Investing in Real Estate is usually quite lucrative. When looking into where to invest, it is important that you research the demographics of the region that is of interest to you. Is the population growing or are people moving away? Are jobs being created in this area? Are unemployment rates high or low? These are just some of the macro economic questions that you need to answer.
If the population is growing that means more people are moving into the area and the demand for housing will be on the rise. If people are leaving then perhaps it might not be a great area to buy in as there is a high possibility of higher supply in housing with lower demand.
Job creation and employment rates are also important to factor in. As employment and wealth increases the demand for housing increases. People will move away from areas with little to no job growth to areas where employment can be found.
To help you get a good idea of where to invest your time and effort, we have compiled a list of the top 10 best cities to invest in.
Table of Contents
- Best Cities to Invest in Real Estate
- 1.) Austin, Texas
- 2.) Durham, North Carolina
- 3.) Boston, Massachusetts
- 4.) Syracuse, New York
- 5.) Orlando, Florida
- 6.) Atlanta, Georgia
- 7.) Phoenix, Arizona
- 8.) Miami, Florida
- 9.) Nashville, Tennessee
- 10.) Provo, Utah
- Best Cities to Invest in Real Estate FAQ’s
Best Cities to Invest in Real Estate
1.) Austin, Texas
- Population: 1,018,842
- Median Home Price: $405,000
- Median Household Income: $76,845
- Job Growth (2018): 3.3%
- Unemployment: 2.8%
- #9 in job growth
Austin, Texas is currently a sellers market. Sellers hold bargaining power and demand higher prices.
Austin, TX is a great place to invest in real estate. Job growth rates are high which means unemployment is low and the economy is growing. Along with good job availability, the average household income is $76,845 a year.
With a population of 1,018,842 the demand for both renters as well as people looking to purchase homes is on the increase. Home values are up 4.7% in the last year and are estimated to rise another 4% in the coming year. Investors can worry less about their properties losing value over time.
On the flip side, buyers also benefit in the long run. Their home value is likely to appreciate in the future and they will most likely make a profit when they may decide to sell their home in the future.
2.) Durham, North Carolina
- Population: 284,996
- Median Home Price of Homes Sold: $249,800
- Median Household Income: $63,520
- Job Growth (2018): 1.9%
- Unemployment: 3.7%
- #75 in job growth
Both buyers and sellers hold sway in this market. Supply and demand are about even, but sellers do have a slight edge. This means that the market is primarily a seller’s market but buyer’s do have some leeway. Both sides hold bargaining power concerning properties.
We recommend this city due to the increase in home values and high rental rates. The value of homes has gone up 4.8% in the last year and is predicted to rise another 4.2% which is great for buyers and sellers alike.
Job growth is lower than the unemployment rate, but it has risen compared to the past. Durham is also number 11 when it comes to people who have post secondary education. Almost half of the residents (49.6%), have a college degree.
With higher education rates, it can be assumed that the residents in Durham would have higher paying jobs. This most likely would translate into a higher demand for quality housing. This can also be seen when looking at the rate of delinquency 1% in Durham compared to 1.1% nationwide. Also the median price that properties rent for is $1,550 per month.
3.) Boston, Massachusetts
- Population: 701,984
- Median Home Price of Homes Sold: $670,100
- Median Household Income: $85,916
- Job Growth (2018): 0.9%
- Unemployment: 2.8%
- #84 in job growth
Boston is more of a buyer’s market however home values have gone up 1.4% over the past year. These values are predicted to significantly increase by 4.2% over the next year, which means both buyers and sellers stand to make really good profits.
The median household income is higher than the national average and job growth is on the rise which is a great predictor that the home values will continue to rise as well.
4.) Syracuse, New York
- Population: 140,678
- Median Home Price of Homes Sold: $98,700
- Median Household Income: $57,573
- Job Growth (2018): 1%
- Unemployment: 4.1%
- #178 in job growth
The market is very hot in Syracuse! Home values are up a whopping 7.7% in the last year. Syracuse is one of the best cities to invest in real estate.
Home values are expected to rise another 5.6% in the next year. The median sales price of homes sold is $98,700. In addition, employment growth has risen 1%. This is definitely a growing market.
5.) Orlando, Florida
- Population: 303,933
- Median Home Price of Homes Sold: $267,800
- Median Household Income: $57,721
- Job Growth (2018): 3.7%
- Unemployment: 3.2%
- #6 in job growth
Orlando, Florida is considered a very hot market. Sellers are more likely to benefit from the housing market. The job growth rate is increasing faster than the unemployment rate which is a great sign that the housing market is healthy.
Orlando is number 6 in job growth. Home values have risen by 3.2% in the last year and are expected to rise by 4.4% in the next year.
With consistent growth, you can expect an investment in Orlando to yield great returns.
6.) Atlanta, Georgia
- Population: 510,730
- Median Home Price of Homes Sold: $260,000
- Median Household Income: $66,958
- Job Growth (2018): 2.2%
- Unemployment: 3.7%
- #34 in job growth
Atlanta has the 36th largest population in the United States with 510,730 residents meaning that you are likely to find a buyer in this city.
