10 Top Spots to Invest in a Rental Property in 2020
If you've been thinking about investing in a rental property, mortgage rates are still at all-time lows.
Three main factors to consider when buying a rental property for equity growth and cash flow are an area's job growth rates, population growth, and affordability. When a market possesses all three factors, it's probable that it will have good investment opportunities. Here are the 10 top spots to invest in for 2020: #1 – Orlando, Florida Housing Market Quick Facts:
Orlando is listed as the #1 Best Places to Buy a House by Forbes for the third year in a row. Projections suggest up to a 35% increase in house prices by 2021.
Metro Orlando is the 4th largest metro area in the country, and it’s also the fastest growing metro in the nation.
Over 68 million people visited the Orlando area in 2019, making it the most visited tourism destination in the country.
The population in Orlando has grown over 20% since the year 2010. To date Metro Orlando houses over 2.6 million residents.
Rents grew by 3.44% in the last 12 months, which is 134% higher than the national levels.
Orlando’s projected job growth for the next ten years is the highest in the United States among the 200 largest metros, Forbes reports.
Orlando Medical City boasts a $7.6 billion economic impact and will create over 45,000 jobs.
#2 – Tampa, Florida Housing Market Quick Facts:
Tampa area has a population of over 3 million, a local economy worth over $130 billion, and is one of the fasted growing metros in the United States.
An area with mostly high-priced homes, Tampa still has pockets where investors can find homes at affordable prices (even as low as $150,000) and turn around to rent them for around $1,485 a month.
New jobs from Amazon and a talent pipeline from the University of South Florida helped push the Tampa metropolitan area to the No. 15 spot on the Milken Institute’s 2018 index of best-performing cities in the United States.
The area has numerous strong Fortune 500 companies including Publix Super Markets Inc., Jabil Circuit Inc., and WellCare Health Plans, Inc.
Tampa remains a fantastic tourism market and one of the best cities to buy real estate. It’s a popular option for retirees as well, providing for many short-term rental opportunities.
#3 – Jacksonville, Florida Housing Market Quick Facts:
The population in Jacksonville has grown almost 14% in population since 2000, which is higher than Miami’s and Tampa’s.
Future job growth in Jacksonville is predicted to be 39.21% over the next 10 years.
In Jacksonville, the median home price is about $189,000, which is 15% less than the national average.
A typical 3 bedroom home can rent for around or more than the national average.
The expansion of the Panama Canal is helping to bring jobs into the Jacksonville area ports. This is likely to lead to even more population growth.
The Jacksonville metro also has a world-class health care system, with more than 20 hospitals and a growing bioscience community.
#4 – Huntsville, Alabama Housing Market Quick Facts:
Huntsville is home to several prestigious Southern universities, including Alabama A&M University, Oakwood University and the University of Alabama in Huntsville.
The U.S. Space & Rocket Center, Alabama’s top paid tourist attraction and the earth’s largest space museum, is also located in Huntsville.
Huntsville is well known for it’s technology, space, and defense industries. The top employer is the military with over 31,000 jobs at Redstone Arsenal. NASA Marshall Space Flight Center are the next largest employers.
Both cities are also home to several Fortune 500 companies, which provide a broad base of manufacturing, retail and service industries to the area.
Huntsville continues to lead the growth in Alabama. In the last eight years the population has grown over 10%, which is 80% faster than the national average.
Huntsville enjoys lower tax rates and high rents, which increase ROI. And since the average home price is approximately $158,750, these areas won’t break your bank account either.
#5 – Dallas, Texas Housing Market Quick Facts:
Dallas is slightly more affordable than the average home nationwide. In 2019, the median purchase price of 3 bedroom single family homes in the Dallas metro area was $215,000. This is 3.5% lower than the national average of $222,000.
Dallas offers investors an opportunity to generate passive monthly income. In 2019, the median monthly rent for 3 bedroom homes in Dallas was $1,654, which is 0.77% of the purchase price of $215,000. This is higher than the national average of 0.75%.
