Learn more. Already a member? Sign in here. Access to timely real estate stock ideas and Top Ten recommendations. Learn More. Real estate has long been the go-to investment for those looking to build long-term wealth for generations. Let us help you navigate this asset class by signing up for our comprehensive real estate investing guide. The real estate market has changed dramatically over the past year.

The outbreak of the coronavirus pandemic has shifted tenant preferences, which have created hot new housing markets and broken longtime leaders. If you're looking to buy residential rental property in the coming year, here are the 10 best places to buy rental property in Several factors make a city or market ideal for owning rental real estate:.

Keep in mind that this list of the best places to buy rental property in takes a macro look at rental demand and housing opportunities. Each individual market has its own unique supply and demand with niche neighborhoods that present their own opportunities for real estate investors. Before investing, make sure to research areas on a micro level, including neighborhoods or zip codes, in order to gauge which ones present the best investment options for your financial goals.

The capital of Arizona, Phoenix is a well-established city rooted in tourism, education, technology, military. Its warm weather makes it an appealing place to live, work, and visit. Currently, the city's unemployment rate is slightly higher than the national average, but considering its fairly high expected appreciation in addition to the consistent year-over-year rent growth, it's a good market to jump into with long-term prospects and demand.

El Paso is home to one of the largest military complexes in the United States, Fort Bliss, and is largely supported by defense and educational industries. Below-average median home values, as well as stable appreciation and year-over-year rent growth makes this a leading market for owning rental property. Tucson, Arizona, is one of the large metropolitan areas that has maintained rental-rate growth and home appreciation over the past year despite other large cities seeing residents flee.

While unemployment rates are above the national average, the city has diversified industries, including education with the University of Arizona and governmental or contracting agencies like Davis-Monthan Air Force Base and the U.

You can start by researching rent prices for similar properties in the area to understand what you could expect to rent your property for. Estimate your annual expenses. When calculating this, include taxes, insurance, maintenance, repairs and any homeowners association fees. Add your mortgage payments, including interest. Determine your net operating income NOI. Calculate your NOI by subtracting your annual rental income from your annual expenses.

Determine your total cash investment. You can find this by adding together your down payment, closing costs and any upfront renovation or repair costs. Divide your NOI by your total cash investment. The result here will determine your ROI. This makes up your NOI. Here are some tips to help you find and buy your new house to rent. Save For Your Down Payment The down payment required for an investment property is higher than the down payment required for a primary home.

Get Preapproved Getting a mortgage for a rental property, also called a non-owner-occupied loan , isn't much different from getting a mortgage for a primary residence. Consider Fixer-Uppers Vs.

Ready-To-Rent Units You also need to consider the condition of the rental property before you invest. Look Into Local Property Taxes Homes in areas with highly rated school districts and plentiful public amenities often have higher property tax rates.

The Bottom Line Being a landlord is a lot of work, but it can also be rewarding. The right home is out there. Find it online at RocketHomes. See Home Listings. See What You Qualify For. Miranda Crace The Rocket Mortgage Learning Center is dedicated to bringing you articles on home buying, loan types, mortgage basics and refinancing.

That's good news for the future of single-family rental investors. Single-family rental starts totaled 40, units in the last 12 months. While down slightly from pre-pandemic levels, it shows the activity in the market. S FR cap rates ticked down to 6. However, Arbor's report has a positive outlook on the sector for It says that the asset class was the best positioned to grow through the pandemic. However, it also warned that landlords still have hurdles ahead in terms of rent collections and the ongoing pandemic that has hurt the economy.

According to the Census Bureau, in the third quarter of , single-family rentals had an average This is the highest occupancy rate since for single-family rentals. The data reflects both rising user demand and landlords prioritizing tenant retention.

For comparable owner-occupied single-family housing units, occupancy rates sat at This demand could lead to a shortage of single-family rental homes. However, recently investors and developers have shown a renewed commitment to operating and developing these properties. Through the joint venture, Invitation Homes will provide investment, asset management, and property management services.

It shows that the interest of investors in single-family rental homes has risen to a great extent during this pandemic. Large investors are gravitating towards it. As of now, institutional investors account for only 2 percent of the million unit market, according to NHRC. This is meager as compared to the US multifamily sector, where more than 50 percent of ownership is held by institutional investors.

Hence, the single-family rental market remains an emerging market for both individual and institutional investors. You may be located anywhere in the world, the basic principles of real estate business remain unchanged — you want to choose those places for your investment properties where the return-on-investment is high.

To maximize the returns from your real estate investment you want to buy property in places with the following features:. Real estate investing requires in-depth research. Market timing also matters as some cities have exceptional rental income prospects, but a very tight inventory.

