are thinking of investing in vacation rental properties, the state of tourism 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 best cities for investment properties in 2023.

Growing Job Market

Another important factor to consider is the state of the economy. Ideally, you should only focus on cities with a flourishing economy and a growing job market.

When many job opportunities are created, people will be attracted to such markets. It means that there will be a higher demand for traditional rental investment properties. With the increased demand, home prices and rents are likely to go up, too.

To learn about the current employment statistics of a city, visit the US Bureau of Labor Statistics (BLS) website.

Low Crime Rate

The crime rate of a city will impact your real estate business. If you invest in a city with a low crime rate, it will be easier to attract and retain tenants and guests.

On the other hand, buying an investment 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 or vacation 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.

Landlord-Friendly

On the other hand, traditional rental properties also pose specific challenges because certain locations aren’t friendly to landlords. Before putting money into an investment property in a particular location, find out what the state or county can offer landlords.

As a landlord, you need to know and protect your rights. It is why performing due diligence includes finding out about such things. Being aware of your rights as a landlord in a particular state will help you make better investment decisions.

Related: The Best States for Landlords in 2022

How to Find the Best Neighborhoods

After analyzing the best cities to invest in real estate properties and narrowing down your options, you need to research the best neighborhoods for investment. The best places to invest in real estate should include amenities like hospitals, good schools, shopping malls, and public transportation. In addition, these areas should be potentially profitable for real estate investment.

One of the best property search tools 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
• Traditional and Airbnb Cash on Cash Return
• Airbnb Occupancy Rate

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. Areas with the highest cash on cash return will be marked in dark blue, while those with the lowest CoC return will be marked in light blue. If you chose to view the heatmap in full color, the highest numbers will be highlighted in green instead and the lowest numbers in red.

Now that we’ve 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 in 2023.

Related: 20 Best Markets for Real Estate Investing in 2023

20 Best Cities to Invest in Real Estate in 2023

The following are some of the best places to buy a rental property in 2023. The cities were selected based on the highest cash on cash return, as provided by Mashvisor’s nationwide real estate data analysis.

To give you only the best cities and towns that can offer you the most optimum return on your investment, we used the following filters:

• Each location must have at least 100 rental listings.
• Each location should have a median property value of no more than $1,000,000.
• Each location should have a monthly rental income of at least $2,000. 
• Each location must have at least 2.00% cash on cash return. 
• Cities ideal for traditional rentals must have a price to rent ratio of no less than 20. 
• Cities ideal for Airbnb rentals must have a 50% and above occupancy rate.

That said, let’s take a look at the different cities ideal for rental property investment.

Best Cities to Invest in Real Estate: Traditional Rental Properties

According to Mashvisor’s October 2022 data, the following are the top cities to invest in traditional rental properties. This list is ranked from highest to lowest traditional cash on cash return.

1. Vero Beach, FL

• Median Property Price: $727,992
• Average Price per Square Foot: $294
• Days on Market: 91
• Number of Traditional Listings: 628
• Monthly Traditional Rental Income: $2,618
• Traditional Cash on Cash Return: 4.26%
• Traditional Cap Rate: 4.37%
• Price to Rent Ratio: 23
• Walk Score: 78

Vero Beach in sunny Florida ranks as the second-strongest real estate market in the county. It makes real estate investing in Vero Beach a wise move. If you take a closer look at how traditional rentals are doing, they offer a very good cash on cash return of 4.26% on a price to rent ratio of 23.

2. Hallandale Beach, FL

• Median Property Price: $728,539
• Average Price per Square Foot: $415
• Days on Market: 92
• Number of Traditional Listings: 642
• Monthly Traditional Rental Income: $2,853
• Traditional Cash on Cash Return: 3.61%
• Traditional Cap Rate: 3.72%
• Price to Rent Ratio: 21
• Walk Score: 79

The vibrant coastal community of Hallandale Beach is considered a prime location for real estate investment opportunities. It is very attractive to both young professionals and retirees. Its convenient location between Fort Lauderdale and Miami makes it highly desirable for people looking for long-term rental properties.

