The Best US Cities for Real Estate Investors
Dec 30, 2020
Real estate is one of the best ways to earn financial independence. But the worst mistake you can make is buying real estate without doing your research.
Finding an ideal place to invest in real estate can be difficult, especially if what friends or family consider a great location doesn’t suit your specific needs. Where you invest should really be driven by your personal investment goals.
When you choose a location for your investment income, there are a lot of important factors you should consider such as real estate supply and demand or the cash flows?
While most investment properties will appreciate in value, the location plays a huge role in the shifts in value, as well as the rental yield. Operational costs and expenses are other factors that affect how profitable your investment will be. So location is more than just the place you choose to invest. It also plays a big role in the success of that investment.
So let’s have a look at some of the best US cities for real estate investors.
One of the reasons why Austin sits at the top of the list of the best cities for real estate investors is because of its diverse economy. Thanks to Austin’s robust economy, the unemployment rate sits at just 6.5%, and this impacts the demand for housing. Property prices have remained affordable, although the demand has steadily risen and the value of homes is forecast to increase steadily over time. Hence, rental property investors in Austin continue to reap significant returns thanks to high occupancy rates.
The median property price is $631,959 with a 7.7% expected appreciation rate. While real estate in Austin is generally booming, one of the most favourable neighborhoods to invest in is West University. An expected population growth rate of 2.2% in the next five years also makes the city a perfect location for real estate investors who invest in the present but with the future in mind.
Boca Raton, Florida
The strong local economy in Boca Raton goes a long way to supporting real estate investments. The average market rent per month is $2,606 and the median listing home price/sq ft is $222. Both self-employed and employed individuals have endless job openings thanks to the new jobs generated in Boca Raton. Good elementary, middle, and high schools as well as multiple opportunities for higher education in the city make it an ideal location for families and students. What’s more, there are 15 neighborhoods, diversifying the specific areas for real estate investment.
“We’ve seen an increase in the number of investors moving down here from the north east and west coast. Boca Raton is definitely a hub for the wealthy and affluent and it seems only to be growing that populace” says Jason, founder of Client Focused Advisors.
Raleigh/Durham, North Carolina
Raleigh and Durham also make the list of best US cities for real estate investments. Apart from homebuilding, other strong real estate investments in Raleigh/Durham are multi-family constructions and suburban offices. With a combination of both people and businesses backed by a thriving economy, real estate has picked up momentum and managed to flourish over a long period.
In fact, the estimated appreciation rate for real estate is 7% in Raleigh and 6.9% in Durham in 2021, and the median property price is $477, 440, and $377, 133 respectively. The price-to-rent ratio is pretty high which is partly one of the reasons why a lot of investors are rushing to invest there. The current renter population in Raleigh is 51% and that of Durham 53%, and with an expected growth rate of 1.3% in the next five years, and it is possible that this will increase.
Tampa is a highly populated area, with numbers slightly higher than 3 million people. The metro area is rapidly growing compared to other cities and boasts more than $130 billion in the local economy. It has a huge potential for job growth with a rate of 71% more than the national average and increased employment rates translate to better real estate investment opportunities.
With a high renter population, Tampa is a good rental market for interested investors. It also has a high ranking for economic prospects and a dropping rate for unemployment. Northeast Tampa is the top neighborhood to invest in the city.
Low cost of running businesses and low state taxes as well as lessened business regulations are huge contributors to the job growth rate in Dallas. This creates a friendly environment not only for businesses but also for real estate investments. The city has been a target for relocation for big companies in other cities as it is considered one of the fast-growing areas with a dense population and endless investment opportunities.
While commercial real estate is a top consideration for real estate investors, even residential real estate is doing quite well with a renter population of 59%. And a 6.1% estimated real estate appreciation for 2021 is a very promising rate for investors.
Charlotte, North Carolina
The home values in Charlotte have risen 5.3% in the last year and a price-to-rent ratio of 23. Charlotte is also a top pick for most investors since the demand for real estate investors is high. It has even been named as one of the best places to start a business and has a job growth rate of 3.1%. Also, the estimated five-year population growth stands at 1.4%, and a 7.7% estimated real estate appreciation rate in 2021. One of the best neighborhoods to invest in the city is Lakewood and the general renter population is about 48%. The multi-family market in Charlotte is also booming, with 56% of experts recommending investing in this niche.
The above cities can serve as exemplary locations for real estate investment. While it is a profitable business, it is equally important to collect as much information as you can and proceed with caution. Every city is different, so just because you know of the market regulations and dynamics in your hometown, they might not be the same in the next city. Oftentimes, investors buy estates and property mostly for equity growth and cash flow. As such, it is always important to consider the affordability, job growth of the location as well as population growth as they are some of the major signs of good investment opportunities.