In that scenario, it becomes very difficult to find and close a deal that fits your investment criteria. Therefore, you need to act fast and wisely. Don't take any uninformed decision without evaluating the fundamentals of the real estate market you intend to purchase in — is it growing, stable, or declining?

Are you planning for the short-term capital gains or the long-term buy and hold? To make it easy for you, we recommend contacting an investment counselor who can help you to invest in some of the best real estate markets in the United States. We looked at data and examined trends from across the US to bring you this list of the 21 best places to invest in real estate in Here are the best places to invest in real estate and buy rental properties. They all have their own set of qualities and disadvantages, but many of them are less expensive than the national average.

Bosie stands at the 1st position for real estate investment. It has a record of being one of the best long-term real estate investments in the U. The supply and demand dynamics continue to drive home prices up in Boise. The Boise housing market was ranked as the 1 in the U. Their main criteria were based on the combined yearly percentage growth in both home sales 0.

Home prices are soaring and breaking records despite the coronavirus pandemic. Persistently tight inventory in the entire Boise Metro Area housing market, coupled with historically low year fixed mortgage rates are keeping the demand high, which in turn is pushing home prices up in this region.

The real estate appreciation rate in Boise in the latest quarter was around 4. Dallas is another good place to invest in real estate in The strong availability of housing stock and high rental rates relative to the house price make it an accessible market to invest in. The Dallas real estate market offers a wide range of investment properties; you just have to find your tenants to rent out the property.

Hiring a local property management company can help in finding tenants for your rental property in Dallas. You should think of investing in Dallas real estate because it has a very diverse economy so there is a niche for people of every income level. It is estimated that people move to Dallas-Fort Worth every day. Dallas has the lowest homeownership rate in the country, with renting more affordable than buying. The Metro area is growing and it's expected that at least new homes in this area and Dallas a total of new single-family homes and apartments.

Houston is one of the all-time best places to invest in real estate. This city is the home of the US oil and gas industry and offers perennial employment opportunities. Greater Houston is Texas' fifth-largest metro region, with over 7 million residents, and its population continues to expand at a rate nearly double that of the rest of the country. It is home to 53 Fortune businesses, putting it in third place behind New York and Chicago as the most concentrated city.

These strong macroeconomic factors continue to power the Houston housing market. However, what makes Houston a strong investment destination is that it has a very active real estate market. Volumes of trade are high and housing stock moves fast. This means it is fairly easy to exit investments and find a buyer for your home. Atlanta, GA is also one of the best places to invest in real estate. Atlanta offers attractive buying prospects for savvy rental property investors. This increasing population is driving the housing demand.

Should you buy investment properties in the Atlanta Real Estate Market? Located in the state of Georgia, the city of Atlanta is a hotspot for any type of real estate investment. Atlanta has shown promising population growth and employment, which are two signs of a healthy real estate market. As the city continues to go through an economic boom, prices of properties in Atlanta are forecasted to increase in the following years. How can we miss Las Vegas on our list of best places to invest in real estate?

Las Vegas has experienced several booms in its history. And it saw an incredible real estate bust during the Great Recession. For savvy investors, the Las Vegas real estate market is both stable and predictable.

Throughout , the Las Vegas housing market was the hottest in the United States. The Las Vegas real estate market is entirely brimming with new businesses. Its friendly business environment is propping up the economy and helping towards the positive Las Vegas real estate market trends for The new businesses are propping up at a much faster rate than the national average.

Now is a great time to invest in Las Vegas rental properties. Orlando, FL is a tourism and entertainment favorite, because of this, it remains a strong real estate investment destination.

Investors have a choice of targeting the long-term residential or holiday markets with their properties. Both offer strong returns. This expansion is related to the growing population and job opportunities in this city, this translates to more rental income and tourism leading to a better economy for the city. Spokane stands at the 5th position. With a population of only , people, Spokane is small, but it is a rising real estate hot spot.

Spokane homes are selling faster than Seattle homes. For renters in Spokane, the good areas are mostly on the north side north of Garland street. Perry District is growing faster than many other parts of Spokane.

Spokane Valley and Liberty Lake are also desirable neighborhoods and are growing rapidly. One reason to invest in Spokane real estate now instead of waiting is that prices are appreciating so fast.

According to Neighborhoodscout. Real estate appreciation rates in Spokane's have tracked to near the national average over the last ten years, with the annual appreciation rate averaging 0. Tampa, FL is also on the list of best places to invest in real estate in With a population of more than 4 million, Tampa, FL is not only an attractive metropolitan area but is also one of the most frequently visited tourist destinations.