3. Stuart, FL

• Median Property Price: $719,961
• Average Price per Square Foot: $361
• Days on Market: 68
• Number of Traditional Listings: 376
• Monthly Traditional Rental Income: $2,931
• Traditional Cash on Cash Return: 3.57%
• Traditional Cap Rate: 3.62%
• Price to Rent Ratio: 20
• Walk Score: 42

Another Florida real estate hot spot rounds up our top three traditional rental locations. A lot of folks prefer to live in Stuart because of its proximity to public amenities, as well as its good reputation. Investors will find that there is no shortage of demand for traditional rentals in Stuart, making it an excellent investment location.

4. Fountain Hills, AZ

• Median Property Price: $885,044
• Average Price per Square Foot: $359
• Days on Market: 92
• Number of Traditional Listings: 122
• Monthly Traditional Rental Income: $3,161
• Traditional Cash on Cash Return: 3.42%
• Traditional Cap Rate: 3.46%
• Price to Rent Ratio: 23
• Walk Score: 39

According to Niche.com, Fountain Hills is one of the best places to live in Arizona. It may be one of the more expensive places to live in the state, but the tradeoff is worth it. It has a spacious land area and several excellent schools, and it is one of the safest communities in Maricopa County.

5. Dania Beach, FL

• Median Property Price: $609,500
• Average Price per Square Foot: $376
• Days on Market: 63
• Number of Traditional Listings: 238
• Monthly Traditional Rental Income: $2,404
• Traditional Cash on Cash Return: 3.37%
• Traditional Cap Rate: 3.45%
• Price to Rent Ratio: 21
• Walk Score: 86

Dania Beach in Florida is a great place to live. It is a quaint town that is made up of a diverse community. Its real estate market is amplified all the more with the town’s investments in infrastructure and future developments. It means that the community is growing and offers plenty to look forward to.

6. North Miami, FL

• Median Property Price: $829,727
• Average Price per Square Foot: $392
• Days on Market: 31
• Number of Traditional Listings: 248
• Monthly Traditional Rental Income: $3,224
• Traditional Cash on Cash Return: 3.31%
• Traditional Cap Rate: 3.40%
• Price to Rent Ratio: 21
• Walk Score: 52

North Miami is a growing community with thousands of households and renters. As its economy continues to grow, the demand for rental properties grows along with it. With pleasant year-round temperatures, picturesque views, and solid returns on investment, investing in rental properties in North Miami can be quite rewarding.

7. Riviera Beach, FL

• Median Property Price: $810,151
• Average Price per Square Foot: $404
• Days on Market: 75
• Number of Traditional Listings: 281
• Monthly Traditional Rental Income: $2,686
• Traditional Cash on Cash Return: 3.25%
• Traditional Cap Rate: 3.30%
• Price to Rent Ratio: 25
• Walk Score: 43

Riviera Beach is a community made up of a little over 35,000 people. The suburb appeals to residents and tenants because of the mixed urban-suburban vibe it gives. It is especially attractive to young professionals and families, which means that the demand for traditional rental properties is strong.

8. Williamsburg, VA

• Median Property Price: $565,289
• Average Price per Square Foot: $223
• Days on Market: 62
• Number of Traditional Listings: 181
• Monthly Traditional Rental Income: $2,139
• Traditional Cash on Cash Return: 3.23%
• Traditional Cap Rate: 3.31%
• Price to Rent Ratio: 22
• Walk Score: 81

As mentioned earlier, one of the things you should look out for when choosing a location for rental properties is economy. Williamsburg, VA appears to offer a healthy one, making it really attractive to residents. It boasts a lower-than-average crime rate and a high livability score of 75, putting it in the top 20% of the best places to live in the country.

9. Punta Gorda, FL

• Median Property Price: $655,944
• Average Price per Square Foot: $319
• Days on Market: 100
• Number of Traditional Listings: 347
• Monthly Traditional Rental Income: $2,719
• Traditional Cash on Cash Return: 3.21%
• Traditional Cap Rate: 3.25%
• Price to Rent Ratio: 20
• Walk Score: 14

If there’s one thing to know about Punta Gorda, it is that its population is projected to grow from 197,100 in 2022 to 306,700 by the year 2060. As a real estate investor, it indicates that there will be a substantial increase in demand for traditional rentals.

