Are you looking for a location for your next income property? If so, here are the 10 best places to buy investment property in 2017.
The following list has been prepared by Forbes together with Local Market Monitor, a company based on North Caroline, tracking over 320 metro housing markets across the US. The 20 cities ranked as the best places to buy investment property in 2017 have been chosen based on a mix of criteria combining housing indicators with broader growth trends. These are markets where real estate investors can invest their money with confidence – the return on investment will be good, while the risk will be reasonable. However, because of the relatively low risk, these markets are not good for those looking to make some quick cash in real estate.
Just a note before we take a look at the list below. Keep in mind that the real estate comps for these cities have not been provided by Forbes and Local Market Monitor, but have been computed by Mashvisor’s investment property calculator and covers the first couple of months of 2017. This calculator will provide you with numbers for hundreds of markets throughout the US, saving you lots of time and money by eliminating the need to perform a real estate market analysis.
So, let’s finally have a look at the 10 best places to buy investment property in 2017 with data from early 2017:
1. Dallas
- Median Property Price: $376,000
- Traditional Rental Income: $2,070
- Airbnb Rental Income: $2,270
- Traditional CoC Return: 2.4%
- Airbnb CoC Return: 3.4%
- Traditional Cap Rate: 6.7%
- Airbnb Cap Rate: 7.9%
- Airbnb Occupancy Rate: 55.5%
The #1 among the best places to buy investment property in 2017 is Dallas, which must come as no surprise. This diverse modern metropolis has so much to offer to everyone. Home prices in Dallas are expected to grow faster than in any other US market, at an annual rate of 9%. Data from Mashvisor’s rental property calculator shows that Dallas is quite affordable, which results in good profitability. If you are in favor of Airbnb investments, you will be glad to hear that Dallas scored 0 in a 2016 report on short-term rental regulations in US cities by R Street Institute, due to the lack of specific Airbnb legislation there.
Related: Top 5 Areas for Dallas Investment Properties
2. Jacksonville
- Median Property Price: $220,000
- Traditional Rental Income: $1,060
- Airbnb Rental Income: $1,090
- Traditional CoC Return: 2.4%
- Airbnb CoC Return: 2.6%
- Traditional Cap Rate: 6.1%
- Airbnb Cap Rate: 6.4%
- Airbnb Occupancy Rate: 55.6%
The second city in the ranking is one of the four Florida top markets for buying a rental property in 2017. The annual growth in the prices of investment properties in Jacksonville was 9%, while properties are generally undervalued by 8% at the moment. Jacksonville is also favorable for Airbnb income properties.
3. Orlando
- Median Property Price: $252,000
- Traditional Rental Income: $1,430
- Airbnb Rental Income: $1,830
- Traditional CoC Return: 3.3%
- Airbnb CoC Return: 5.5%
- Traditional Cap Rate: 7.3%
- Airbnb Cap Rate: 9.6%
- Airbnb Occupancy Rate: 39.4%
The main factor which ranked Orlando as #3 in this list is the expected economic growth, one of the major factors pushing any real estate market. In addition, Airbnb does not face legal obstacles there.
Related: Investing in Orlando Real Estate: The Real Deal
4. Seattle
- Median Property Price: $656,000
- Traditional Rental Income: $2,370
- Airbnb Rental Income: $2,270
- Traditional CoC Return: 1.7%
- Airbnb CoC Return: 1.5%
- Traditional Cap Rate: 4.4%
- Airbnb Cap Rate: 4.2%
- Airbnb Occupancy Rate: 40.8%
Last year Seattle underwent a home price increase of 12%, the highest across the US. High population and job growths are not allowing builders to catch up, which makes Seattle a hot, hot real estate market. Actually Seattle scored +5 in the above-mentioned report on Airbnb regulations, which means that it benefits from some favorable legislation in this regard.
