The best places to buy rental property for cash flow and equity growth often have three things in common: job growth, population growth and affordability. When you find a market that has all three of these factors, you’ll probably be able to find good investment opportunities.
There are several cities across the United States where these factors exist today — places where you can buy high cash flow rental property while prices are still low (around $100,000 in many cases), and watch your equity grow.
In this article, which was updated for quality and accuracy on January 16, 2018, you’ll learn about 16 of these “best-buy” real estate markets for the year 2018. Find out what makes them great places to invest and why. Note: These markets are not listed in any particular order.
TABLE OF CONTENTS
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Part 1: Orlando, Florida
The demand for single family homes has been on the rise in the Sunshine State for quite some time. Still, it’s possible to acquire fully renovated properties in good Florida neighborhoods for under $125,000.
What’s even more interesting is that, despite these incredibly low housing prices statewide, many home seekers are choosing to rent instead of buy. As you can imagine, this is causing rental rates to skyrocket (approximately 8% just this year)!
On top of great cash flow, values are on an upswing in these areas with no sign of slowing down. They are nowhere near their 2006 highs and inventory levels are still way down because builders just can’t make a profit at these price points.
Property taxes and insurance are low, plus there’s no state income tax. Add warm weather and exceptional health care, and you can see why many of the 10,000 baby boomers retiring every day are moving to Florida.
Orlando is one of the best places to buy rental property in the state of Florida in 2018. Located in Florida’s “sun belt” region, the area is known for its warm climate, beautiful beaches, world famous amusement parks, entertainment, and attractions.
With a combined population of 3.3 million residents, the Orlando real estate market is fueled by job seekers, baby boomer retirees, and students who want to live in a “cheap and cheerful” area that offers a high quality of living at a reasonable cost.
Orlando Market Statistics
- Median Sales Price: $188,000
- Median Rent Per Month: $1,360
- Median Household Income: $42,000
- Population: 2.4 M
- 1-Year Job Growth Rate: 4.20%
- 5-Year Equity Growth Rate: 66.40%
- 5-Year Population Growth: 14.20%
- Unemployment Rate: 4.5%
Orlando Market Quick Facts
- Metro Orlando is the 4th largest metro area in the country, and it’s also the 16th fastest growing metro in the nation.
- Forbes reports that 60 million people visited the Orlando area in 2015, making it the most visited tourism destination in the country.
- The population in Orlando has grown 41% since the year 2000. To date Metro Orlando houses over 2.3 million residents.
- Rents grew by 3.4% in the last 12 months, which is higher than the national and state levels.
- Orlando’s projected job growth for the next ten years is the second-highest (3.2% annual growth) in the United States among the 200 largest metros, Forbes reports.
- Orlando Medical City boasts a $7.6 billion economic impact and will create 30,000 jobs.
Conclusion: Top 3 Reasons to Invest in Orlando in 2018
As mentioned, most of the best real estate investment markets have three factors in common: job growth, population growth and affordability. Orlando is no exception…
Job Growth: Orlando’s employment growth is among the best in the U.S. with more than 173,900 jobs created since the recession and a projected growth rate of 3.2% annually for the next ten years.
Population Growth: Orlando’s population has grown 217% faster than the national average over the last 5 years, and with all the new jobs coming to the area, it’s very likely this trend will continue in 2018. (This means the demand for housing is likely to increase.)
Affordability: In Orlando it is still possible to purchase fully renovated 3-bedroom properties in good neighborhoods for as little as $122,500.
Part 2: Tampa, Florida
Located on the west coast of Florida, Tampa Bay is a densely populated metropolitan area (second only to Miami), with a population of more than 4 million people. Major cities in this area include St. Petersburg, Largo, Clearwater, New Port Richey, Holiday and Tampa.
The local economy is worth of $130 billion and the metro area has been ranked as one of the top 20 fastest growing in the country. Tampa also has a strong local economy with a strong focus on job growth in areas such as financial services and healthcare.
The Greater Tampa Bay area is worth over $130 billion and is consistently ranked among the top 20 fastest growing metro areas in the country. More than 19 firms with annual revenues of more than $1 billion are headquartered here and it is home to four Fortune 500 companies.
Tampa Market Statistics
- Median Sales Price: $136,000
- Median Rent Per Month: $995
- Median Household Income: $43,514
- Metro Population: 3.0 M
- 1-Year Job Growth Rate: 2.10%
- 5-Year Equity Growth Rate: 4.60%
- 5-Year Population Growth: 8.70%
- Unemployment Rate: 4.60%
Tampa Market Quick Facts
- Tampa has a population of 4 million, a local economy worth over $130 billion, and the it’s ranked in the top 20 fastest 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 $90,000) and turn around to rent them for $950 a month to $1,250 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. It’s a popular option for retirees as well, providing for many short-term rental opportunities.
Conclusion: Top 3 Reasons to Invest in Tampa in 2018
As you’ve learned, when a real estate market has job growth, population growth and affordability, you’ll likely be able to find good investment opportunities. We believe Tampa is one of the best places to invest in real estate in 2018 because it has all three.
