What do real estate investors do best? They’re always looking out for the property’s location when making investments. For an investor to effectively make this investment decision, identifying markets with great investment opportunities is vital. With all these considerations, an investor is certain of a positive cash flow and a high investment return.
In this guide, we’ll look at characteristics that make a market to be considered “the best place” and their respective locations in the US. It’s going to be an exciting read, so sit back and read on!
Factors That Make a Market Considered the “Best Place”
What makes a market the best place to buy a rental property in the US? They are characterized by the following:
Affordable Housing
What determines the top market is its affordability. Consequently, when housing is cheap and affordable, the more opportunities investors get to invest.
Wage Growth
When investing in real estate, the wage growth of people in that area should be considered. Wage growth is simply the percentage of change evident in the increased average wage of that area annually. With landlords wanting to invest in the regions that reflect growth, wages must grow with the market and rental appreciation.
Rate of Unemployment
When making that investment choice, the rate of unemployment is something to have in mind. With the current unemployment rate nationwide being set at 6.5%, a fair market is characterized by an unemployment level, equal to or lower than the current unemployment rate across the country.
Population Growth
A top market should experience increases and not decreases in all its sectors. Population growth should be evident, meaning that people move into certain states and counties, with affordable housing and job growth at the back of their minds.
Property Value Increase
Investors are interested in buying properties that appreciate as time goes by. Property value is measured by taking the percentage of change evident in the home value median, year after year, to calculate the home value.
Rental Income
In the top market, the higher the rental price median to the cost of housing, the higher the rental income. Rental yield is made out of the value percentage evident in rental income to the property’s market value.
Top 6 Places to Buy a Rental Property in the US
Real estate markets are differentiated on either macro or micro levels. When looking for the best cities to buy and hold properties, the following places must be considered when diversifying your real estate investment portfolio.
The top markets below were carved out from a very long list. Cities on this list are characterized with a high rental yield, improved wage growth and a lower unemployment rate. They include:
Amarillo, Texas
Amarillo is a small city with a population of 200,000 located in the northern part of Texas. In times past, this was just a city that was known for mainly ranching. But the surge of population and growth has made it a top market.
Currently, the city is experiencing an expansion in multiple job sectors, including retail, hospitality, health, mining, education, and construction. With the unemployment rate 1% below the national average, this is an excellent market for real estate investment.
Greater Tampa Bay, Florida
With a combined population of over 2.8 million, the Greater Tampa Bay area is one of the USA’s fastest-growing cities. Being home to the University of Florida, the Tampa Bay Buccaneers, Lightning, and Ray’s professional sports teams is massive.
With increased rental rates and home values, this is a top market for real estate investors. In the greater Tampa area, the Pasco and Hernando counties have the highest rental returns.
Oklahoma City, Oklahoma
Also referred to as the OKC, Oklahoma City is an upcoming city that has experienced tremendous growth over the past ten years. Oklahoma City’s leading economic sustenance source is in oil, natural gases, and other petroleum products. All these combined make it a real estate investment hotspot.
While being a top market, it is pertinent to note that 25% of its total workforce are in the natural resource sector. Consequently, if there’s a downturn in production, it can significantly impact employment and population negatively.
Atlanta, Georgia
Atlanta is the fifth biggest metro city in America. Atlanta is home to top companies, including Coca-Cola, UPS, Delta Airlines, alongside other professional sports teams.
In Atlanta, the median home price is higher than the national average. Atlanta is also characterized by its surging population growth, strong market, and low unemployment rates. Therefore, counties all over Atlanta like Bartow, DeKalb, Douglas offer the highest rental returns making it a great real estate investment hotspot.
Indianapolis, Indiana
Indianapolis is regarded as one place to get the best out of rental real estate investment. Its main strength includes possessing an economy that’s heterogeneous, improved market growth in different sectors like health, education, healthcare, and finance. All these attributes put together, makes it appealing to people in search of a stable job market, an intriguing city, and an affordable place to reside.
Louisville, Kentucky
Louisville is located on the Ohio River. It’s home to the Kentucky Derby and the bourbon industry, which produces $8.6 billion annually in revenue. Louisville is also known for its health care and medical sciences, manufacturing, mining, oil, and gas.
Louisville is a place where you are sure to make high returns when investing in rental real estate with all its characteristics.
Conclusion
Just because a place is considered the “best market” doesn’t mean it’s the best place for you. Your financial goals, management style, and investment strategies must be considered before picking the right market that fulfills all your requirements, with investing being a private affair. Don’t forget to find a suitable real estate syndication software to manage your investments and monitor the cash flow.
Even though locations might differ, using this guide when buying rental property in Canada is beneficial since investment strategies are constant.
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