Related: What’s Up With Seattle Real Estate Investing
5. West Palm Beach
- Median Property Price: $383,000
- Traditional Rental Income: $1,770
- Airbnb Rental Income: $2,080
- Traditional CoC Return: 1.6%
- Airbnb CoC Return: 1.9%
- Traditional Cap Rate: 4.8%
- Airbnb Cap Rate: 5.2%
- Airbnb Occupancy Rate: 40.0%
#5 among the best places to buy investment property in 2017 is West Palm Beach, which has recently enjoyed an 11% annual growth in home prices. This does not, however, mean that properties are overvalued yet.
6. Salt Lake City
- Median Property Price: $355,000
- Traditional Rental Income: $1,400
- Airbnb Rental Income: $1,920
- Traditional CoC Return: 2.0%
- Airbnb CoC Return: 3.9%
- Traditional Cap Rate: 4.8%
- Airbnb Cap Rate: 6.9%
- Airbnb Occupancy Rate: 50.3%
Salt Lake City features a home price growth rate of 8%, and experts believe that there is still room for more increases.
7. Tampa
- Median Property Price: $294,000
- Traditional Rental Income: $1,840
- Airbnb Rental Income: $2,430
- Traditional CoC Return: 4.5%
- Airbnb CoC Return: 7.6%
- Traditional Cap Rate: 8.3%
- Airbnb Cap Rate: 11.5%
- Airbnb Occupancy Rate: 40.4%
Related: Tampa: Hot Weather, Hot Real Estate for 2017
The next of the best places to buy investment property in 2017, Tampa, is the final Florida city on the list, offering a 9% rise in property prices last year as well as significant population and job growths. According to data from Mashvisor’s investment property calculator, investing in Tampa real estate is very affordable at the moment, but this is likely to change soon.
8. Nashville
- Median Property Price: $376,000
- Traditional Rental Income: $1,620
- Airbnb Rental Income: $3,240
- Traditional CoC Return: 2.5%
- Airbnb CoC Return: 9.9%
- Traditional Cap Rate: 5.7%
- Airbnb Cap Rate: 13.6%
- Airbnb Occupancy Rate: 56.9%
#8 among the best places to buy investment property in 2017 is Nashville, which experienced one of the highest 3-year population growths from all cities on the Forbes’ list, at 6%. This demographic trend is expected to continue, which means that there will be lots of new tenants in Nashville. Overall, Nashville investment properties are underpriced by 7%. Real estate investors should keep in mind that Airbnb is the much more profitable strategy here, which is great since legislation is quite conducive for this type of business.
Related: Why Nashville Investment Properties Are Hot
9. Fort Worth
- Median Property Price: $344,000
- Traditional Rental Income: $1,800
- Airbnb Rental Income: $2,500
- Traditional CoC Return: 2.3%
- Airbnb CoC Return: 5.3%
- Traditional Cap Rate: 7.0%
- Airbnb Cap Rate: 10.2%
- Airbnb Occupancy Rate: 54.3%
One of the main drivers of the real estate market in Fort Worth, part of the Dallas-Fort Worth Metroplex, is the population influx. About 600 people move into the Metroplex each day, looking to buy a home or rent an income property. While property prices are still affordable, real estate investors should hurry up in buying a Fort Worth investment property. If you decide Fort Worth might be the location for your new investment, you should be open up to Airbnb, which is legal here.
10. Grand Rapids
- Median Property Price: $219,000
- Traditional Rental Income: $1,130
- Airbnb Rental Income: $1,770
- Traditional CoC Return: 2.3%
- Airbnb CoC Return: 6.4%
- Traditional Cap Rate: 6.8%
- Airbnb Cap Rate: 11.1%
- Airbnb Occupancy Rate: 48.7%
The last of the best places to buy investment property in 2017, Grand Rapids, which used to be ranked #1 last year, enjoys the lowest median property prices, based on computations by Mashvisor’s rental property calculator. Still, being #10 among the best places to buy investment property in 2017 in the US is not bad at all, is it?
Now that you know the 10 best places to buy investment property in 2017 and you have the figures from Mashvisor’s investment property calculator, you can decide what the right location for your next income property is.