Job Growth: The Tampa metro area is ranked #15 on the Milken Institute’s 2018 index of best-performing cities in the United States
Population Growth: Tampa has a population of 4 million, a local economy worth over $130 billion, and the it’s ranked in the top 20 fastest growing metros in the United States.
Affordability: An area with mostly high-priced homes, Tampa still has pockets where investors can find homes at affordable prices, even as low as $90,000 and turn around to rent them for $950 a month to $1250 a month.
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Part 3: Jacksonville, Florida
In the past 10 years, the Jacksonville metro area has grown by a whopping 20%. To date there are 1.3 million people living in this area, and more continue come every year. In fact, Jacksonville’s population has been steadily increasing at a rate of about 2% per year, and their workforce is growing at a consistent rate as well.
There are many reasons for this growth. For starters, Jacksonville is also the only Florida city that is home to four Fortune 500 companies. The region also has a world-class health care system, with more than 20 hospitals and a growing bioscience community. Additionally, 13 of Forbes Global 500 have operations in Jacksonville.
With a cost of living below the national average, a wonderful climate and a business-friendly environment, we believe Jacksonville is one of the best real estate investment markets in the country right now.
Jacksonville Market Statistics
- Median Sales Price: $154,000
- Median Monthly Rent: $1,050
- Median Household Income: $48,143
- Metro Population: 1.5 M
- 1-Year Job Growth Rate: 3.0%
- 5-Year Equity Growth Rate: 38.70%
- 5-Year Population Growth: 9.60%
- Unemployment Rate: 4.6%
Jacksonville Market Quick Facts
- The population in Jacksonville has grown 24.1% in population since 2000, which is higher than Miami’s 16.4% and Tampa’s 19.8%.
- Future job growth in Jacksonville is predicted to be 39.21% over the next 10 years.
- In Jacksonville, the median home price is about $153,400, which is 23% less than the national average.
- A typical 3 bedroom home can rent for 25% 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.
Conclusion: Top 3 Reasons to Invest in Jacksonville in 2018
There are three main reasons that Jacksonville made our list of the best places to invest in property: job growth, population growth and affordability.
Job Growth: Forbes also ranked Jacksonville #3 on their list of best cities in the U.S. for jobs. The region also has a world-class health care system, with more than 20 hospitals and a growing bioscience community.
Population Growth: The population in Jacksonville has grown 24% since the year 2000, and continues to grow by an average 2% annually. Future job growth over the next ten years is predicted to be 39.21%.
Affordability: In Jacksonville, the median home price is about $153,400, which is 23% less than the national average. A typical 3 bedroom home can rent for 25% more than the national average. These factors show us that there’s a strong opportunity for cash flow in the Jacksonville metro.
Part 4: Cape Coral, Florida
Known as the “Boaters Paradise” of Florida, Cape Coral is a fantastic area to acquire rental property, for both cash flow today, and a strong chance of appreciation in the future.
What’s interesting about this area is that before now, Cape Coral was primarily a vacation destination. As a result, it was one of the hardest hit cities in the country during the real estate downturn of 2008. Values plummeted.
Our team at Real Wealth Network was concerned about that and the possibility of it happening again in the next downturn. But our research showed that many baby boomers who are retiring today are choosing to live in vacation-like communities for a resort-style retirement.
What were once just vacation homes are now becoming primary residences. Plus, values haven’t come back yet in Cape Coral, so it’s still a very affordable vacation-style destination. With 10,000 baby boomers retiring every day, and not all in a position to buy, it’s no wonder rents in Cape Coral are on the rise.
As a result, Cape Coral rents have increased by more than 26% over the last few years and the baby boomer population continues to be one of the fastest growing rental groups in the nation.
This could be because they are not as intrigued with home ownership after the last crash, or they don’t want to deal with home maintenance, or maybe they just can’t qualify for a loan but want to retire in an affordable resort community.
Cape Coral Market Statistics
- Median Sales Price: $217,000
- Median Rental Price Per Month: $1,650
- Median Household Income: $51,000
- Metro Population: 722,000
- 1-Year Job Growth Rate: 2.44%
- 5-Year Equity Growth Rate: 81%
- 5-Year Population Growth: 17%
- Unemployment Rate: 4.8%
Cape Coral Market Quick Facts
- Single family home values in Cape Coral have risen 81% over the last 5 years. This is 179% faster than the national average.
- Cape Coral was recently named as one of the 10 Real Estate Markets To Watch in 2017, according to Forbes. Their reasons: high job growth (fourth in the nation!) and a sharp drop in vacancy rates. “And then Fort Myers, FL is home to baseball’s Boston Red Sox and Minnesota Twins during spring training every year, which boosts the economy even more every spring,” says Pat Eberle of RASO Realty in Cape Coral, FL.
- Many retiring baby boomers are choosing to live in vacation-like communities, and Cape Coral is one of the top communities in the nation for this type of resort-style retirement.
