Our team at RealEstateAgent.com has been doing a lot of lists lately, right? We have published our Best cities for singles, Best Museums in the USA and many more. Now it’s time to point our list machine toward the Best cities to invest in real estate. Those are the cities where you can buy rental property and get a great return over your investment, where the amount of money you put into the investment rental properties you acquire doesn’t overwhelm you financially because the annual rent appreciation is good, where the employment rate and population growth is on a steady rise so you know the near future is sustainable and the present is not a fluke; you won’t get off to a good start, but end up having to sell your investment rental properties to cover your certain future losses.
Before we head into the best cities to invest in real estate, let’s take a broader look to the country to understand the areas where buying rental property makes sense.
It’s flagrant that, overall, the areas of interest are within the coasts of the country. That’s due to the fact that the coasts are attractive to people buying a second home as a vacation home where they can travel from time to time to enjoy the beach but not necessarily rent it to make money off of it, and also to people who are interested in using for airbnb renting and such. The three main concentrations of best cities to invest in real estate are Florida, California and the whole area that goes from Washington, DC up to New Hampshire. Florida is just insane. If you’re not looking for just one city, but an overall environment prone to investment rental properties, head to the Sunshine State. The reasons Florida has so many of its cities listed as the best cities to invest in real estate are, of course, the exemption of state income tax, which makes it really inviting and favorable for investors but also because it’s the only bi-coastal state in the nation, being bathed both by the Atlantic Ocean and the Mexican Gulf. Add Orlando to the mix, right there in the middle of the state, and you get a very interesting H-shaped heat map of best cities to invest in real estate.
Speaking of Orlando… let’s start with it!
Orlando, Florida
Orlando Real Estate Agents are smiling from ear to ear, right? Orlando has made the best cities for families list, it’s not too shabby for singles either, and, now, here they are at the best cities to invest in real estate. And, although we’re not ranking them, if we were, chances are Orlando Real Estate Agents would acquire the bragging rights of getting the #1 spot on the list.
Yes, and it ain’t no fluke. The city has been at the top for the last 5 years and forecast says it will keep its position there, with house prices increasing by 35% by the start of 2021, so for the investors who are just looking to buy and sell rather than using the home as a rental is likely to get a good return in a very short amount of time. In 2017 alone, the home prices increased 9% to a median home price of $247,550 – which, FYI, is still 22% below the national average. That means Orlando Real Estate Agents can still find homes in very accessible neighborhoods: like Park Central, that has its median home price at $91,750. And that’s the secret to a good investment. Get something that is currently affordable, but has been steadily becoming more sought-after. And that’s Orlando.
But price alone is not what will drive people to your investment rental property. You need to have an inviting city, and Orlando excels at that. We don’t even need to say anything about tourism, right? One word is enough: Disney. What Orlando Real Estate Agents will say is that the 2-year employment growth of 7% (second only to Boise, Idaho) with a rental yield of 5.97% and a steady population growth behind Seattle only, makes this one of the best cities to invest in real estate regardless if you will rent or just flip your investment rental property. Orlando has got it going on!
Charlotte, North Carolina
Surprised to see Charlotte as one of the best cities to invest in real estate after everything we mentioned about coastal cities? Well, Orlando isn’t coastal either, and yet, they’re both here. Don’t get caught on that. Yes, the number of “best cities” in the coasts is grander. However, remember what we said in the first paragraph of this article: the truly best are the ones who’ll give you a big return, and since real estate is all about the supply and demand ratio, the very best are usually non-coastal cities.
The thing that makes Charlotte undeniably one of the best cities to buy a rental property and makes the job of Charlotte Real Estate Agents easy is its numbers. Rental yield is 5.82% but, in 2017 alone, the median rent price increased by 3.3% and this trend should continue due to the 2.9% employment bump aligned to a 3-year population growth of 6%.
