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ContinueIn this article, we take a closer look at 10 of the best places to invest in real estate whether you’re looking for cash flow or appreciation or both.
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Written by
Ben Luxon
PUBLISHED ON
26
Apr
2023
Selecting the right investment property in the right location can make or break your success as a real estate investor. When it comes to investing in real estate, location is often considered one of the most critical factors. However, it’s not just where to invest you have to think about, you also need to analyze the property’s financials on an individual level to ensure this specific investment will cash flow positively, appreciate in value over time, and have low vacancy rates and ultimately that it will meets your specific needs and goals.
For example, if you are looking to purchase a short term rental you’ll likely have a whole different set of criteria than if you were looking for a commercial property or a long-term residential property. It's also important to do your due diligence to ensure the property itself is sound and doesn't need any major work.
With that being said, with so much opportunity across the US, knowing where to start looking can be a challenge. In this article, we take a closer look at 10 of the best places to invest in real estate whether you’re looking for cash flow or appreciation or both.
Real estate is a long term investment. You’re unlikely to see major overnight financial gains. However, as Andrew Carnegie famously said, "Ninety percent of all millionaires become so through owning real estate," so it’s clear to see that as an asset class. real estate is invaluable.
But, should you be looking at real estate in 2023? With high interest rates, low inventory, and the threat of recession, it might be tempting to wait for a better time, a better opportunity. The common response to this is that as long as you treat your investments as long term investments, whether that’s stocks or real estate or something else, 'time in the market almost always trumps timing the market'.
Of course everyone’s situation is different, you don’t want to over-leverage or over-expose yourself to risk and be forced to sell at a loss. As such, it is recommended that you consult a financial advisor or qualified CPA before making any major investment decisions.
When exploring opportunities for a new investment property, it's important to conduct thorough research and due diligence on the local market conditions and economic factors in the areas you are interested in. Some factors that may influence the desirability and profitability of rental properties include:
In this article, we look at a few key metrics and manly use residential single family homes as a benchmark. The metrics we use to identify the best places to invest in real estate in the US and these include:
It’s important to note that everyone's goals and strategies are different and so there is no universal truth. For example, the financial benefits of investing locally so you can self-manage all your units might outweigh the benefits of a slightly larger cashflow. Alternatively,
We have used a range of data sources including:
The key factors that influence migration to growing cities include the end of Covid and concerns about inner-city crime, the restart of head offices, apartment vacancy rates in cities, the overall growth of renting, and the affordability of single-family homes in the suburbs.
Offices are being converted into residential multifamily and apartment units, and some over-leveraged multifamily firms are selling low-performing units which presents an opportunity for investors.
Unemployment rates remain a significant consideration. According to Forbes, the cities with the strongest job markets and lowest unemployment in March 2023 included Sioux Falls, South Dakota, with 1.9% unemployment, along with Burlington, Vermont (2.0%) and Lincoln, Nebraska (2.0%).
Mortgage rates have peaked massively from the historic sub 3% rates we were seeing only 12 months ago. However, property demand and prices remains high. Single-family homes are still in demand, and in some markets, like California, prices continue to rise.
Other investment opportunities include modular construction and built-to-rent developments. Low taxes and prices are attractive, but even up-and-coming states like Pennsylvania, Tennessee, Arkansas, Georgia, and South Carolina will run out of supply, causing prices to rise.
Texas was the hottest real estate market for prices and yields last year and continues to be a strong performer due to its diverse economy and key commodity strengths. States that are attracting interest from buyers include Indiana, Virginia, North Carolina, Michigan, and Connecticut. These states may benefit from the repatriation of manufacturing to the United States as global trade shifts.
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Boise's strong job market, affordable housing, growing population, stable real estate market, and low property taxes make it an attractive destination for real estate investors.
Boise's real estate market has shown strong long-term growth, with a home appreciation rate of 217.86% and an average annual rate of 12.26%. This places it in the top 10% nationally for real estate appreciation, making it an attractive option for investors looking for potential capital appreciation over time.
Boise's economy is thriving, thanks to its strong job market in industries such as technology, healthcare, and education. This growing job market attracts new residents, who drive demand for housing, leading to increased property values.
Compared to other major cities in the US, Boise offers more affordable housing options, making it a popular choice for first-time homebuyers and real estate investors alike. This can provide steady rental income for investors and potential long-term capital appreciation.
Boise's population is steadily increasing as people are drawn to the city's high quality of life, outdoor recreational opportunities, and affordable cost of living. This growing population drives demand for housing, which can lead to increased property values, making it an attractive option for real estate investors. Additionally, low property taxes in the area make it even more attractive for investors looking for a stable real estate market.
In March 2023, Boise home prices were down 14.6% compared to last year, selling for a median price of $459K. On average, homes in Boise sell after 48 days on the market compared to 7 days last year. Source.
