Best US Cities to Buy Rental Income Properties

Best US Cities to Buy Rental Income Properties

Best Cities to Buy Real Estate

The US real estate market forecast in 2020, during the pandemic sees a very different landscape for home buyers and rental property owners.

The pandemic is changing the way people feel about where they live and work. It’s changing how they will do their jobs and how they feel about high density living.  The pandemic and remote work trend toward is encouraging buyers and renters to begin searching in rural areas and smaller cities is taking hold.

More people will be working from home and that opens up the possibility of moving to another city.

Screenshot courtesy of Brookings Institute.

You can learn more about the best cities to buy real estate in below.

Which City or Town Could I Move To?

Buyers will be asking not about big city neighborhoods, but rather which towns or cities they could move to and grow their business in.  There will be questions about lifestyles, job opportunities, and remote work security. There are risks.  However, overall, everyone including corporate managers are opening to the idea of remote work.  Hiring or outsourcing could offer companies big savings and let them access better talented contractors.

And banks have a different perception of mortgages too. They’re tightening restrictions to avoid big losses due to home owner job losses. We’re back to work, however many workers won’t be going back to their former employment. Bi

If you look at the housing market stats for San Francisco real estate, Tampa/Sarasota real estate, Florida real estate, Los Angeles real estate, Denver real estate, Boston real estate, or Atlanta real estate, you can see that single detached houses are up. Check the prices of houses for sale and you’ll see that trend, even during a recession.

For lower house prices, you’ll need to search for opportunities in smaller, outlying cities and towns.

Which Cities/Towns Have the Qualities You Seek?

What to Look for in the Best City to Buy Income Real Estate:

  1. lowest vacancy rate
  2. rising working age population
  3. rising developments
  4. lowest price to rent ratios
  5. rising number of millennials or baby boomer retirees
  6. growing economy
  7. good metro GDP
  8. lots of US based companies
  9. local restrictions on new construction
  10. located in the heartland or south region
  11. lower purchase prices
  12. lower property taxes
  13. lower state taxes
  14. better schools
  15. better lifestyle
  16. lower crime
  17. lower pollution and quick commutes

 

The exodus of workers and businesses from California is a trend.

Which cities and states offer the best employment outlook, lowest taxes, fewest regulations, large millennial population, and a pro business climate?  Texas might be first in line, especially as the price of oil has climbed back up to $35 a barrel.

Which State is Most Attractive?

The climate, cost of doing business, state business incentives, presence of labor, and tax costs in each state comes into the calculation.  Georgia, Texas, and Michigan would definitely rise to the front of the line.

Florida, Illinois, Pennsylvania, Colorado, Miami FloridaBoston, Massachusetts, and Ohio also offer potential savings for New York and California companies.

Danger Signals for Buyers

The US trade situation and political strife between the democrats and President Trump are macroecomic factors to weigh carefully.  A global recession has impacted the US short term. If he protects US business, then heartland cities will continue their growth.

Additional potential anti trust action against the FAANG tech giants could also bring a better outlook for small businesses and reduce the trend to the Bay Area.  California businesses are moving to Texas, North Carolina, Arizona, and even Georgia to reduce taxes, and business costs.

Please do Share this Post on Facebook!

 

Make sure others learn about the once in a lifetime opportunity in real estate investment with rental properties, and which cities might be best to invest in as rental income property.

Where Are the Renters?

As mentioned above, they’re in California, New York, Florida, Texas, Arizona, and Los Angeles. Small cities are gaining mention.

Best Performing Cities Report. Screenshot courtesy of Milken Insitute.

Is 2019’s top cities relevant anymore? To a certain extent they are. By 2021, a Corona Virus vaccine will have ben developed and life will return almost to normal. If business continues to return from China, it will bode very well for small cities, particularly in the heartland.

Milken Institute conducts an investigation of the best big and small towns to consider. This year’s ranking takes these factors into consideration:

  • Job growth
  • Wage growth
  • Short-term job growth
  • High-tech GDP growth
  • High-tech GDP concentration
  • Number of high-tech industries

Yet Milken didn’t appear to take into account the non-employment factors in relocation — namely remote work and the Covid 19 pandemic. Even as subways, airlines, trains, buses gear up for the long daily commutes, we may turning more to a commute free trend where pollution and time waste are reduced.