Home values have risen by 3.3% over the last year and are expected to rise by 4.7% in the next year. This steady increase in home value shows great promise for the housing market.
Houses also sell for extremely high prices so you can expect to receive a great return on your investment.
7.) Phoenix, Arizona
- Population: 1,743,469
- Median Home Price of Homes Sold: $254,300
- Median Household Income: $63,724
- Job Growth (2018): 3.4%
- Unemployment: 4.3%
- #28 in job growth
Phoenix is home to over 1.7 million people. It is #28 in job growth at 3.4% increase. The housing market here is hot!
Phoenix was added to this list due to the outstanding home value increases. Home values have risen by a whopping 7.4% in the last year and are expected to rise by 4.9% in the next year.
8.) Miami, Florida
- Population: 504,439
- Median Home Price of Homes Sold: $335,100
- Median Household Income: $53,045
- Job Growth (2018): 1.9%
- Unemployment: 3.5%
- #54 in job growth
Buyers are more likely to benefit from the housing market, but sellers can also benefit in Miami.
Home value has risen by 1.4% in the last year and is expected to rise by 4.1% in the next year. The significant increase in house value from year to year spells good news for investors.
Miami, Florida also has a large population of 504,439 residents. This means that you will be likely to find more people who are interested in properties.
9.) Nashville, Tennessee
- Population: 685,628
- Median Home Price of Homes Sold: $296,000
- Median Household Income: $66,630
- Job Growth (2018): 3.1%
- Unemployment: 2.7%
- #14 in job growth
Nashville, Tennessee made this list due to the fact that housing prices have risen by 4.5% in the last year and are expected to rise by 4.4% next year.
It is #14 in the nation for job growth at 3.1% compared to unemployment which is only 2.7% and a large population of 685,628. This definitely translates to an increase in demand for more housing and a good opportunity for investors looking to invest.
10.) Provo, Utah
- Population: 116,702
- Median Home Value: $317,105
- Median Household Income: $71,616
- Job Growth (2018): 5.2%
- Unemployment: 2.7%
- #1 in job growth
Sellers are more likely to benefit from this housing market, but buyers can also benefit.
Provo, Utah was put on this list due to the high increase in home value and the city being number one in job growth. This increase in job growth is most likely to lead to an increase in population growth over the next few years.
Home prices have risen by 5.4% in the last year and are expected to rise by 5.0% in the next year. These increases are significant for real estate investors and are amazing for the housing market.
All of these cities have undergone or will undergo significant positive changes in their demographics. More people will likely be moving to these areas due to increased employment opportunities. Thereby increasing the demand for housing. This is good news for any real estate investor.
As an investor it is important to do your due diligence when making the decision to invest in any property. Be sure to consider the above noted information as well as any other factors that may be unique to where you want to invest. Remember research is very important and good luck to you!
Best Cities to Invest in Real Estate FAQ’s
What Factors Should you Consider when Investing in Real Estate?
Real estate can serve many investment goals, from income production and capital appreciation to inflation hedge. Investors should assess their goals carefully in order to select properties with maximum return and minimal risk. Once their goals have been determined, investors can select properties which best meet them.
Location is of critical importance in both residential and commercial property investments. A house located on a busy street might not appreciate as quickly, while it’s important to consider how an area may change during your investment period; peaceful open land could someday become noisy manufacturing plants which would negatively affect its values.
Real estate investing provides another advantage: leverage. Leveraging allows you to buy more property with smaller down payments, thus increasing your potential return. Furthermore, leverage can also be used to pay for maintenance and repairs on properties thereby decreasing risk and loss.
Real estate has low (or negative) correlation with other asset classes, making it an excellent addition to a diversified portfolio. Furthermore, rental property returns typically exceed inflationary increases and provide passive income streams; making real estate an appealing alternative to stock and bond mutual funds.
Where is the Smartest Place to Buy Property?
Real estate is a solid investment, allowing you to build wealth over time by increasing house value. But what are the best cities to invest in?
When it comes to investing in property, Seattle leads the pack due to its strong economic prospects and vibrant job market that keep rentals high in demand. Plus, the Seattle area is a highly desirable place to live for residents from all over the world so there is a huge amount of potential for appreciation.
A city with a growing population can also be a smart investment because people will want to live there. As a result, your rental property will be able to command higher rents and higher property values.
If you’re looking to invest in real estate, you’ll need to do your research to ensure that you find a property in the best possible location. There are several indicators that can help you determine which neighborhoods will be the most profitable and which areas are likely to appreciate in value.
Population: A strong population increases the odds of a home attracting tenants and generating profit for its owner. Ideally, you want to invest in a neighborhood with a median income level that is higher than the average, so that your investment property can rent for a high percentage of its total value.
Cash-on-cash return: The cash-on-cash return is a key metric for real estate investors. It measures the amount of money that you can earn from your investments over a period of time.