There are several economic and development prospects attached to this market and Tampa was described as one of the hottest real estate markets in the US in the past year.

The Tampa housing market is growing steadily, prices are still low and properties have a good chance for a strong appreciation in the coming years. Home values have gone up 5. There is less than 2-month of the available inventory in the entire Tampa metro area — down almost This is one of the key factors in rising home prices. The benchmark for a balanced market favoring neither buyer nor seller is 5. Anything lower than 5. Austin, TX is also on our list of best places to invest in real estate.

The Austin housing market has gained a lot of steam, with home values almost doubling since Austin is only the fourth largest city in the state. However, the Austin housing market is sizable — it is the eleventh largest city in the U. Austin has come up as another tech hub in the last 5 to 6 years.

There are tons of high-paying tech jobs moved to Austin in the last couple of years. As Austin is a young city by many standards, Millennials will be the largest buying force in Austin in , and this trend should continue in the coming years. Real estate industry experts think that there is no bubble. Overall there is a huge scarcity of homes for sale in Austin.

Chicago is also on our list of the best places to invest in real estate. Additionally, the lender may take a closer look at the borrower's employment history and income and want to see prior experience as a landlord.

In general, here's what lenders require from borrowers to approve a rental property mortgage:. The cost of borrowing money might be relatively cheap in , but the interest rate on an investment property is generally higher than for a traditional mortgage. If you do decide to finance your purchase, you need a low mortgage payment that won't eat into your monthly profits too much. Mortgage lending discrimination is illegal. If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take.

Other costs include homeowners' insurance, possible homeowners' association fees, property taxes, monthly expenses such as pest control, and landscaping, along with regular maintenance expenses for repairs. Protect your new investment: In addition to homeowners insurance , rental property owners should always purchase landlord insurance.

This type of insurance generally covers property damage, lost rental income, and liability protection—in case a tenant or a visitor suffers injury as a result of property maintenance issues. Keep in mind that standard homeowners insurance policies may not cover losses incurred while the home is rented out.

Contact your insurance agent to make sure you are adequately insured. To lower your costs, investigate whether an insurance provider will let you bundle landlord insurance with a homeowners insurance policy. It's not just maintenance and upkeep costs that will eat into your rental income. There's always the potential for an emergency to crop up—roof damage from a hurricane, for instance, or burst pipes that destroy a kitchen floor.

It's tempting to look for the house that you can get at a bargain and flip into a rental property. However, if this is your first property, that's probably a bad idea. Unless you have a contractor who does quality work on the cheap—or you're skilled at large-scale home improvements—you likely would pay too much to renovate. Instead, look for a home that is priced below the market and needs only minor repairs. For every dollar that you invest, what is your return on that dollar?

Stocks may offer a 7. The more expensive the home, the greater your ongoing expenses will be. In addition, experts advise never to buy the nicest house for sale on the block—and ditto for the worst house on the block. Condos can be a good option for rental property buyers because they tend to be more affordable than comparable single-family homes, and they are often located in desirable locations think: at the beach or a ski resort. Additionally, condos often have fewer maintenance demands since owners aren't responsible for taking care of the grounds or the building's exterior.

Still, financing a condo can be trickie r than getting a mortgage for a single-family home. It's also important to consider potential special assessments.

You may be able to swing the monthly dues with no problems, but if the building needs, say, a new roof, you may owe a special one-time payment that could be thousands or tens of thousands of dollars. Rental owners need to be familiar with the landlord-tenant laws in their state and locale. It's important to understand, for example, your tenants' rights and your obligations regarding security deposits, lease requirements, eviction rules, fair housing, and more in order to avoid legal hassles.

Rental property owners can manage the property themselves or hire a property manager. Still, hiring an experienced property manager can be well worth the cost. After all, it means less work and fewer headaches for you, while taking advantage of their industry expertise. In general, a property manager will:.

To decide if hiring a property manager makes financial sense for you, ask yourself these questions:. In every financial decision, you must determine if the payoff is worth the potential risks involved. Does investing in real estate make sense for you? Because your income is passive, notwithstanding the initial investment and upkeep costs, you can earn money while putting most of your time and energy into your regular job.

Unlike investing in stocks or other financial products that you cannot see or touch, real estate is a tangible physical asset. Although rental income is passive , tenants can be a pain to deal with unless you use a property management company.

If you would like to invest in a rental property but don't have the money or expertise to make it happen, you might want to consider a real estate partnership. In simple terms, an investing partner helps finance the deal in exchange for a share of the profits. Keep in mind that a partnership isn't an "easy button," and it doesn't get you out of any work.

You still have to do your homework, practice your pitch, and be ready to show prospective partners that the investment makes financial sense.