Median for a 1 bed in Boise in March 2023 was $1452 representing a 0% change. Source.
Boise, ID remains a seller's market in December 2022, which means that there are more people looking to buy than there are homes available.
Austin is only the fourth largest city in the state. However, the Austin housing market is still sizeable being the eleventh largest city in the U.S. Additionally, Austin has increasingly drawn tech companies and investment in the last 5 to 6 years.
Here are the top reasons why Austin is one of the best places to invest in real estate.
Austin's economy is thriving, driven by the presence of major tech companies such as Dell, IBM, and Apple. This has led to a significant increase in employment opportunities, driving population growth and increasing demand for housing.
With an annual population growth rate of 2.5%, Austin is one of the fastest-growing cities in the US. This has created a high demand for housing, making it an attractive market for real estate investors looking for potential capital appreciation.
Austin has a strong rental market, with a high percentage of renters in the population. This trend is expected to continue due to the high cost of homeownership and the influx of young professionals and college students. This provides a stable rental income for real estate investors.
Texas has no state income tax, making it an attractive option for investors looking to maximize their profits. Austin's pro-business environment also offers low regulatory hurdles, making it easier for real estate investors to navigate the market and potentially increase their returns.
In March 2023, Austin home prices were down 16.1% compared to last year, selling for a median price of $537K. On average, homes in Austin sell after 59 days on the market compared to 26 days last year. However, it's important to note that different neighborhoods respond to the market differently. For example, homes in top neighborhoods in Central Austin will move at a different rate than homes in other neighborhoods.
Austin was a buyer's market in January 2023, which means that the supply of homes is greater than the demand for homes. Source.
Median for a 1 bed in Austin in March 2023 was $1,591 representing a 2% YoY increase. Source.
Austin’s economy is strong and varied. Overall there is a huge scarcity of homes for sale in Austin. It just hasn’t kept up with the pace of people moving there.
Orlando's strong tourism industry, growing job market, affordable cost of living, thriving business community, and a growing population all make it one of the best places to invest in real estate. With a wide range of investment opportunities available, including short-term rental properties to commercial real estate.
Here are some of the top reasons why Orlando is one of the best places to invest in real estate:
Orlando's job market is one of the fastest-growing in the country, with high-tech industries like aerospace and simulation leading the way. This is attracting a skilled and educated workforce with high-paying jobs and driving demand for both residential and commercial properties in the area.
Orlando's business community is thriving, with a number of high-tech, aerospace, and simulation companies calling the area home. This, combined with a growing job market and affordable cost of living, is driving demand for real estate investment in both residential and commercial properties.
Orlando's strong tourism industry attracts millions of visitors each year, driving demand for both short-term and long-term rental properties. This provides a steady source of rental income for real estate investors.
Orlando's population is growing rapidly, making it one of the fastest-growing cities in the US. This, combined with a strong job market, a thriving business community, and an affordable cost of living, is driving demand for both residential and commercial properties in the area, making it an ideal location for real estate investment.
In March 2023, Orlando home prices were up 5.1% compared to last year, selling for a median price of $360K. On average, homes in Orlando sell after 32 days on the market compared to 8 days last year. Source.
Median rent for a 1 bed in Orlando in March 2023 was $1,648 representing a 2% YoY decrease. Source.
Orlando was a balanced market in January 2023, which means that the supply and demand of homes are about the same.
Tampa, Florida is one of the best places to invest in real estate, due to its growing population, strong economy, affordable cost of living, thriving tourism industry, access to the beach, investment opportunities, and favorable climate.
Here are the top reasons why Tampa is one of the best places to invest in real estate.
The Tampa Bay area has a robust economy, driven by industries such as technology, healthcare, and finance. This strong economy is attracting new businesses and creating jobs, which is increasing the demand for housing in the area.
Compared to other cities in the U.S., Tampa has a relatively low cost of living. This makes it an attractive destination for people who are looking to relocate or invest in real estate. As a result, property values in Tampa have been steadily increasing.
Tampa is home to several popular tourist destinations, including Busch Gardens and the Florida Aquarium as well as beautiful beaches. This thriving tourism industry drives demand for rental properties, making it a great place for real estate investment.
Tampa has a rapidly growing population, which is increasing the demand for housing in the area. As more people move to the city, the need for rental properties and new homes is growing, making Tampa a great place for real estate investment.
Tampa has several investment opportunities in both residential and commercial real estate. There are many properties available for purchase, including single-family homes, townhouses, and apartments. Additionally, there are also investment opportunities in commercial real estate, such as retail, office, and industrial properties.
In March 2023, Tampa home prices were up 9.3% compared to last year, selling for a median price of $410K. On average, homes in Tampa sell after 35 days on the market compared to 7 days last year. Tampa was a balanced market in January 2023, which means that the supply and demand of homes are about the same. Source.
