Whether you plan to flip a house or rent it out, you’re making a great decision. Investing in real estate means that you’ll eventually start generating ongoing passive income and look towards increasing your rental portfolio as your business grows.
It’s not always easy. One of the most important factors to consider when starting out as a landlord is the location of your potential investment property. If you aren’t careful and choose an undesirable location, you could lose money. However, if you find the perfect place, the chances are you’ll never see your rental property vacant.
Due to the pandemic, it is hard to predict what will happen with the housing market and whether demand will go up or down. However, it’s quite clear that moving patterns have changed over the past few years. Rural areas have become more attractive for renters, and they still remain relatively affordable despite rent prices going up. The average rent in Delaware, for example, has increased from $804 in the first quarter of 2020 to $1,308, as of Q1 2021, respectively. Also, there has been a jump in exurb occupancy due to remote working policies and people’s desire to move to less densely populated areas.
Obviously, location matters, so let’s review a few places in the U.S. that could provide profitable investments as you’re starting out or expanding your property management business.
1. Springfield, Missouri
Median home price: about $185,000
For real estate investors, Springfield could be a great place to start a business. Due to its affordable home prices, beautiful landscapes and many outdoor opportunities, it is ranked as one of the best housing markets in terms of real estate investing.
According to Zillow, Springfield home values have increased 16.6% in comparison to the previous year. However, average rental prices across the state have remained relatively stable.
2. Fort Worth, Texas
Median home price: about $305,000
Fort Worth has one of the highest rates of population growth in the country. Ultimately, demand for affordable housing will only increase in the upcoming years.
While average rental prices across the whole state did not change drastically compared to the last year, the home values have increased by about 21%, based on Zillow research.
3. Boise, Idaho
Median home price: about $480,000
Due to its lower cost of living and pleasant atmosphere, Boise was recently named the best city for Millennials. Although home prices may still be too high for first time home buyers, renting is still affordable, especially for those who have recently moved from larger cities.
Average rent prices have gone up slightly compared to the previous year. Boise home values have increased by 44.9% over the last year.
4. Las Vegas, Nevada
Median home price: about $365,000
Although it might seem that Las Vegas is exclusively a tourist destination, the city’s economy is continually growing, and investing in real estate in the city’s real estate could be lucrative. Las Vegas is also experiencing a surge in population growth that guarantees a higher number of prospective renters over the next several years.
Home values in Las Vegas have increased by 21.4% compared to the past year.
5. Phoenix, Arizona
Median home price: about $395,000
With a population of over 1.6 million people and an improving economy, Phoenix is a great choice for real estate investors. Rents across the city are also increasing: they went up 8.4% last year.
Home values in Phoenix have increased by 30.3% compared to the past year.
Which cities would you add to our list? What factors do you consider when choosing a location to invest in real estate?
Note!
Purchasing an investment property is already a huge step, but if you’re planning to take on the majority of landlord tasks yourself (from listing a property to signing lease documents and maintaining the place), you’ll probably need some extra help. TenantCloud is always available as your all-in-one rental tool, as the service is designed to optimize every step while staying on top of your property management business.
