Looking for the best place to purchase a rental property so you can get the best ROI can be tricky, especially if you’re not that savvy in real estate. One of the reasons for this is that we don’t precisely know when rent prices are going to drop in 2020 or when they’re going to rebound considering the coronavirus situation that the world is dealing with at the moment.
What we can say for sure, however, is that during this lockdown, real estate demand and prices are going to drop. And who knows what tomorrow entails as there’s no sign of the coronavirus situation getting better soon. That’s why it’s best to take your mind off of such things and look into the best cities to buy an investment property while prices are expected to remain low.
Factors That Rank Highest in Rental Investment Property Potential
There are six factors that we should examine in order to determine which cities have the highest potential in rental investment properties, including:
- Local economy
- Wage growth
- Employment growth
- Increasing home values
- Population growth
- Rental yield
The following is a list of some of the best cities for rental property investment:
Best Cities to Purchase an Investment Property
Orlando, Florida, has witnessed a considerable economic boost thanks to an incredible 3.46% increase in jobs year-over-year. It also experienced equally impressive growth in rent as well as the population.
One of the reasons for this appreciation is due to the fact that Orlando caters to a wide range of migrating retirees, an enormous tourist industry, and provides a variety of jobs to young adults. There are also plenty of beaches that are located close to residential areas.
Orlando was ranked first on Forbes’ 2019 list of best places where people can purchase a second house for themselves. And as of this writing, that momentum isn’t even thinking about slowing down even during these dark times.
Next up is Arlington, Texas, that has maintained a commendable population growth over the last two years. Like Orlando, it too has a 3.4% year-over-year growth in employment. The year-over-year home price growth has gone up by 8.3% from last year.
In addition, it has a median home price of $240,000, which is on the affordable end. The rents, on the other hand, are relatively high at $1498. This means that the city comes with a compelling rental yield and offers investors the opportunity to pay off their property in the course of approximately 13 years.
Reading Pennsylvania grabbed the top prize on Turbo Tenant’s list of best places to buy rental properties in the United States. The city is situated in southern Pennsylvania in Berks County and played a crucial factor in the area’s development and industry. Monopoly players may be familiar with the city’s signature Reading Railroad. The town of Reading has been known historically for relying mostly on manufacturing and agriculture. The city boasts an assortment of music and art festivals, delectable restaurants, and outdoor activities.
Reading is an excellent place for anyone in the suburbs looking to buy good homes at the most affordable rates. The average rent is usually approximately $957. Some of the best signs to invest in Reading include the increase in employment and population, in which the average lead number for landlords is expected to be 271.
Toronto, Ontario, Canada
Here, we’re offering something for our Canadian readers as part of our list of the best cities investment property. Although the metropolis may be the most expensive out of other Ontario cities, it’s great for long-term investment. And even though a strong year-over-year ROI does sound nice on paper, it pays to do a bit more research down the line.
Toronto’s attractiveness lies in its ability to draw students, immigrants, and more businesses every year. As a matter of fact, there were over 90,000 students at the University of Toronto alone just last year. And with the University constantly ranking among the best universities in the world, we can expect many more students to move to the heart of the city as the years go by.
Immigration is also a huge factor for Toronto as the city continually sees an increase in the number of immigrants settling down for work. These are also people who would like to rent when they arrive.
Architecture firms in Toronto (read more about them on Procore) are some of the most productive in the world, which has led to the rise of numerous condos in the city.
Tampa Bay is a densely populated metropolitan area situated on the west coast of Florida. There are over 3 million people living in this vibrant, prosperous city. The local economy of Tampa, which is over $130 billion in the metropolitan area, has been consistently growing in size for so many years. There’s also a strong focus on job growth in areas like healthcare and financial services.
More than 34,300 jobs have been created in the last 12 months and the greater Tampa Bay area has witnessed a job growth rate of more than 71% over the national average. Tampa is home to over four Fortune 500 companies and more than 19 companies with more than $1 billion in annual revenues are found here. Tampa, as well as other areas around it, continue to be recognized as some of the greatest real estate markets in all of the United States.
Charlotte, North Carolina
The greater metropolitan area Charlotte is also renowned for its excellent population and job growth. Over the last two years, Charlotte has experienced a solid 3.7% population growth, while employment grew by 2.7% between 2017-2018. Despite rental yield being less than average, last year saw home values rising by almost 12%. CNBC reports that Charlotte in the United States is the third-best if anyone is thinking about a business.
In these recent years, the home prices have inclined, so has the gross rent multiplier, which has regrettably made Charlotte not so attractive to investors of rental in the previous year or so. Nevertheless, the city still experiences gradual demand and growth.
As you can see, there are plenty of factors and metrics that make a city attractive for rental investing. It would be best if you meticulously evaluate each and every city’s factors such as current numbers and pricing, past growth as well as factors contributing to future growth.