Median rent for a 1 bed in Tampa in March 2023 was $1,674 representing a 2% YoY decrease. Source.
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Based on Zillow data, the Reno real estate market is expected to experience a slight decline in home values in the coming year. The projected decline is not expected to be significant, and the market is likely to remain relatively stable with strong long-term projected growth.
Reno has a strong economy that is largely driven by industries such as gaming, healthcare, manufacturing, and technology. The area is home to a growing number of high-tech companies, including Tesla and Panasonic, which are creating jobs and attracting highly skilled workers to the region. The combination of these industries has helped to drive economic growth in Reno, making it an attractive location for businesses and investors.
Nevada is known for its business-friendly tax environment, and Reno is no exception. The state has no personal income tax or corporate income tax, which is a major draw for businesses and individuals alike. Additionally, the property tax rates in Reno are relatively low compared to other states, with an average effective property tax rate of 0.71%.
Despite the projected decline in home values, the moderately competitive market and the percentage of homes selling over their list price indicate that there may still be opportunities for both buyers and sellers in the Reno area.
In March 2023, Reno home prices were down 8.3% compared to last year, selling for a median price of $500K. On average, homes in Reno sell after 68 days on the market compared to 21 days last year. Source.
Median rent prices for a 1 bed in Reno in March 2023 was $1,324 representing a 2% YoY increase. Source.
Raleigh, North Carolina boasts a strong job market, with 35,600 jobs added year-over-year through December 2022. The city's low unemployment rate of 3.2% further underscores the robustness of the local economy. Most of these jobs are in leisure and hospitality, financial activities, and professional and business services.
The leisure and hospitality industry is a significant contributor to Raleigh's economy, with attractions such as the North Carolina Museum of Natural Sciences and the North Carolina Museum of Art drawing in visitors from across the country. This thriving tourism industry is a testament to Raleigh's appeal as a destination for both business and leisure travel.
North Carolina's property tax rates are among the lowest in the country, with an average effective property tax rate of 0.70%. This favorable tax climate makes Raleigh an even more attractive location for real estate investment. Additionally, the state tax rate in North Carolina is also relatively low.
In March 2023, Raleigh home prices were down 3.7% compared to last year, selling for a median price of $389K. On average, homes in Raleigh sell after 42 days on the market compared to 22 days last year. Source.
Median rent prices for a 1 bed in Raleigh in March 2023 was $1,421 representing a 17% YoY increase. Source.
There are several reasons why Spokane, WA is considered one of the best places to invest in real estate. These include its affordable Spokane housing market, strong rental demand, growing economy, and abundant outdoor recreational opportunities.
Here are the top reasons why Spokane is one of the best places to invest in real estate.
Spokane's real estate market is currently experiencing a strong seller's market, with increasing home values and low inventory.
Spokane has a lower cost of living compared to other major cities in the Pacific Northwest, making it an affordable place to invest in real estate.
Spokane has a growing economy with job opportunities in healthcare, education, and manufacturing. This translates to a steady demand for housing.
Spokane's population has been steadily increasing over the years, making it an attractive location for real estate investments. The 2020 Census showed that Spokane city's population was 222,647, a 7.5% increase from 2010.
In March 2023, Spokane home prices were down 9.09% compared to last year, selling for a median price of $350K. On average, homes in Spokane sell after 18 days on the market compared to 5 days last year. Source.
Spokane was a balanced market in January 2023, which means that the supply and demand of homes are about the same.
Median rent prices for a 1 bed in Raleigh in March 2023 was $1,000 representing a 13% YoY decrease. Source.
Chicago's strong rental market, thriving downtown, presence of well-developed infrastructure, high rents, large population, investment opportunities, affordable housing, investment in public transportation, and thriving start-up culture make it an attractive destination for real estate investors.
Here are the top reasons why Chicago is one of the best places to invest in real estate.
Chicago has a rental market that makes it an excellent location for real estate investors. Over 50% of the population rents, indicating a significant demand for quality housing.
Chicago is a bustling and thriving city, with a diverse range of amenities, culture, and a robust economy and has become a hub for start-ups and financial services. As such, it attracts plenty of young professionals, resulting in a strong rental market.
Despite a recent population decline, Chicago is still home to almost 2.7 million people, making it a significant market for real estate investment. The large population also means a steady demand for housing.
Chicago has many neighborhoods that have undergone revitalization in recent years, making them more attractive to potential renters and real estate investors. Investing in these areas can provide significant returns, especially when done early in the development process.
Chicago has a relatively affordable housing market compared to other major metropolitan areas. This makes it an attractive option for investors looking to provide quality housing at reasonable prices.
In March 2023, Chicago home prices were down 2.9% compared to last year, selling for a median price of $335K. On average, homes in Chicago sell after 65 days on the market compared to 60 days last year. Source.
