Best Cities to Invest in Real Estate: Buy Real Estate Rental Properties
When it comes to buying real estate for an investment, you need to be careful about where you buy. Sure, being a local landlord can make your life easier in some ways. But if you really want to be sure your investment goes well, your best bet is to invest in a place that has high job growth, good population growth, affordability, and moderately increasing housing prices.
Job and population growth are important because the more new jobs and more people a city has, the more people will be looking for a place to rent or buy. And affordable property now means that you can actually afford to purchase property as an initial investment. And you don’t want to buy in a place where property prices are increasing too quickly unless your ultimate plan is to re-sell. If you’re looking for long-term investment, purchase in a place with moderately increasing housing and rental prices so that your future tenants don’t get priced out of the area.
Taking into consideration all of those factors, we scored U.S. cities to come up with this list of the top 10 cities for investing in real estate this year.
This rather unassuming Midwestern city is home to several industries in the region, including growing technology companies as well as automotive operations. Inc. gave it a workforce and earning score of 38.9 and a business growth score of 44.1. But where it really shines is in affordable real estate. Zillow puts the average home at just over $150,000 with a growth index of 5%.
Grand Rapids, MI
Grand Rapids is a nice mid-sized city in western Michigan. You can buy a home there for well under $200,000, and home prices are expected to increase moderately over the next few months. The city is attracting plenty of new businesses and workers, too, and scored well in both of those areas.
San Antonio, TX
If you’re looking for somewhere more southern and warm, consider San Antonio. The city’s biggest industries include manufacturing, aerospace technology, biosciences, information technology, and military and defense. It has an impressive business growth score of 64.5. And with the average home price around $174,900, it’s still an affordable place to invest.
Houston starts to get on the pricier side, but you can still buy an average home there for under $200,000–right around $185,000 according to Zillow. And property prices are expected to increase at a steady pace over the next year. Houston’s primary industries include oil and gas, petroleum refining, and medical research–all fields that should draw well-paid young graduates in the near future.
For a more charming southern city, check out Greenville, which has a slightly lower business growth score but a great workforce score of 43.2. Its housing market is expected to grow slightly more slowly than some of the other cities listed here. But it’s growing steadily, and you can still purchase a home for $185,700.
Charlotte is our breaking point for houses under $200,000, with an average home price of $222,500. Still, it has a growing economy and workforce, especially in technological areas that are likely to draw in new workers. And if you’re looking for a home to invest in but sell in the mid-term, Charlotte could be a good bet, with home prices expected to rise fairly quickly in the next few years.
Durham is known for its life sciences industries, including pharmaceuticals and biotechnology. With that said, it’s drawing plenty of well-paid workers to the region. And average home prices are still affordable–around $224,800. The housing market is expected to grow fairly quickly, though not quite as quickly as that of Charlotte.
You might think that property in Orlando would be too expensive for an investment, but that may not be the case. Actually, the average home price according to Zillow is just $237,900, although prices are expected to rise steadily. Orlando ranks seventh in the U.S. for economic growth, so it could be an excellent place to invest this year.
This desert city is booming right now, with a business growth score of 48.8. It’s recently seen an increase in the job market, and you can still get a nice home for under $250,000. Overall, this hot city is also a great place to go for real estate investors.
We’ll round off our list back in the midwest in a city you might not expect, Omaha. This city has great employment and business growth outlook, and the average home price is just over $250,000. Home prices are expected to grow, but not too rapidly.
Other Investing Options: Crowdfunding and REITs
Choosing the right city for investing in real estate is essential, as the right home in the right city can make the difference between losing money and making money on your investment. But there are also other ways to hedge your bets by investing in real estate.
One option is crowdfunding with real estate. This is where you can buy into part of a real estate investment with other investors. In this way, you can spread your investment around to various cities without having to spend more than you can afford. Find out more about the best real estate crowdfunding platforms here.
But beyond crowdfunding, Real Estate Investment Trusts (REITs) are a popular way to get into real estate investing. REITs are a group of investors that invest in a project together – think of it like a mutual fund for real estate investing. With as little as $1,000, you can own part of a commercial property.
CrowdStreet, for example, is an online platform that gives investors direct access to individual commercial real estate investment opportunities. Furthermore, through managed funds and advisory services, you don’t have to do anything but invest. CrowdStreet does all the heavy lifting.
Another company we like right now is Streitwise. They offer the ability for non-accredited investors to invest in commercial properties. REITs are mid-to-long term assets. Streitwise has a lockout period of one year, but after that, investors can start to take out their money. The company says they have a dividend yield of 8.4% compared to 4.75% of public REITs.