Dallas home values are rising faster than other real estate markets. Over the last 7 years (Jan 2012 to Dec 2019), 3 bedroom homes in Dallas have appreciated by 81%. During the same period, 3 bedroom home values appreciated by 55% nationwide.
Dallas is the ninth most-populous city in the U.S. and is a huge commercial and cultural hub in Texas.
#6 – Houston, Texas Housing Market Quick Facts:
Houston is more affordable than many U.S. real estate markets today. In 2019, the median price of three bedroom homes in Houston was $175,000. This is 21% lower than the national average of $222,000
Houston offers investors a strong opportunity to generate passive monthly income. In 2019, the median monthly rent for three bedroom homes in Houston was $1,517, which is 0.87% of the purchase price of $175,000. This is higher than the national price-to-rent ratio of 0.75%.
Houston home values have been rising faster than other U.S. real estate markets. In 2012, the median price of three bedroom homes in Houston was $104,000. Over the next 7 years (Jan. 2012 to Dec. 2019), three bedroom homes in Houston appreciated by 61%.
Houston was ranked the #10 best city for young entrepreneurs by Forbes and the #2 best place to live in the world by Business Insider.
#7 – Cleveland, Ohio Housing Market Quick Facts:
Fastest growing healthcare economy in U.S. (and home to world renowned Cleveland Clinic).
Nation’s first Global Center for Health and Innovation as well as a new medical convention center.
10 Fortune 500 company headquarters (Goodyear Tire, Cliffs, Natural Resources, Firstenergy, Sherwin Williams, Eaton Corporation, Travel Centers of America, Aleris, Parker Hannifin, Progressive Insurance, KeyCorp).
Home to three major sport teams that bring billions of dollars to the area every year.
Job growth continues to steadily rise at 0.94%.
In 2019, the median price of 3 bedroom homes in Cleveland was $138,000. This is 38% lower than the national average.
#8 – Cincinnati, Ohio Housing Market Quick Facts:
The area is among the nation’s 25 fastest developing regions with a growing population every year.
A $350 million retail complex opened in 2018.
Cincinnati/Dayton is the country’s 4th largest inland hub.
The area is 4th in the US in new facilities – including GE Aviation’s new 420,000 square-foot Class A office campus and a new 80,000 sq ft Proton Therapy Center for cancer research.
Cincinnati has also completed a $160 Million dollar campus expansion.
In 2019, the median monthly rent for three bedroom homes in Cincinnati was $1,232, which is 0.75% of the purchase price of $165,000. This is right in line with the national price-to-rent ratio of 0.75%.
Cincinnati was just named as one of the best markets for real estate investments in 2020 by Forbes.
#9 – Chicago, Illinois Housing Market Quick Facts:
Chicago is the 3rd largest city in the United States and among the top 5 most economically powerful cities in the world.
The median sale price of the average 3 bedroom home in the Chicago metro area was $210,000.
This is 5% less than the national average of $222,000 for 3 bedroom homes.
In the neighborhoods where RealWealth members invest, the median purchase price was only $128,000 in 2019, which is 42% more affordable than the national average.
The median rent in the Chicago metro area is over $1,679 per month, with over half of the population renting.
83% of Chicagoans live in a home for 1 year or more.
Chicago is home to 30 Fortune 500 companies and boasts a $500 billion GDP, which is more than that of Norway and Belgium combined!
#10 – Indianapolis, Indiana Housing Market Quick Facts:
3 Fortune 500 Companies have their headquarters in Indianapolis.
7 high-tech “Certified Technology Parks” with tax incentives to start-ups.
Major distribution hub including Fedex, Celadon Trucking, Amazon, Target.
Indy is the ONLY U.S. metropolitan area to have specialized employment concentrations in all five bioscience sectors evaluated in the study: agricultural feedstock and chemicals; bioscience-related distribution; drugs and pharmaceuticals; medical devices and equipment; and research, testing, and medical laboratories.