Rental income: As an investor, you’re likely to be focused on rental income as a primary goal. This can be an excellent way to build wealth over time. If you have the funds, buying a property that you rent out can be an excellent strategy to start receiving passive income.
Appreciation: You can also find good investment properties that have higher appreciation potential. However, you have to be cautious about the location and market of your investment.
Single-family: Investing in a single-family home is one of the smartest real estate strategies for new investors. This type of property offers a lower risk of financial loss and fewer expenses. These homes provide privacy and more flexibility with regard to their renovations and improvements.
In addition, the tenants in these homes usually stay longer than those in apartment complexes because they want to save money to buy a house. This can help you earn higher annual ROI from your investment.
What are the Best Cities for Investing in Real Estate?
How should one choose the ideal cities for investing in real estate?
Making an intelligent investment choice involves looking at cities from a long-term investment viewpoint rather than looking solely at short-term returns. A savvy real estate investor looks for cities with strong economies with consistent population and job growth as well as low unemployment; reasonable average home prices relative to national norms; an increased gross rent multiplier rate and low property taxes and rental vacancy rates as indicators of investment success.
Dallas boasts a high concentration of renters and affordable homes, making the city well-positioned to experience ongoing increases in home values and rentals. Furthermore, with low property tax rates that allow investors to maximize returns on their investments.
Pittsburgh stands as an excellent example of a post-industrial city that’s been able to thrive despite an initially slow start. Thanks to tech startups and health care jobs being brought in through outsourcing contracts, Pittsburgh is experiencing a revival. Furthermore, with low median home prices and high gross rent multiplier ratios making it attractive to both residential and commercial investors.
Toledo offers an attractively affordable and fast-growing investment environment, making it well worth your consideration if your goal is diversification rather than home appreciation as the primary objective. However, home appreciation could still be possible in Toledo so further investigation may be required before making a final decision.
What State has the Best ROI on Real Estate?
Real estate investment can be an enviable business, yet returns aren’t always guaranteed in all states. A variety of variables including home prices, state regulations and occupancy rates all influence profitability of property investments; however, certain key metrics can help investors identify locations to maximize returns.
Florida provides excellent long-term rental returns. A consistently growing population and strong economy drive rental demand while its warm climate attracts retirees. Landlords also benefit from favorable security deposit and eviction laws in this state.
Denver boasts an outstanding track record for real estate investment returns. A growing tech hub, Amazon, Uber and Yelp all maintain offices there. Denver is easily accessible via air, road and rail connectivity – making it attractive for both remote workers and those needing proximity to an international airport.
Colorado provides another high return for investment property investments. Its economy boasts strong expansion across healthcare, technology and education – while its housing market offers affordability with median list prices that fall significantly below national averages.
North Carolina is one of the best states for investing in short term rentals. Home to many natural attractions and tourist spots that attract millions of visitors annually, North Carolina enjoys high occupancy rates and daily rental rates, which provide investors with a healthy return from Airbnb investments in this state.
What is the 1% Rule in Cities?
Finding properties that yield positive rental income is of paramount importance when investing in real estate. There are various methods for evaluating potential investment properties; one simple strategy is the 1% rule which helps estimate whether or not a particular investment could produce an acceptable return.
The 1% rule can be calculated by multiplying the purchase price by one percent and adding one cent as rent to determine how much is necessary to generate profit from rent collection. Unfortunately, this calculation doesn’t account for expenses such as maintenance costs, taxes and insurance that should all be included when considering rental properties as an investment opportunity.
Though the 1% rule can serve as an effective prescreening tool, it’s important to keep in mind that its numbers and trends differ depending on where you live. Finding properties meeting this threshold may be challenging in high-priced markets where median home prices often surpass median rental prices.
As well, the 1% rule doesn’t consider operating costs and expenses that can have an effect on rental property profitability, yet still meets its criteria. That doesn’t necessarily make a property which does not pass this threshold an unwise investment; in cases such as an area predicted for rapid gentrification where future income growth will make purchasing one that doesn’t pass this rule a wise long-term bet.
As such, due diligence processes on each investment property should be conducted extensively.
Where to Invest $5,000 in Real Estate?
If you have $5,000 burning a hole in your pocket, and are wondering where best to invest it, here are some wise ways of investing that cash while also exploring why real estate makes for an excellent alternative investment option for those with limited capital to spare.
Home ownership can be an excellent way to build wealth over time. A well-maintained property will only increase in value over time and renovating it may increase its rental value; for example, turning a basement into an in-law suite provides both added value and an income stream by renting it out as part of its rental value.
However, if you want to increase diversification without becoming a landlord yourself, REITs (real estate investment trusts) offer an ideal way to do this. They’re publicly-traded companies that own, operate or finance income-generating real estate properties – these can be bought directly through brokerage accounts.
Private money lending is another effective way of expanding real estate exposure. Lending funds directly to real estate investors for their projects allows you to earn attractive returns while helping real estate investors realize their dreams. You can start out by opening accounts with Peer Street or Lending Club; both sites require at least $1,000 investments upfront with Betterment offering intelligent investment decisions on behalf of its users.