- Forbes rated Cape Coral the number one best city in the United States for future job growth in 2017, and in the top 25 for best places to retire in 2015.
- Money Magazine ranked Cape Coral as the #1 city for startups in 2015.
- In 2016 Forbes Magazine named the City of Cape Coral as # 9 of the “Top 25 Cities To Retire in the United States”
Conclusion: Top 3 Reasons to Invest in Cape Coral in 2018
Job Growth: Money Magazine ranked Cape Coral as the #1 city for startups in 2015 and in 2017Forbes rated it the number one best city in the United States for future job growth.
Population Growth: Forbes ranked Cape Coral as the 10th fastest growing city in the nation. And MarketWatch ranked it as the #2 city in the U.S. where retirees are moving.
Affordability: Home prices in Cape Coral still haven’t bounced back from the Great Recession of 2008, so it’s still more affordable than other coastal cities. Plus, with 10,000 baby boomers retiring every day, not all in a position to buy, it’s no wonder rents in Cape Coral are on the rise too. (Both good signs for investors!)
Part 5: Pittsburgh, Pennsylvania
With a population of over 2.3 million, the Pittsburgh Metro area is the 22nd largest in the nation. The “Burgh” is known as “The City of Bridges” for its 446 bridges, and “The Steel City” for its former steel manufacturing base.
It’s the home of several large corporations that help to keep its moderate and growing economy stable including PNC Financial Services and Federated Investors. Its economy thrives on healthcare, education, technology, robotics, financial services, glass, and more recently film production (The Dark Knight Rises was recently filmed downtown).
The region is also known for oil and natural gas production and is headquarters to major global financial institutions including PNC Financial Services (the nation’s fifth largest bank), Federated Investors and the regional headquarters of BNY Mellon.
It is ranked as one of the top 12 places to invest by the Pittsburgh Post Gazette. It’s also one of the top 10 housing markets for redevelopment and growth. Plus, according to RentRange rents for single-family homes rose 12.6 percent and the average gross yield was over 15 percent! That’s of course why why we believe Pittsburgh is one of the best places to buy rental homes this year.
Pittsburgh Market Statistics
- Median Sales Price: $137,000
- Median Rent Per Month: $1,140
- Median Household Income: $36,000
- Metro Population: 2.3 M
- 1-Year Job Growth Rate: 0.27%
- 5-Year Equity Growth Rate: 20.20%
- 5-Year Population Growth: -0.63%
- Unemployment Rate: 4.70%
Pittsburgh Market Quick Facts
- The median sale price of 3 bedroom single family homes in Pittsburgh remains low at only $137,000. However, in some neighborhoods it is possible to purchase homes for less than $73,000.
- Median rent per month is $1,140 a month or 0.99% of the median purchase price, which provides an opportunity for a sizable and quick return.
- The area is also seeing steady rise in home value with over 20% equity growth over the last 5 years.
- Pittsburgh has been experiencing steady job growth in the education and health services, leisure and hospitality, professional and business services, and STEM sectors.
- Pittsburgh is also home to 15 Fortune 500 companies, the East Coast headquarters for Google, and many other high tech startups.
- Business Times ranks Pittsburgh as the #1 top city to relocate to & Zillow ranked it in the top 10 best housing markets in the nation.
Conclusion: Top 3 Reasons to Invest in Pittsburgh in 2018
Job Growth: Pittsburgh has not been creating as many jobs as other U.S. cities, however the metro area is experiencing employment gains in several sectors. For example, between September 2015 and 2016, there were 6,773 jobs created in the education and health services, leisure and hospitality, professional and business services, and STEM sectors. However, 6,447 jobs were lost from goods-producing industries, which created close to the net decline in employment for the metro area. All of this data shows us that demand in Pittsburgh is still rising at a steady rate among some “high-value” demographics, including millennials and people in STEM fields.
Population Growth: Pittsburgh’s overall population has declined since 2010 but the millennial population has grown significantly. In fact, Time recently ranked Pittsburgh in the top 10 U.S. cities where millennials are moving. This is a good sign for investors because millennials often prefer renting to buying (in 2017, homeownership for millennials is less than 13% nationwide), which means the demand for rental homes in Pittsburgh will likely rise in the coming years.
Affordability: The median sale price of 3 bedroom single family homes in Pittsburgh remains low at only $137,000, which is 27% less than the national average of $187,000.
Part 6: Huntsville & Montgomery, Alabama
The fourth-largest city in Alabama, Huntsville is just a 90-mile drive on the I-65 heading north from Birmingham. Founded in 1811, Huntsville is known for its rich Southern heritage and a legacy of space missions. Huntsville actually earned the nickname “The Rocket City” during the 1960s when the Saturn V rocket was developed at Marshall Space Flight Center, which later made it possible for Neil Armstrong and Buzz Aldrin to walk on the moon.
Today, Huntsville is one of the most well known cities in the Southeast part of the country. USA Today touted Huntsville as “one of the top communities leading the economic recovery,”