Real estate is all about location, but you should never invest in property just because of a great location. It’s up to you to determine which location is best for you and your portfolio. If there was one best place to invest in real estate, everyone would be investing in the same location, ultimately diminishing returns. However, some places offer great real estate investment opportunities. This article will discuss the importance of investing depending on location and what makes a location attractive for investors.
Table of Contents
Factors to Consider Before Investing in a Real Estate Market
Job Creation
A real estate market is attractive to investors when the job creation in the location is above the national average.
Population
The current and future population and growth should also be above the national average.
Housing affordability
If you’re investing in real estate, you need to know whether you’ll be able to fill a vacant property. Always compare median home prices to median rents before you decide to purchase an investment property.
Absorption Rate
The absorption rate is the time it takes for new housing to be rented or purchased after it hits the market.
Vacancy Rate
The vacancy rate is the average number of vacancies in your market compared to the average vacancy rate of similar markets.
Real Estate Investment Strategies
There are three main types of real estate investing, including:
Cash Flow
In cash flow real estate markets, investors look for homes that can provide a quick return to generate a predictable stream of income.
Appreciation
Investors who want to increase property values over time focus on markets with a good appreciation by understanding job and population growth.
Cash Flow and Appreciation
The third strategy is a combination of the other two. Those who invest in single-family rental property can own property with predictable cash flow and good appreciation. This strategy focuses on long-term appreciation and short-term cash flow.
Best Places to Invest in Real Estate
Real estate will always be an appealing asset class for investors of all types because they can earn recurring income month after month. Monthly rental income can offset other expenses, including your mortgage. If you’re considering investing in real estate, there are a few markets that may yield higher returns. These are the best places to invest in real estate right now.
Austin, Texas
Austin’s housing market has almost doubled in the past decade, even though it’s only the fourth largest city in Texas. Austin is the center of a large metro area that consists of high-paying tech jobs. As millennials are the largest buying force in the real estate industry, Austin will continue to become more attractive to renters and investors.
Austin has a strong economy and low unemployment rate with a growing population and rising rents.
Atlanta, Georgia
Atlanta is one of the top rental markets in the US, with cheap property prices and high rents. Atlanta’s population has increased about 15 percent in the last ten years, driving the housing demand. Atlanta is Georgia’s most vibrant city, and it has gone through an economic boom in recent years. Property prices in Atlanta are forecasted to increase in the years to come, so now is a good chance to invest before anyone else.
Boise, Idaho
Boise’s housing market is one of the top in the nation based on the percentage of growth in home sales and prices. Home prices are still soaring right now, and interest rates are still relatively low. With a small inventory in the Boise market and low mortgage rates, house prices continue to increase in this city with high appreciation and job growth that is twice the national average.
Orlando, Florida
Orlando is a favorite to tourists, but many people love being long-time residents of this beautiful city. Investors in Orlando can target long-term residential homes or short-term holiday markets to get strong returns. Orlando is considered economically stable, thanks to its improving real estate marketing and reliance on tourism. Its population also continues to grow with more job opportunities in this city, which means higher rental prices. As one of America’s fastest-growing cities, Orlando’s real estate market is a wise long-term investment, appreciating nearly 40% over the last decade.
Las Vegas, NV
Las Vegas has always been one of the hottest real estate markets in the United States, experiencing several booms. The Las Vegas real estate market can be tough for investors, but it’s reasonably stable and predictable as there are new businesses always popping up. These business opportunities keep the economy stable, and home prices have increased exponentially over the past few years.
Chicago, Illinois
Chicago has a population of around three million, with over ten million in the metro area. It also has a diverse economy and stable housing market with more than 30 Fortune 500 Companies calling the Windy City home. Over half of the population of Chicago rents their homes, making the potential rental income higher than in many other cities in the United States. Not only that, but the average rent is reasonably high for the Midwest at just about $1,500 for a one-bedroom apartment.
Chicago is one of the best places to invest in real estate because of its strong rental market, high rents, and strong economic and job growth.
Columbus, OH
Columbus is another city in the Midwest that makes a great place to invest. Residential property sells for as low as $175,000 on average, offering a high yield on rental income. The housing market in Ohio is also seeing steady growth, even though overall population growth is slow. In Columbus, this is a high demand for renovated, family-friendly homes. Be careful when investing in Columbus real estate; some areas are better than others due to the economy and average rent prices.
Columbus could be a great starting place for real estate investors looking for affordable real estate to rent out due to the affordable home prices and large rental market. It’s also home to a variety of colleges, with students looking to rent homes with roommates.
Marné Amoguis
Marné Amoguis holds a B.A. in International Business from UC San Diego. She is a contributing writer at 365businesstips.com where she loves sharing her passion for digital marketing. Outside of writing, she loves traveling, playing music, and hiking.