Median rent prices for a 1 bed in Chicago in March 2023 was $1,795 representing a 5% YoY decrease. Source.
Greater Houston is Texas' fifth-largest metro region, with over 7.2 million residents, and its population continues to expand at a rate nearly double that of the rest of the country. Forty-one Fortune 1000 companies are headquartered in the Houston region. These strong macroeconomic factors continue to power the Houston housing market.
Houston, Texas has several factors that make it a strong market for real estate investment. Some of the reasons include:
Houston is home to a diverse and robust economy, with several major industries, including the energy sector, medical center, and aerospace industry. This has driven job growth in the city, attracting new residents and supporting the real estate market.
Compared to other major cities, Houston has relatively affordable housing. This makes it an attractive location for real estate investment, with opportunities for both rental properties and flips.
Houston is one of the fastest-growing cities in the U.S., with a growing population and an increasing demand for housing. This provides ample opportunities for real estate investors to meet the growing demand for housing in the city.
Texas has no state income tax, making it a more attractive location for both residents and businesses. This can potentially increase the demand for housing and support the real estate market in Houston. Additionally, Houston has relatively low property tax rates compared to other major cities, making it an attractive location for real estate investment.
In March 2023, Houston home prices were up 1.5% compared to last year, selling for a median price of $330K. On average, homes in Houston sell after 33 days on the market compared to 20 days last year. Source.
Median rent prices for a 1 bed in Houston in March 2023 was $1,249 representing a 5% YoY decrease. Source.
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Las Vegas is a city that is known for its vibrant entertainment scene, luxury casinos, and world-class dining experiences. However, it's not just a great place to visit, but also a prime location to invest in real estate with a strong job market, high rental demand, affordable housing, a growing population, investment in infrastructure, a thriving tourist industry, and favorable tax benefits.
Here are the top reasons why Las Vegas is one of the best places to invest in real estate:
Las Vegas is a city with a strong job market and population growth, leading to a high demand for rental properties. This high demand translates into stable rental income and steady property value appreciation.
Compared to other major US cities, Las Vegas offers affordable housing options. With lower real estate prices and a relatively low cost of living, it is an attractive destination for real estate investors looking to invest on a budget.
Las Vegas is one of the fastest-growing cities in the United States. The increasing population has resulted in a high demand for housing, driving up real estate values and providing stable investment opportunities.
Las Vegas has a robust job market, with a diverse set of industries contributing to its growth, including tourism, gaming, construction, and technology. As a result, the city has a strong economy and a low unemployment rate, which is beneficial for real estate investors.
Las Vegas is one of the most popular tourist destinations in the world, attracting millions of visitors each year. The thriving tourism industry is a significant contributor to the city's economy and provides real estate investors with a reliable source of rental income.
In March 2023, Las Vegas home prices were down 5.7% compared to last year, selling for a median price of $396K. On average, homes in Las Vegas sell after 62 days on the market compared to 19 days last year. Source.
Median rent prices for a 1 bed in Las Vegas in March 2023 was $1,289 representing a 0% YoY change. Source.
Below are the most stable 20 cities with the highest long term appreciation.
After you’ve found the ideal place for your real estate investing needs, here are some tips on how to better understand the real estate market as a new investor.
Once you’ve chosen your location, whether it be a large city or a small town, connect with local real estate investors and agents to learn more about the local market. You can learn a lot from those who have been investing in real estate in your area and the expectations of cash flow and revenue.
As a homeowner, you’ll need to insure your purchased home. However, when buying a potential rental property, you’ll also need rental property insurance – also known as landlord insurance.
Once you’ve done your research on the local market, always make a plan for the next steps. Be mindful of market conditions and seasonality. Ask yourself questions like, “What are popular months for renters to renew leases?” and “What are the median rental rates in the local area?”
You might like: 11 Real Estate Investing Metrics that Investors Need to Know
Everything about investing in real estate takes time. From locating a deal to completing on it, from finding tenants to generating cash flow. Appreciation, and refinancing options. Be patient, run the numbers again and again and don’t select the very first tenant that applies. With real estate you’re thinking in decades.
We’ve already talked about the importance of knowing your numbers, well that doesn’t stop once you get the lease signed. You need to be staying on top of your income and expenses throughout the year, accurately tracking every deductible expense, every mile, digitizing every receipt if you want to run a profitable scalable portfolio.
The easiest way to do this is with purpose-built software like Landlord Studio.
Landlord Studio is an property management and accounting software designed specifically for landlords. With an easy to use app and a range of features designed with user feedback it offers everything you need to save time and money managing your rentals. And it’s free.
A few key features include:
Landlord Studio is an easy property management and accounting software and app designed for landlords.
Track income and expenses, run reports, collect rent online, find and screen tenants, manage property maintenance, and more.
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