10 Best Real Estate Cities for Investing
Nobody is born great at investing in real estate. Like anything else, it’s a skill that anyone can learn, and the more you study and practice, the better you become! And while it’s important to keep up on the latest real estate trends, it’s equally important to understand which are the best real estate cities for investing.
For starters, understand this: Every city is different. Even if you’re starting off with millions of dollars and are able to buy dozens of houses right out of the gate, your investment will go much farther in some cities over others.
It all goes back to that core real estate tent: location, location, location. Where you decide to invest is just as important as which homes you ultimately invest in.
What to Look for In A City That’s Good for Investing In Real Estate
The best cities for real estate investors tend to showcase the same characteristics over and over again, at least in a few neighborhoods. Those characteristics include:
Low Home Values - A key principle in investing is “buy low, sell high.” That same rule applies here as well; you want the homes you buy to be as inexpensive as possible so you can more easily sell or rent them for a profit in the future. Take note, however, that this doesn’t necessarily mean every home you buy should be dilapidated or in need of a major overhaul. Extension remodeling projects can interfere with profits!
High Home Value Appreciation - In a perfect investing scenario, you could buy a forgotten property for a small amount of money, and then the property simply appreciates in value as the neighborhood and surrounding city become a better place to live. We’ve seen this play out in neighborhoods throughout Pittsburgh. Communities like Lawrenceville and Garfield have seen home values appreciate simply because the neighborhood as a whole is becoming a hotbed for economic growth.
Low Property Tax Rates - If you’re holding onto a property, you don’t want taxes cutting into your profit. Working in a city with low property tax rates (like Pueblo, CO) means you have fewer taxes interfering with your revenue.
Low Rental Vacancy Rate - If your plan is to rent, you want to increase the likelihood that people will rent your property! A low rental vacancy rate is a strong indication of a healthy rental market and heavier competition among renters. In general, that means you’re more likely to receive a slew of applications for every vacancy you have!
With those figures in mind, let’s explore some of the best cities for buying an investment property.
Top Cities to Buy Investment Properties
Whether you’re a new or experienced investor, it helps to know the best markets in the country. Here are some of the best real estate cities for investing, based on our internal data and research from Policygenius:
Youngstown, OH - Youngstown boasts the lowest home values on this list, making it an easy market to move into. Although the tax rates here are above average, Youngstown also has a low rental vacancy rate and strong home value appreciation in recent years.
Detroit, MI - Like Youngstown, Detroit has incredibly affordable homes. The city also boasts a 100% appreciation rate—but it does have high taxes and an above-average rental vacancy rate.
Spring Hill, FL - Spring Hill has higher home values than the first two cities, and that may make it more difficult for some investors to tap into. However, Spring Hill does have strong home value appreciation, a below-average property tax rate, and a strong rental vacancy rate.
Pueblo, CO - Pueblo has some of the highest home values on this list, but good home value appreciation, low tax rates, and low rental vacancy rates can make this an attractive city for investors with a little extra cash to spend.
Birmingham, AL - While homes in Birmingham aren’t nearly as inexpensive as in Detroit or Youngstown, they’re still under the $100,000 mark. Although appreciation in recent years has been relatively modest compared to other hot markets, it does have below-average taxes! One note: Be prepared for that high rental vacancy rate of 9.4%! If you invest here, you may want to put extra time into marketing your property to potential renters.
Cleveland, OH - Like many cities part of the former “rust belt,” Cleveland has affordable homes and very good appreciation. Unfortunately, Cleveland does have above-average taxes and a rental vacancy rate of 6.7%.
Pittsburgh, PA - Home values in Pittsburgh have increased in recent years, but that’s a direct result of steep appreciation. And although taxes are above-average, the city does boast a strong rental vacancy rate. To learn more, check out our article on earning an ROI on Pittsburgh real estate!
Colorado Springs, CO - The home values in Colorado Springs are the highest on this list, but the city receives strong marks for its strong appreciation, very low taxes, and healthy rental base.
Lehigh Acres, FL - Although home prices in Lehigh Acres tend to be higher, the city has seen decent appreciation, below-average taxes, and a strong rental base.
Palm Bay, FL - Palm Bay is almost 200 miles from Lehigh Acres, but its housing market is almost identical: Higher value homes, decent appreciation, below average taxes, and a strong rental base.
Of course, these aren’t the only cities that provide excellent ROI for investors, but they are a good starting point for identifying great opportunities.
Get Extra Help For Finding the Best Real Estate Cities for Investing
If you’re interested in investing in a new city, we’d love to meet you! We have deep experience in the Pittsburgh market, but our network extends all over the country. Contact us today to get started!