Here’s Milken Institute’s 2020 selection of best cities:

  1. San Francisco-Redwood City-South San Francisco, California
  2. Provo-Orem, Utah
  3. Austin-Round Rock, Texas
  4. Reno, Nevada
  5. San Jose-Sunnyvale-Santa Clara, California
  6. Orlando-Kissimmee-Sanford, Florida
  7. Boise City, Idaho
  8. Seattle-Bellevue-Everett, Washington
  9. Dallas-Plano-Irving, Texas
  10. Palm Bay-Melbourne-Titusville, Florida

And Milken chooses their top 10 Small Cities:

  1. Bend-Redmond, Oregon
  2. Grants Pass, Oregon
  3. Logan, Utah-Idaho
  4. St. George, Utah
  5. Coeur d’Alene, Idaho
  6. The Villages, Florida
  7. Idaho Falls, Idaho
  8. Gainesville, Georgia
  9. Sebastian-Vero Beach, Florida (13)
  10. Bellingham, Washington (17)

Cities that Are Rated as Declining:

TABLE 4. BIGGEST DECLINES AMONG ALL CITIES
(Based on change in rankings)

City  Rank        2020 Rank   2018 Rank

Iowa City, IA            150     57     -93
Manhattan, KS        156      76    -80
Kokomo, IN             126     51     -75
Hammond, LA        132     61     -71
Lawrence, KS           116     46    -70
Appleton, WI           139    69     -70
Bowling Green, KY 108    39     -69
Dover, DE                 118    49     -69
Lansing,MI               154     89    -65
Albany, GA               160    98    -62
Battle Creek, MI      181     120 -61
Jacksonville, NC      183     122 -61
Pittsfield, MA           142     86 -56
Kahului-Wailuku-Lahaina, HI 88 34 -54
Monroe, MI             152 99 -53
Grand Forks, ND-MN 192 140 -52
Hagerstown-Martinsburg, MD-WV 169 119 -50
Montgomery, AL     174 127 -47
Kankakee, IL             72 26 -46
St. Cloud, MN         104 58 -46
Panama City, FL     117 71 -46
Lubbock, TX            131 86 -45
Grand Rapids-Wyoming, MI 73 29 -44
Indianapolis-Carmel-Anderson, IN 106 63 -43
Columbia, MO         93 50 -43

Source: Milken Institute (2020)

Houses for Sale – The Ultimate Home Search Source

 

Wallethub: Best Places to Buy a House

Wallethub the mortgage rate website conducted a study of the best cities to buy a house. The study is a year old, but when the economy returns, the conditions from last year will be similar to expected for 2021.

Best Cities to Buy a House. Chart courtesy of Wallethub.

Best Cities for Rental Income Property

For rental property investment buyers, the rules that govern the best places to buy are similar as with young home buyers — employment stability, jobs outlook, migration trends, state GDP, city economic outlook, and house prices. For landlords, cap rates, price to rent ratios, rent price trends, and projected maintenance costs come into the picture.

Here’s Realty Trac’s most recent outlook on the best US cities to invest for rental property income

usheatmap-rental-roi

Complicating your investment decision is another set of statistics from Realty Trac that shows the west still has the highest returns currently but the green zones are predicted to perform better.

 

best-rental-income-cities

Screen capture Courtesy of Realty Trac

How about a 32% Yield on a Single Family Home?

Best Cities to Single Family Rentals USA. Chart courtesy of Attomdata.

(Screenshot above courtesy of RealtyTrac single family rental market reports

Top 80 Cities and their Potential for Passive Rental Income ROI

These converted stats in this chart from Smart Assets are very insightful. They used U.S. Census data, to calculate the price-to-rent ratio in every U.S. city with a population over 250,000.

This is their list of 80 US cities below with the worst potential for rental property income investment appearing at the top (The ones at bottom such as Detroit have better potential, unless employment fails to recover in Michigan).

US Cities with Population above 250k Price-to-Rent Ratio

Home Price

(for a $1,000 Rental)

