It should be of no surprise to investors in the Louisiana housing market that the New Orleans real estate market has the best investment prospects for 2020 in the state. Let’s take a look at a few important New Orleans real estate trends for next year.
Related: 10 Best Places to Invest in Real Estate in 2020
New Orleans Real Estate Market: Mashvisor’s Data
In order to understand why you should be investing in New Orleans real estate in 2020, we need to review the market’s data. We’ve compiled data on the New Orleans real estate market below from Mashvisor’s investment property calculator. What is Mashvisor’s investment property calculator? How can it help you to invest in the New Orleans real estate market 2020? Click here to find out! In the meantime, check out Mashvisor’s data on the New Orleans housing market.
- Median Property Price: $412,744
- Price per Square Foot: $223
- Price-to-Rent Ratio: 20
- Traditional Rental Income: $1,738
- Traditional Cap Rate / Cash on Cash Return: 1.5%
- Airbnb Rental Income: $2,822
- Airbnb Cap Rate / Cash on Cash Return: 3.1%
- Airbnb Occupancy Rate: 53%
Related: Mashvisor’s Rental Property Calculator: A Guide for Beginner Real Estate Investors
New Orleans Real Estate Market Trends for 2020
There is a lot to talk about regarding the data of the New Orleans real estate market. Using this data and other important pieces of information, we deduce four important trends for New Orleans real estate investing in 2020.
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Both the Traditional and Airbnb Rental Strategies Will Be Lucrative
The highlight of the New Orleans real estate market is its profitability. This is the case for both the traditional and Airbnb rental strategies. As seen from Mashvisor’s data, the average New Orleans investment property generates $1,738 and $2,822 in traditional and Airbnb rental income, respectively. These figures are considerably higher than the averages of the Louisiana real estate market. According to Mashvisor’s calculator, Louisiana’s traditional and Airbnb rental income averages are $1,289 and $2,245, respectively. With such impressive profitability, a New Orleans real estate investor will be in no shortage of income in 2020.
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New Orleans House Prices Will Be Relatively Affordable
The price of a New Orleans real estate investment in 2020 may not seem like the most affordable on the surface. After all, the national median property price has hovered between $299,400 and $339,000 in 2019, while New Orleans’ median is over $400,000. However, 9 of the 10 best neighborhoods in New Orleans have prices below the city median (check out the list below).
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Airbnb Will Continue to Be Legal in New Orleans in 2020
For investors interested in Airbnb New Orleans, they’ll be glad to know that Airbnb is legal in the city. This topic is detailed enough to be a blog post on its own, so we recommend you refer to Airbnb’s Help Page on Airbnb New Orleans. Nonetheless, we’ll briefly go over the updated December 2019 New Orleans Airbnb laws:
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Licenses
Airbnb New Orleans short-term rentals are allowed in both residential and non-residential areas. However, different licenses apply to different situations.
- Residential Partial Unit License: Applies to one dwelling unit in an Airbnb property with 5-10 guests.
- Residential Small License: Applies to up to four dwelling units, such as in a multi-family property with 5-10 guests.
- Large Residential License: Applies to up to four dwelling units, such as in a multi-family property with 6-12 guests.
- Commercial License: Unlike the previous three, this license is required for properties in non-residential areas.
Investors should know that non-owner occupied rentals are not allowed in residential zones. It is best to check with local authorities before buying an Airbnb property in New Orleans.
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Taxes
Airbnb regulations in New Orleans require hosts to pay the following taxes, which you can learn more about here.
- 5% New Orleans Hotel-Motel Sales Tax
- $0.50 per night New Orleans Hotel Occupancy Privilege Tax
- $1.00 per night Neighborhood Housing Improvement Fund Fee
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Rentals in the New Orleans Real Estate Market Will Be in High Demand
Finally, property in the New Orleans real estate market will be in high demand in 2020. With an expected drop in property prices, the city’s warm seller’s market will likely cool to a buyer’s market. This means that we can expect to see more buyers entering the market next year.
