Top 10 Most Profitable Cities to do Real Estate Investing
It’s no surprise that real estate is booming all over the country. Even cities that saw significantly smaller populations or were hit hard when the housing bubble popped years ago are on investors’ minds. First, let’s review what an investment property is and some of its benefits, then let’s cover the top ten most profitable cities for real estate investing and why you should consider investing there.
What is an investment property?
According to Investopedia, “Investment property is real estate property that has been purchased with the intention of earning a return on the investment, either through rental income, the future resale of the property or both.” These properties are usually not an investor’s main home, but serve as supplemental income through short or long-term rentals.
Short-term rentals are often referred to as vacation rentals and serve guests for shorter periods of time. Sites like Airbnb and VRBO provide outlets for investors to make money using short-term rentals.
Long-term rentals involve renting out an investment property to a renter who is looking to stay for a longer period of time. Investors interested in long-term rentals are focused on the end goal, like generating supplemental income or making a profit when the property sells in the future.
Depending on your needs and goals, different cities and properties will be best for you. Here, we show you the top 10 places best places to invest in real estate.
Where to Invest in Property?
10. Austin, Texas
Austin is an up-and-coming area for young people and families, alike. One of the draws of Austin is its increasing nightlife and attractions and its affordable homes. With the university close by, investors can expect to rent out their property to students or faculty in the area.
BENEFITS OF INVESTING IN AUSTIN
Some of the key benefits of buying a property in Austin, Texas include:
A rising demographic of young people, meaning that individuals might be looking for a long-term rental to grow or start a family.
More businesses, including the technology industry, are opening up in the area.
Nightlife is growing, as well, meaning that rent will increase as the population grows.
Real estate is affordable. The median home price in the West University area, for example, is $239,000, and downtown the median home price is $379,000.
CONSIDERATIONS OF INVESTING IN AUSTIN
Don’t expect to get rich quick by investing in a city like Austin. In the area, most investors expect from 5-7% appreciation. In other areas, such as California, these rates are low. In addition, there is a high rate of people moving out of the area, including graduating students and people leaving for better paying jobs. This constant flight might be worrisome for some investors.
9. San Diego, California
Ask any local in San Diego and they will tell you to jump on the housing market while you can. This diverse city boasts some of the best weather in the country, access to beaches and cities, and many other attractions (including great Mexican food!). Investors who have more capital might be interested in this growing Southern California city.
BENEFITS OF INVESTING IN SAN DIEGO
Some of the key benefits of investing in San Diego include:
A booming real estate market and increasing home prices. If you invest in San Diego today, expect your investment to increase in a short amount of time.
A diverse population of renters. In the area you will likely see surfer kids, working professionals, international families, and much more. Chances are, you will be able to find renters for your property with this wide pool of applicants.
Views! Nothing beats a Southern California view, which you can find in almost every part of San Diego.
CONSIDERATIONS OF INVESTING IN SAN DIEGO
If you are a first time investor, chances are you won’t be able to afford your dream home in a city like San Diego. If you are looking for an investment property, expect to pay more in such a high-demand city.
Another consideration of the area is that it has a very transient population. A lot of San Diegans are in the military, are students, are Mexican citizens staying for a short time, or other people looking to leave in the near future. If you don’t mind changing tenants regularly this might not be a deal-breaker, but if you are looking for consistent renters, San Diego might not be for you.
8. Charlotte, North Carolina
Charlotte is a southern city that has taken Millennials and older generations by storm. While some of the recent news surrounding the city has been unfavorable, it is a growing metro area with a lot to offer. Located on the cusp of the Atlantic Ocean, real estate in this area is ever-increasing.
BENEFITS OF INVESTING IN CHARLOTTE
You can get a good home at an affordable price. The average home sale price is about $185,000, which means that average rent is about $750 a month.
Even amenities are cheap. Locals boast that you can get a beer for $2 during a night on the town. These prices will attract younger renters.
In addition to a lively downtown, Charlotte also has greenery and keeps up wildlife conservation.
Talk about good food! Charlotteans’ favorites are barbeque and fast food.
CONSIDERATIONS OF INVESTING IN CHARLOTTE
It’s still the Deep South, meaning that it lacks the diversity that some renters and investors might be searching for.
Homes sell fast and might not be seen without working with a realtor. Even on the popular house-hunting site Zillow, some homes might be under contract in less than 24 hours after it hits the market.
Investment properties likely won’t increase in value as much as other areas (but is still a viable option!)
7. Houston, Texas
Like Austin, Houston is redefining what most of the country thinks of when they think of Texas. The city is attracting a younger market with lively downtown's and many schools in the area.
BENEFITS OF INVESTING IN HOUSTON
The city is growing rapidly. Since 2010 the population has grown by 8.9%. In one year, between July 2014 and July 2015, Houston added 40,000 residents.
Home prices are low, with the average around $150,000.
Business owners and wealthy families are growing the artistic and musical attractions that Houston has to offer, making it more cultural than ever.