Overall, North Carolina has been a great place for people that are starting to enter the investment rental properties game. Closer to Charlotte you have Gastonia and Concord, who act as helpers and satellite cities, but a bit further you also have Durham to keep an eye on; forecasts say it will have a price growth of 26% in the next 3 years as the homes in the area are undervalued by 3% compared to the historic ratio of price and local income, and the job growth and population growth have been steady.
But back to Charlotte; maybe it’s a city you don’t know much about besides their knack for sports like NASCAR, Football and Basketball – Michael Jordan learned how to ball in North Carolina, and Charlotte residents LOVE the Hornets – but Charlotte is a major financial hub. It’s second only to New York when it comes to banking centers. Bank of America and the Wells Fargo East Coast operation center are headquartered there. Isn’t that a great opportunity for you to buy a rental property and gear it as a short-term lease landing spot for executives that get transferred to Charlotte? Smart Charlotte Real Estate Agents say so; they’ve been making a lot of money doing exactly that in the last couple of years.
Anyways, if that isn’t enough for you to “understand” the city, and considering there are some things real estate agents can’t tell you, let us cut to the chase and crunch the numbers: Westmoreland is one of the top 5 neighborhood housing markets in the whole country. With a median home price of $326,000, strong schools and lower crime rate, it’s a perfect place to buy a rental property.
Jacksonville, Florida
See how Florida is just a great environment for people buying a rental property?
Jacksonville is not kidding around. The city has been growing for the last 10 years by a ridiculous 20%; topping Miami and Tampa’s growth rate. With more than 1.3 million residents – and many more coming at an annual rate of 2% – to take advantage of a world-class health care system composed of 20 hospitals and a thriving bioscience community, Jacksonville looks to have no problem nurturing this growth either. Home to four Fortune 500 companies, Jacksonville’s 2-year job growth is 5.9% and a future job growth projected to 39% over the next 10 years because of the Panama Canal expansion, which is helping to bring a lot of jobs into the area and its ports.
With a 20% 3-year price growth forecast and a current average home price of $247,809, a typical 3-bedroom investment rental property can earn about 25% more than the national average in Jacksonville!
Overall, Jacksonville is a town filled with young people; the average age is 35 – younger than any city in Florida, a state with a tradition of retired people. One of the things that makes that possible is the number of Universities around (great for all the investors thinking of buying a rental property to serve as Student Accommodation) and a number of art attractions throughout the town.
Columbus, Ohio
Cleveland is Ohio’s most sought-after city, and it does provide awesome return (with a whopping rental yield of 14.67%!), but the declining population is something to worry about, so we’ve decided to single out Columbus because it has all the good numbers when comparing to the national average. If the US had a 3-year house price growth forecast at 14%, Ohio’s capital had 21%. Median home price: $283k USA, $229 Columbus. 2-year job growth of 3%? Columbus slightly edged even that with 3.1%. And the rental yield is the best one on this list: 8.51%! With a median rental price of $1,162; it will take something like 12 years to return your investment if you buy a rental property in Columbus, Ohio.
Need to know more about Columbus to see what kind of investment rental property you’d have there? Columbus is not your typical Midwest city. It was called by the New York Times the gay Mecca of Midwest, and studies estimate that 6.7% of its population is made of gay men, lesbians, and bisexuals. Columbus also has a diverse population – in fact, the second largest population of Somalis reside there. And a very smart town; the Intelligent Communities Forum named it one of the seven most intelligent cities in the world! That’s in part due to its award-winning library system. How good is it? It earned a National Medal for it. How about that?
Finally, here are some other cities that are great ideas when buying rental property:
- Seattle, Washington
- Atlanta, Georgia
- Mobile, Alabama
- Boise, Idaho
- Tampa, Florida
- St. Paul, Minnesota
- Minneapolis, Minnesota
- Arlington, Texas
- San Antonio, Texas
- Las Vegas, Nevada
- Richmond, Virginia
- Fort Myers, Florida
We hope you’ve enjoyed our best cities to invest in real estate and it helped you figure out where to buy rental property for yourself. Do you feel your city should be on the list? Or care to share some other info about the cities on the list that deserved a shout out? Tell us in the comments!
