Hottest Cities for Real Estate Investment 2018

Which are the Best Cities to Buy Real Estate?

It’s a rosy outlook for the housing markets in America and anyone buying real estate. Prices have moderated, new city markets are catching investor’s attention. However do you know which are the best cities to invest in real estate in 2018?

Do you have a strategy to buy in the best cities, use a property management company or use property management software to run your portfolio.

You’re just about set to make 2018 a great investment year. Have you looked at the forms of property investment should you choose — rental income suites, apartment buildings, or student housing reits? Open your mind the right type of property investment in the right city will outperform everything else.

Which cities and states offer the best employment outlook, lowest taxes, regulations, large millennial population, and a pro business climate? Florida, California, Michigan, Colorado, Miami Florida, Boston, Bay Area, New York , Massachusetts, or is it Ohio and Michigan?

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The most recent update on hot investment cities (average profit US-wide was at $336,000) for sellers still has San Francisco as the tops. And San Francisco Sunnyvale San Jose might be tops due to high rental prices, lack of housing and land, silicon valley paychecks, and an improving economy means there’s no bubble and no crash possible.

But the Bay Area isn’t the only city with potential. Dallas, Houston, Austin, San Antonio and Fort Worth are getting special attention these days. Texas is growing. Michigan has huge potential. Even Boston has potential. Businesses are relocating to these cities for a lot of reasons.

In this era of investment, the best property investments may be in other cities. Even if you intend to stay close to home, knowing what’s going on in other states might provide a superior return on investment.

As you may have read in my very popular post on US Housing Predictions for 2018 to 2020, the US housing market is hot and some cities are hotter than others. No housing crash is forecasted. The list below of the top 80 cities to invest in real estate represent your best opportunities for high returns. Even normally depressed quiet markets are coming to life and beginning to catch investor’s eyes. It’s good news for Michigan, Florida, California, Texas, and New York and even better for real estate investors in 2018.

Record Demand for Home, Condo and Apartment Rentals

The difference in this latest real estate rebound is the number of Americans renting and still needing to rent a home or condo. That’s created the incredible income investment opportunity called rental income investment properties for passive income investments or self-managed property investments. 30% to 40% returns are not unheard of. It’s once in a lifetime wealth building. The kind of cap rates major investors can only dream of. Get some tips on how to do homes for sale searching better.

Just an aside on investment opportunities in condo/apartments is student housing investment in Vancouver. You may want to check out the underlying fundamentals and demand for student housing.

Scorching hot opportunity in the best cities! Will the hot markets of San Francisco, San Jose, Silicon Valley, Phoenix, and Los Angeles do as well as expected? Those cities with the highest home prices are not your only option. There’s plenty more towns and cities across the nation where you can buy rock bottom and sell high including this list of real estate by zip code. Cities you’ll read about below with lower home prices and rising employment rates may be your best bets for 2017 to 2020.

One high performing rental income related opportunity to investigate is student housing investment in Vancouver. The student housing market in Vancouver is like no other place. Foreign families like Vancouver BC in Canada for many reasons. And the Canadian government is raising the limits on foreign students and on post grad immigration. That means lots of demand coupled with high rents which translates to big profits. A company called CIBT has dominated this sector and is growing fast. You can invest with them like a REIT.

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Make sure others learn about the once in a lifetime opportunity in real estate investment with rental properties.

With strong economic growth as certainly continuing, rental income investment offers multiple ways to grow revenue. And your property may look even better to another investor when you sell. Lets see what the experts predict and what the stats say about the best cities and zip codes.

Renter Statistics:

Growth in rental demand was largest for people with incomes lower than $25,000; a group that accounted for four million new renters over the past decade.
Growth for people with household incomes over $50,000 accounted for 3.3 million new renters.
There was an increase of 1.6 million renters for those with incomes over $100,000 a year.
The amount of rental stock also grew, and the single-family house share of the market increased from 34-40% of the total rental stock
Vacancy rate was less than 5% in 75% of the United States largest cities by 2015.

Stats courtesy of go.homebay

Apartment and Single Family Home Rental Price Index — Price Index Screenshot courtesy of AMERICA’S RENTAL HOUSING: Expanding Options for Diverse and Growing Demand

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Skyrocketing Home and Rental Prices in California are a Continuing Allure for Investors

In major urban areas such as San Francisco, Los Angeles, Oakland, Boston and New York, the demand for rental properties is skyrocketing. Investors might see ROI of 30% or more on rental income property and that beats any stock market these days.

Foreign buyers too, are purchasing lower priced homes now, likely because of high prices on luxury homes along with the fact they can rent them out — passive income which is a hot topic for babyboomers in particular. Realtors are seeing a much different type of buyer today and they need to keep up on how competitive properties are in other cities in the US and Canada. Investors just want a great return.

Home prices are rising everywhere, but what makes San Francisco so hot is its lack of housing stock and a booming job market. Where there is little growth in new housing development together with a healthy job market and a good demographic (millennials who can’t buy) the demand for rental housing has to explode.

Experts try to explain away this demand by blaming speculators and high housing prices, yet the driver of rental demand in San Fran is too many employed people with nowhere to live. And wages are rising. Silicon Valley’s rental market is so tight, there’s an overflow to Sacramento and other inland cities.

In-migration has been strong at a time when millennials are leaving home, contributing to rocketing apartment and home rental costs. This is fueling the tremendous demand for investment income properties. With no one building new homes and the government not acting to help, it’s up to private investors to take the helm.

With crazy high ROI, we’ll see rental income investors and developers race into these regions to build new properties. It’s a great investment situation for Americans, investors and realtors.

San Francisco is one area however that might not benefit. Its strong economy is driven by large tech corporations that add value to imported technology and products manufactured in China. Which is why Silicon Valley is hostile to Trump. California’s economic outlook is still very bright, but it’s low potential rental income outlook could send investors over to other US cities to invest in, such as those in green areas in the charts below.

Rental Income Property Investment Opportunities

With or without Trump, the US economic outlook is good. The outlook for rental income property is exceptional. Realtors and investment advisors should be looking hard at this market. Even babyboomer investors are looking at the potential of retirement income. Many babyboomers are a little nervous about how they’ll fund their “stay put” retirement plans.

They’ll need extra income to stay put and revamp their home over the next 30 years, and they may look to rental income to get that money. A percentage may just sell their home and leave it to a developer/investor to turn it into the multi-family unit. That investor might be you.

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

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?

(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?

Last year’s report from Millken research reveals the cities with the best performing economies in 2015. This was put out 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.

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

Screenshot courtesy of Millken Institute. Read the detailed Millken 2015 Best-Performing Cities report with rankings by economic component. Excellent insight to help you fine tune your rental income property investment choices.

Their interactive map of US cities with the best economies below is a very helpful tool to help you measure the investment prospects of one city versus another.

Lowest car insurance in these cities: LA car insurance, Boston auto insurance, Phoenix car insurance, San Francisco car insurance, San Diego car insurance, Seattle car insurance, New York car insurance, Indianapolis car insurance, Detroit car insurance, Philadelphia auto insurance, Toronto automobile insurance, or Chicago car insurance.

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

Are There any Warnings?

This graphic from Coreglogic warns about overheated city markets. Yet it also shows how markets like Silicon Valley, actually has lots of room for rent rate growth. And New York has the lowest rent rate to home price ratio.

Screenshot courtesy of Corelogic.com

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.

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Tag: Rentals

Best US Cities to Buy Rental Income Properties 2018 to 2020