10. Melbourne, FL

• Median Property Price: $496,841
• Average Price per Square Foot: $257
• Days on Market: 64
• Number of Traditional Listings: 581
• Monthly Traditional Rental Income: $2,054
• Traditional Cash on Cash Return: 3.18%
• Traditional Cap Rate: 3.26%
• Price to Rent Ratio: 20
• Walk Score: 73

People move to Florida for different reasons. Some of the more common reasons why they go to Melbourne are the absence of state income tax, pleasant weather all year long, and white sandy beaches. It is highly attractive to retirees and families looking to settle in a stable and healthy environment.

To find the best traditional rental properties in the most profitable cities and neighborhoods, click here.

Best Cities to Invest in Real Estate: Airbnb Rental Properties

Where rental properties are concerned, here are ten of the most profitable locations for Airbnb investment properties, according to Mashvisor’s October 2022 data. The locations below are also ranked from the highest to the lowest cash on cash return:

1. Reading, OH

• Median Property Price: $225,180
• Average Price per Square Foot: $139
• Days on Market: 40
• Number of Airbnb Listings: 171
• Monthly Airbnb Rental Income: $2,874
• Airbnb Cash on Cash Return: 7.85%
• Airbnb Cap Rate: 8.14%
• Airbnb Daily Rate: $117
• Airbnb Occupancy Rate: 53%
• Walk Score: 80

As a tourist destination, Reading in Ohio offers a lot to visitors. From exquisite dining spots to fun nightlife, guests are sure to experience a good time. The demand for vacation rentals in Reading is growing, which makes it a very lucrative investment at a nearly 8.00% cash on cash return.

2. Schiller Park, IL

• Median Property Price: $280,389
• Average Price per Square Foot: $208
• Days on Market: 54
• Number of Airbnb Listings: 110
• Monthly Airbnb Rental Income: $3,853
• Airbnb Cash on Cash Return: 7.85%
• Airbnb Cap Rate: 8.10%
• Airbnb Daily Rate: $155
• Airbnb Occupancy Rate: 59%
• Walk Score: 71

Schiller Park is one of Illinois’ best-kept secrets. Its proximity to Chicago makes it an ideal location for vacation rentals, especially given the wide array of fun activities in the suburb.

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.

3. West Saint Paul, MN

• Median Property Price: $268,376
• Average Price per Square Foot: $169
• Days on Market: 35
• Number of Airbnb Listings: 320
• Monthly Airbnb Rental Income: $3,367
• Airbnb Cash on Cash Return: 7.70%
• Airbnb Cap Rate: 7.86%
• Airbnb Daily Rate: $151
• Airbnb Occupancy Rate: 62%
• Walk Score: 75

As the second most populous Minnesota city, visitors to Saint Paul can expect a lot by way of culture, history, and fine dining. It offers visitors both the tranquility and beauty of the countryside and a happening urban vibe. A visit to West Saint Paul will not disappoint.

4. Richmond Heights, OH

• Median Property Price: $229,130
• Average Price per Square Foot: $131
• Days on Market: 108
• Number of Airbnb Listings: 234
• Monthly Airbnb Rental Income: $2,958
• Airbnb Cash on Cash Return: 7.45%
• Airbnb Cap Rate: 7.63%
• Airbnb Daily Rate: $136
• Airbnb Occupancy Rate: 51%
• Walk Score: 23

Richmond Heights, OH is worth visiting as it is home to a very impressive selection of activities and destinations visitors will enjoy. It boasts a thriving tourism industry, making it an ideal investment location for vacation rental properties.

5. Bellwood, IL

• Median Property Price: $257,900
• Average Price per Square Foot: $198
• Days on Market: 54
• Number of Airbnb Listings: 152
• Monthly Airbnb Rental Income: $3,677
• Airbnb Cash on Cash Return: 7.45%
• Airbnb Cap Rate: 7.69%
• Airbnb Daily Rate: $161
• Airbnb Occupancy Rate: 64%
• Walk Score: 82

Bellwood, IL is just a few minutes away from Chicago and only 13 minutes away from O’Hare Airport. As a tourist destination, its proximity to Chicago and the airport makes it a prime location for vacation rental investment properties. Add to that the numerous fun activities and attractions it offers and you’ve got yourself a profitable investment.