CONSIDERATIONS OF INVESTING IN HOUSTON
The biggest thing on residents’ minds are natural disasters such as hurricanes and tropical storms. They do happen.
Commutes are long and residents will need a car to take full advantage of the area. Compared to some metro areas, this may be a deal-breaker.
6. Boston, Massachusetts
The East Coast real estate market has always been booming, and Boston has continued to hold its own. Although the Boston scene may already be more developed than other cities on this list, it’s still a contender for the best place to buy an investment property.
BENEFITS OF INVESTING IN BOSTON
It is developed, attracts a wide array of individuals, and is close to many popular points of interests.
Once a Bostonian, always a Bostonian. Investors can likely expect renters to stay for a long time because the area is so attractive.
Besides being a popular city in itself, it is also close to hits like New York City and Washington, DC.
CONSIDERATIONS OF INVESTING IN BOSTON
Because it is already a large metro area, homes will sell for more than in other places. An investor must have enough capital to afford a place in the area.According to the Boston Globe, home sale prices are up 31% compared to in 2010.
Supply is very limited, so act fast!
Because housing is more expensive, most blue collar workers will be pushed to the suburbs, therefore increasing traffic and commuting times.
5. Salt Lake City, Utah
With Silicon Valley getting so crowded, some people are calling Salt Lake City the next big technology hub.
BENEFITS OF INVESTING IN SALT LAKE CITY
Job growth is at an all-time high and vacancy rates are at an all-time low.
Average rent rates jumped 4.9% and are at $892 for an apartment unit.
Tech, and other industries, are growing in the area and the city is no longer only for families with children.
CONSIDERATIONS OF INVESTING IN SALT LAKE CITY
The weather may scare some renters away, with cold winters and hot summers.
The culture still lacks the diversity some Americans have come to expect.
There are a few strange liquor laws lingering around, such as no liquor at dine-in restaurants without ordering food, which might shy some younger renters away.
4. Tampa, Florida
Florida was a state hit hard by the recession and housing market crash, but it is getting back on its feet surely and stronger than ever.
BENEFITS OF INVESTING IN TAMPA
The city is located close to a major Air Force Base, which means that short-term renters are abundant. Military families also have a guaranteed housing budget, which might set some investors’ minds at ease.
There are a lot of condos and apartments for sale, as well as single family homes. It is likely that an investor can find a property that fits their needs.
CONSIDERATIONS OF INVESTING IN TAMPA
Because of the large military population, expect renters to be more short-term than other areas.
Florida home sale prices fluctuate, meaning that you could sell your investment property and make a profit, or you might have to sit on it while waiting out the low times.
Like North Carolina, this southern state faces the threat of natural disasters regularly.
3. Las Vegas, Nevada
It may surprise you that the Las Vegas housing market is still alive and well, but as the city continues to grow so do its housing opportunities.
BENEFITS OF INVESTING IN LAS VEGAS
We all know the saying “what happens in Vegas, stays in Vegas,” which is one of the reasons why people will always come back. Tourism is booming in Las Vegas, which means good news for business owners.
Although Vegas went through a slump a few years back, they are now attracting a younger crowd again. With live shows, DJs, and other entertainment, young people will come (and bring their friends!)
There is more to Vegas than just the strip. Locals know of all the good, less commercialized nightlife.
CONSIDERATIONS OF INVESTING IN VEGAS
A lot of housing in Vegas is short lived, either because residents tire of its lively nature or because of better jobs elsewhere. Because of that, short-term rentals are more popular.
Although Las Vegas has done its job of attracting young people, the market isn’t as booming as it used to be. Investors might be curious of its future.
2. Boise, Idaho
When you hear about Idaho, you likely think of farmers and potatoes. But the state has a lot more to offer than you may think. From skiing at Sun Valley to living in cities like Boise, this market is hot.
BENEFITS OF INVESTING IN BOISE
The market is new and fresh, meaning that you can purchase a property at a lower cost than other areas in the country.
Job growth and population has grown dramatically.
Multiple reports have considered Boise as one of the best cities to raise a family. This means that investors can expect new parents to stay for the long-term.
CONSIDERATIONS OF INVESTING IN BOISE
While the population is growing, Boise isn’t as attractive to young people as some of the areas on this list.
The weather is extreme and might not be for all residents. Expect cold winters and hot summers.
Boise, and most of Idaho, is more rural than other metro areas. This could be good for some renters and not for others.
1. Denver, Colorado
Denver is a very profitable area for investors right now. It has been attracting diverse populations for years and has a lot to offer renters.
BENEFITS OF INVESTING IN DENVER
The area has grown and there are many points of interest nearby.
Public transportation is prominent and appeals to many renters.
There are many schools and universities nearby for children of all ages.
CONSIDERATIONS OF INVESTING IN DENVER
The market is hot, so act fast! Places sell fast in the area.
A lot of the homes for sale are older and may require extensive fixing up.
Investment properties are a great way to generate supplemental income and make a profit, if marketed correctly. These are ten of the most profitable cities for real estate investing, if you would like to learn more about real estate investing please reach out to us and we will be happy to help.