When it comes to owning a rental property, real estate investors will find their properties enjoying high occupancy rates. The city’s above-national average growth rate of 6.8% since 2010 is a major factor in the rising demand. New Orleans’ cost of living will drive tenant demand as well. The cost of living in the city is about 4 percent lower than the US average. Even with an affordable cost of living, over 53 percent of residents live in a New Orleans rental property. The combination and interplay of these factors project high demand in the New Orleans real estate market 2020.
Best Neighborhoods in New Orleans: Traditional Rental Strategy
So, where should you invest in New Orleans real estate? According to Mashvisor, these are the best neighborhoods to buy New Orleans houses for sale and rent them out traditionally.
Florida
- Median Property Price: $132,857
- Price per Square Foot: $94
- Price-to-Rent Ratio: 5
- Traditional Rental Income: $2,091
- Traditional Cap Rate / Cash on Cash Return: 9.1%
St. Roch
- Median Property Price: $192,978
- Price per Square Foot: $120
- Price-to-Rent Ratio: 15
- Traditional Rental Income: $1,099
- Traditional Cap Rate / Cash on Cash Return: 5.4%
West Lake Forest
- Median Property Price: $157,467
- Price per Square Foot: $78
- Price-to-Rent Ratio: 10
- Traditional Rental Income: $1,262
- Traditional Cap Rate / Cash on Cash Return: 3.0%
Holly Grove
- Median Property Price: $257,900
- Price per Square Foot: $160
- Price-to-Rent Ratio: 16
- Traditional Rental Income: $1,379
- Traditional Cap Rate / Cash on Cash Return: 2.6%
US Naval Base
- Median Property Price: $157,000
- Price per Square Foot: $104
- Price-to-Rent Ratio: 14
- Traditional Rental Income: $965
- Traditional Cap Rate / Cash on Cash Return: 2.3%
Related: Where to Find Neighborhood Data For Real Estate Investing
Best Neighborhoods in New Orleans: Airbnb Rental Strategy
What about Airbnb in the New Orleans real estate market? According to Mashvisor, these are the five best neighborhoods for Airbnb New Orleans.
Be sure to check zoning laws before considering an investment in any of these neighborhoods.
Lake Terrace and Oaks
- Median Property Price: $299,900
- Price per Square Foot: $113
- Price-to-Rent Ratio: 17
- Airbnb Rental Income: $3,720
- Airbnb Cap Rate / Cash on Cash Return: 7.8%
- Airbnb Occupancy Rate: 50.5%
Pines Village
- Median Property Price: $115,445
- Price per Square Foot: $76
- Price-to-Rent Ratio: 11
- Airbnb Rental Income: $1,971
- Airbnb Cap Rate / Cash on Cash Return: 7.6%
- Airbnb Occupancy Rate: 42.5%
Florida
- Median Property Price: $132,857
- Price per Square Foot: $94
- Price-to-Rent Ratio: 5
- Airbnb Rental Income: $2,104
- Airbnb Cap Rate / Cash on Cash Return: 6.7%
- Airbnb Occupancy Rate: 65.6%
City Park
- Median Property Price: $499,000
- Price per Square Foot: $207
- Price-to-Rent Ratio: 21
- Airbnb Rental Income: $5,196
- Airbnb Cap Rate / Cash on Cash Return: 6.6%
- Airbnb Occupancy Rate: 60.9%
St. Bernard Area
- Median Property Price: $331,800
- Price per Square Foot: $176
- Price-to-Rent Ratio: 22
- Airbnb Rental Income: $4,010
- Airbnb Cap Rate / Cash on Cash Return: 6.0%
- Airbnb Occupancy Rate: 54.4%
All in all, the New Orleans real estate market will have another successful year for investment in 2020. To start searching for New Orleans houses for sale, click here to start your FREE 14-day trial with Mashvisor!