6. Northlake, IL

• Median Property Price: $304,667
• Average Price per Square Foot: $205
• Days on Market: 66
• Number of Airbnb Listings: 100
• Monthly Airbnb Rental Income: $3,834
• Airbnb Cash on Cash Return: 7.35%
• Airbnb Cap Rate: 7.56%
• Airbnb Daily Rate: $168
• Airbnb Occupancy Rate: 57%
• Walk Score: 33

Just like the other Illinois locations on this list, one of Northlake’s lures to visitors (and investors) is its proximity to the city. It may be a small community of only 12,000-plus people, but they are very friendly and warm. In addition, it has several great restaurants and tourist attractions to choose from.

7. Clawson, MI

• Median Property Price: $256,732
• Average Price per Square Foot: $219
• Days on Market: 30
• Number of Airbnb Listings: 298
• Monthly Airbnb Rental Income: $3,185
• Airbnb Cash on Cash Return: 7.18%
• Airbnb Cap Rate: 7.42%
• Airbnb Daily Rate: $167
• Airbnb Occupancy Rate: 52%
• Walk Score: 69

The many famous attractions of Clawson, a city in Michigan, make it worth visiting. As a progressive city, its tourism is doing quite well. The number of visitors to Clawson is growing, making it an ideal place to invest in a vacation rental property.

8. Luray, VA

• Median Property Price: $416,415
• Average Price per Square Foot: $222
• Days on Market: 67
• Number of Airbnb Listings: 192
• Monthly Airbnb Rental Income: $4,183
• Airbnb Cash on Cash Return: 7.00%
• Airbnb Cap Rate: 7.10%
• Airbnb Daily Rate: $239
• Airbnb Occupancy Rate: 54%
• Walk Score: 52

History buffs will love a trip to Luray, VA as it is home to many historic sites, including Civil War battlefields. This small and unassuming town is famous for its underground Luray Caverns, but it has more to offer than that. Visitors also get to experience outdoor activities and gastronomic delights. Investing in an Airbnb property in Luray is a wise decision.

9. Robbinsdale, MN

• Median Property Price: $303,400
• Average Price per Square Foot: $159
• Days on Market: 36
• Number of Airbnb Listings: 335
• Monthly Airbnb Rental Income: $3,387
• Airbnb Cash on Cash Return: 6.94%
• Airbnb Cap Rate: 7.13%
• Airbnb Daily Rate: $166
• Airbnb Occupancy Rate: 56%
• Walk Score: 73

Visitors will never run out of things to do in Robbinsdale, MN. It is a place best explored and experienced on foot. You can walk through its neighborhoods filled with small businesses and quiet nightlife. Visitors have nothing but nice things to say about Bird Town. It is worth considering as a vacation rental investment location.

10. West Allis, WI

• Median Property Price: $238,308
• Average Price per Square Foot: $156
• Days on Market: 23
• Number of Airbnb Listings: 112
• Monthly Airbnb Rental Income: $2,437
• Airbnb Cash on Cash Return: 6.86%
• Airbnb Cap Rate: 7.05%
• Airbnb Daily Rate: $119
• Airbnb Occupancy Rate: 70%
• Walk Score: 54

There are several reasons to visit West Allis in Wisconsin. If you’re an outdoor enthusiast, it is home to plenty of amazing parks you can enjoy all year long. It is a foodie paradise with a historic farmers market beloved by its residents. Its tourism is healthy enough to consider it an investment location for a vacation rental business.

To find the best Airbnb rental properties in the most profitable cities and neighborhoods, click here.

Conclusion: The Best Cities to Invest in Real Estate in 2023

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. Finding the best cities for investment properties in 2023 will determine how successful you will be.

As an investor, you would want to obtain the best return on your investment. Thus, finding the right location that fits your goals and needs matters a lot. It will take a lot of time and effort on your part. Due diligence should never be neglected. Gathering important information and data will help you make a more realistic and accurate investment property analysis.

When performing a neighborhood analysis, be sure to use the Mashvisor real estate heatmap to assess profitability. It will help you locate neighborhoods that are doing exceptionally well as far as rental income and cash on cash return are concerned.

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 can go further to analyze the profitability potential of specific rental homes using the Mashvisor rental property calculator.

With Mashvisor real estate investment tools, you can’t go wrong in finding the best cities for investment properties in 2023.

To learn more about how we will help you make faster and smarter real estate investment decisions, click here.