10 up-and-coming cities to buy rental property

Written on April 16, 2018 by , updated on April 17, 2018

communicationYou’re thinking of buying rental property. Good for you! Whether this is your first property or your 50th, you need to know where to buy.

Real estate investors look for these three things:

  • Affordability (so you don’t overpay for a property)
  • A strong economy (so renters have jobs and can pay the rent)
  • Population growth (so there’ll be a market for your property)

If you find an affordable city with job and population growth—BINGO.

Hot cities to buy rental property typically change over time. A once-affordable city might now be ridiculously expensive—hello Denver. Or a booming economic hub might now be depressed—sorry Oakland.

So which are the up-and-coming cities for rental property in 2018?

For comparison purposes, please note that the median price of homes that sold in early 2018 in the United States is $232,300. And just for laughs (not investments) the median price of homes sold in San Francisco, California, is $1,328,500.

1. Orlando, Florida

Orlando, Florida, home to Mickey and Minnie, is a family vacation mecca, with a climate that averages 75 degrees. It’s also a great place to buy rental property.

Affordability: The median price of homes sold in Orlando is $214,500, with an expected rise of 4.1% for next year.

Economy: Recent job growth in Orlando is 2.46%, with a future job growth prediction over 10 years of 41.02%.

Population growth: Orlando ranks 8th nationally for population growth.

2. Jacksonville, Florida

Jacksonville, Florida, or Jax, is a hip place with 22 miles of beaches, two national parks, fishing, historic neighborhoods, street art, and craft beer. You’d make a wise investment buying rental property here.

Affordability: The median price of homes sold in Jacksonville is $144,400 (the lowest on our list), with an expected rise of 4.5% for next year.

Economy: Recent job growth in Jacksonville is 2.11%, with a future job growth prediction over 10 years of 39.21%.

Population growth: The metro Jacksonville area was the 32nd fastest growing area out of 382 metros.

3. Atlanta, Georgia

Atlanta, capital of Georgia, is an economic center, transportation hub, and cultural heart of the Southeast. Atlanta consistently ranks high in best cities for real estate investing.

Affordability: The median price of homes sold in Atlanta is $200,500, with an expected rise of 4.9% for next year.

Economy: Recent job growth in Atlanta is 2.21%, with a future job growth prediction over 10 years of 38.52%.

Population growth: People are coming to Atlanta in huge numbers, causing the metro area to gain the fourth most residents in the country in 2016.

4. Kansas City, Missouri

Missouri’s largest city, Kansas City, is a modern town along the Missouri River. It’s known for jazz music, a distinctive barbecue, and craft beer.

Affordability: The median price of homes listed (not sold) in Kansas City is $180,000. (Note that this price is typically higher than the recently sold price.) There is an expected rise of 3.4% for next year.

Economy: Recent job growth in Kansas City is 3.95% (the highest on our list), with a future job growth prediction over 10 years of 42.81%.

Population growth: Kansas City has been experiencing consistent growth since 2010, with annual growth of over 20,000 new residents in 2016.

5. Houston, Texas

The most populous city in Texas, Houston, is a world-class city near the Gulf of Mexico with a growing population and a booming economy. This is largely due to oil and gas companies.

Affordability: The median price of homes listed (not sold) in Houston is $295,000. (Note that this price is typically higher than the recently sold price.) There is an expected rise of 2.7% for next year.

Economy: Recent job growth in Houston is 0.79%, with a future job growth prediction over 10 years of 36.68%.

Population growth: The population has been booming for eight straight years in Houston. It dropped in 2017 from No. 1 to No. 2 for overall growth in the country, meaning that people are still coming to Houston in droves.

6. Detroit, Michigan

Detroit, Michigan, on the Detroit River, may look like an iffy place to invest in rental property, but you’re likely to get a great deal in Motor City. The city is on the upswing. People are visiting the most populous city in Michigan. It could be a great time to invest here.

Affordability: The median price of homes listed (not sold) in Detroit is $179,900. (Note that this price is typically higher than the recently sold price.) There is an expected rise of 2.8% for next year.

Economy: Recent job growth in Detroit is 1.23%, with a future job growth prediction over 10 years of 30.87%.

Population growth: The population still shows a decline (down 0.5% in 2016), but the decline is slowing. Detroit’s mayor is confident that Detroit’s rebirth will lead to population growth, as the signs are already there for 2018, such as more residential units being built downtown and along the riverfront.

7. Columbus, Ohio

The state capital of Ohio, Columbus, is also the most populous Ohio city. In 2016, Money magazine ranked Columbus as one of the “6 Best Big Cities,” with an excellent potential for income growth among its highly educated workforce.

Affordability: The median price of homes sold in Columbus is $150,600, with an expected rise of 4.3% for next year.

Economy: Recent job growth in Columbus is 1.85%, with a future job growth prediction over 10 years of 39.51%.

Population growth: Columbus is growing so much that it is called the “growth king” and is now the second biggest city in the Midwest. (Chicago is the biggest.)

8. Nashville, Tennessee

The capital of Tennessee, and the most populous city in the state, Nashville is a prospering river city, which makes it a great place to buy investment property.

Affordability: The median price of homes sold in Nashville is $252,700, with an expected rise of 3.9% for next year.

Economy: Recent job growth in Nashville is 2.46%, with a future job growth prediction over 10 years of 41.12%.

Population growth: Nashville has been booming for a while, and it currently gets an average of 100 new people a day who call Nashville home.

9. Minneapolis, Minnesota

The largest city in Minnesota, Minneapolis sits on the Mississippi River. Home to Bob Dylan and Prince, Minneapolis—besides being an economic hub—is a cool town with a great music scene.

Affordability: The median price of homes sold in Minneapolis is $233,200, with an expected rise of 4.6% for next year.

Economy: Recent job growth in Minneapolis is 1.24%, with a future job growth prediction over 10 years of 38.78%.

Population growth: Minneapolis is experiencing recent population growth this city hasn’t seen since the 1920s, causing real estate investors to take note.

10. Phoenix, Arizona

Arizona’s capital and the most populous city, Phoenix (also the most populous state capital in the country) is a favorite for sun lovers. Located in the Sonoran Desert, not only does Phoenix boast a hot desert climate, it’s a hot area for real estate investors.

Affordability: The median price of homes sold in Phoenix is $239,700, with an expected rise of 3.5% for next year.

Economy: Recent job growth in Phoenix is 3.17%, with a future job growth prediction over 10 years of 40.84%.

Population growth: Phoenix leads the nation for population growth, and that’s great news for real estate investors.

These 10 up-and-coming cities represent just some of the places to buy rental property in the United States. As a best practice, try to buy investment property near your primary residence. Although you can manage from afar, being local is easier.

If you don’t live near these 10 up-and-coming cities for rental property, you can research towns near you using these same parameters: affordability, a strong economy, and population growth.

Is your city a good one to buy rental property? Tell us why or why not in the comments.

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3 CommentsLeave a Comment

  • Big Mal

    I personally find that the terms “landlord” and “landlady” are too gendered and archaic. I suggest we move on to a more gender neutral term, such as “leech”

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