1 San Francisco, California 45.9 551000
2 Honolulu, Hawaii 40.1 481000
3 Oakland, California 38.5 462000
4 Los Angeles, California 38.0 456000
5 New York, New York 35.7 428000
6 Seattle, Washington 35.1 421000
7 San Jose, California 34.7 417000
8 Long Beach, California 34.6 415000
9 Washington, District of Columbia 32.0 384000
10 Anaheim, California 31.3 375000
11 San Diego, California 30.3 363000
12 Portland, Oregon 29.3 351000
13 Boston, Massachusetts 28.7 344000
14 Jersey City, New Jersey 26.3 316000
15 Denver, Colorado 26.0 312000
16 Chula Vista, California 25.8 310000
17 Santa Ana, California 25.3 303000
18 Sacramento, California 24.3 291000
19 Miami, Florida 23.4 280000
20 Austin, Texas 23.4 280000
21 Atlanta, Georgia 23.0 276000
22 Colorado Springs, Colorado 22.8 274000
23 Bakersfield, California 22.5 270000
24 Raleigh, North Carolina 22.4 269000
25 Riverside, California 22.4 268000
26 Lexington, Kentucky 22.0 264000
27 Albuquerque, New Mexico 21.9 263000
28 Chicago, Illinois 21.6 259000
29 Henderson, Nevada 21.6 259000
30 Chandler, Arizona 21.5 257000
31 New Orleans, Louisiana 21.4 256000
32 Virginia Beach, Virginia 21.1 253000
33 Fresno, California 21.0 252000
34 Newark, New Jersey 21.0 251000
35 Minneapolis, Minnesota 21.0 252000
36 Anchorage, Alaska 20.9 251000
37 Phoenix, Arizona 20.3 244000
38 Louisville, Kentucky 20.1 241000
39 St. Paul, Minnesota 20.0 239000
40 Plano, Texas 19.9 239000
41 Stockton, California 19.5 234000
42 Durham, North Carolina 19.5 233000
43 Las Vegas, Nevada 19.3 232000
44 Nashville, Tennessee 19.1 230000
45 Greensboro, North Carolina 19.1 229000
46 Mesa, Arizona 19.1 229000
47 Lincoln, Nebraska 19.1 229000
48 Oklahoma City, Oklahoma 19.1 229000
49 Wichita, Kansas 18.4 221000
50 Charlotte, North Carolina 18.1 217000
51 Cincinnati, Ohio 18.0 216000
52 Aurora, Colorado 18.0 216000
53 Kansas City, Missouri 17.4 209000
54 Tulsa, Oklahoma 17.2 206000
55 Omaha, Nebraska 16.7 200000
56 St. Louis, Missouri 16.7 200000
57 Orlando, Florida 16.6 199000
58 Tampa, Florida 16.6 199000
59 Tucson, Arizona 16.3 196000
60 Philadelphia, Pennsylvania 16.3 196000
61 Dallas, Texas 16.2 194000
62 Laredo, Texas 15.9 191000
63 Columbus, Ohio 15.9 190000
64 St. Petersburg, Florida 15.8 189000
65 Fort Wayne, Indiana 15.5 186000
66 Baltimore, Maryland 15.5 186000
67 Arlington, Texas 15.5 186000
68 El Paso, Texas 15.4 185000
69 Indianapolis, Indiana 15.4 184000
70 Houston, Texas 15.3 183000
71 Fort Worth, Texas 14.8 177000
72 Jacksonville, Florida 14.3 172000
73 Milwaukee, Wisconsin 14.2 170000
74 San Antonio, Texas 13.7 164000
75 Toledo, Ohio 13.3 159000
76 Corpus Christi, Texas 13.1 158000
77 Memphis, Tennessee 12.3 147000
78 Pittsburgh, Pennsylvania 12.0 144000
79 Buffalo, New York 10.7 128000
80 Cleveland, Ohio 10.5 126000
81 Detroit, Michigan 6.3 75000




What About the Local Economies?

Millken research reveals the cities with the best performing economies in December 2016.  Florida cities are showing a marked rise. Recent reports focus on the apartment rental prices in San Francisco, Sacramento, and San Jose as offering outstanding returns for investors.

Chart courtesy of Milken Best Cities Report 2019

Milken Institutes best cities report

 

And this is Milken’s list of worst performing cities, likely the ones you might avoid.

Milken Institute biggest decliners 2018

In this video below, Mike Hambright talks about apartment rental markets, and how to make money from cash flow and property value appreciation.

There are so many real estate investment opportunities in the US and in Canada too. Hopefully, my amateur US housing forecasts, predictions and unguaranteed advice will help you find those opportunities for the best upside in cash flow, safety and equity appreciation. Be careful with any investment. Do your due diligence. 

 

More Insightful Posts:  Home Price Forecast 2020 | Stock Market Projections | Stock Prediction | Stock Price Forecast | Oil Price Forecast | Housing Market Crash | Stock Market News | Top Trending Stocks | Dow Jones Forecast | Are Home Prices Dropping? | Market Forecasts

22 years of experience as a content researcher, strategist and SEO expert for marketing agencies and his own company. Gord's investigation into housing markets, stock markets, and AI marketing strategy helps clients achieve market dominance. Some of Gord's blog posts have achieved half a million pageviews with over 7,000 social media shares, revealing Gord Collins special talents for building reach and impact. Visit the AI Marketing website for an introduction to the AI marketing era. Artificial Intelligence is lending extra benefit to the power of marketing software which is enhancing SEO, Copywriting and Sales. Gord offers a new brand of SEO services and to regain his reputation as a leading SEO expert. See his 2nd book which describes the powerful relationship between SEO and Content Strategy. Gord's passion is researching algorithms, trends, forecasts, and market statistics to establish clients at the top.

Leave a Reply

Your email address will not be published. Required fields are marked *