It’s time you start investing in the right place- the Midwest real estate market. If you’re looking to invest your money in fairly priced income properties for a strong return on investment, investing in Midwest real estate is the way to go. Here’s exactly where to get started.
Best Cities in the Midwest Real Estate Market
Get ready to find good investment opportunities in the Midwest housing market. Using data from Mashvisor’s investment property calculator, we’ve narrowed down your search for Midwest investment properties to five cities. Let’s get right into it.
#1. Indianapolis, IN
- Median Property Price: $204,853
- Price per Square Foot: $97
- Price to Rent Ratio: 15
- Average Days on Market: 89
- Monthly Traditional Rental Income: $1,135
- Traditional Cash on Cash Return: 2%
- Monthly Airbnb Rental Income: $2,007
- Airbnb Cash on Cash Return: 4%
- Airbnb Occupancy Rate: 50%
As one of Indiana’s wealthiest cities, Indianapolis is definitely a hot market to invest in this year. The low property prices matched with strong rental rates make for high cash on cash return for both rental strategies city-wide. Housing inventory is currently strong making it a buyer’s market. With home values expected to increase by 7 percent towards the end of the year, you’re going to want to invest now. And if you’re an Airbnb investor, you’ll be happy to know a bill was passed back in 2018 protecting short-term rental operators from any new state-wide regulations or bans.
The Southdale neighborhood in Indianapolis is a great place to start your search for Airbnb rentals (12% average cap rate). Whereas the Mapleton-Fall Creek area is where to invest in real estate for Indianapolis traditional rentals (4% average cap rate).
To start your search for Indianapolis investment properties in the Midwest real estate market, click here.
#2. Columbus, OH
- Median Property Price: $244,933
- Price per Square Foot: $130
- Price to Rent Ratio: 16
- Average Days on Market: 86
- Monthly Traditional Rental Income: $1,270
- Traditional Cash on Cash Return: 2%
- Monthly Airbnb Rental Income: $2,257
- Airbnb Cash on Cash Return: 4%
- Airbnb Occupancy Rate: 53%
Columbus, OH is one of the hottest emerging real estate markets, not only in the Midwest but in the nation. And you’re definitely going to want to invest in it for 2019. Demand for housing is so strong that, while construction is increasing, inventory still remains low. Forbes reported last year that Columbus was a rare Midwest success story that has begun to grow again. Its success has not stopped and Columbus remains a hot market for investors in 2019, which is why it’s on our list for the best investment location in the Midwest real estate market.
If you’re planning on renting out a house on Airbnb in Columbus, make sure you’re licensed and get your permit from the city to avoid violation fees. Although there was talk of capping the number of days you can rent out your investment property, Columbus city officials have pulled back on that idea. There really aren’t any other strict regulations for short-term rentals in Columbus.
According to our data, Airbnb rentals perform best in the Edgewood neighborhood (14% average cap rate). For traditional long term rentals, the numbers point to South Linden (5% average cap rate).
To start your search for Columbus investment properties in the Midwest real estate market, click here.
#3. St. Louis, MO
- Median Property Price: $196,146
- Price per Square Foot: $111
- Price to Rent Ratio: 16
- Average Days on Market: 92
- Monthly Traditional Rental Income: $1,013
- Traditional Cash on Cash Return: 2%
- Monthly Airbnb Rental Income: $2,048
- Airbnb Cash on Cash Return: 5%
- Airbnb Occupancy Rate: 60%
This is a city full of hidden gems in the Midwest real estate market. St. Louis is one of the best places to invest in real estate due to the affordability and stability of the market. Real estate investors just can’t help it, the returns are too good! Renters make up about 32 percent of the market, and this is only expected to increase as net migration of millennials towards affordable housing continues.
In 2017, St. Louis was the top home sharing market in Missouri as a result of hosting about 88,000 guests through Airbnb. Now, in 2019, the city continues a good relationship with the company as they struck a deal for Airbnb to collect local taxes on all bookings in the city.
The top-performing neighborhood in St. Louis for Airbnb rentals is currently Vandeventer (11% average cap rate). Long term rentals perform well in most neighborhoods, but the best is Cheltenham (9% average cap rate).
To start your search for St. Louis investment properties in the Midwest real estate market, click here.
#4. Minneapolis, MN
- Median Property Price: $382,299
- Price per Square Foot: $225
- Price to Rent Ratio: 17
- Average Days on Market: 61
- Monthly Traditional Rental Income: $1,868
- Traditional Cash on Cash Return: 1%
- Monthly Airbnb Rental Income: $2,568
- Airbnb Cash on Cash Return: 2%
- Airbnb Occupancy Rate: 58%
Yet another secret haven for real estate investors hidden in the Midwest real estate market is Minneapolis. It has one of the lowest vacancy rates in the entire country, and continues to prove to be a city full of stable and reliable real estate investments. You might not think so from the city-level numbers, but you should never judge a market without looking at it locally.
Remember, finding high cap rate neighborhoods is always easy with Mashvisor’s tools, and we’ve found plenty for your Minneapolis investment in 2019. The Minneapolis neighborhood with the highest performing Airbnb rentals is Holland (14% average cap rate).
Again whenever Airbnb is brought into the equation, you need to remember to check for any regulations in your city and neighborhood of choice. In Minneapolis, Airbnb hosts need to license their investment properties with the city.
Now if you’re planning on renting out your investment property traditionally (long term), we recommend the Bottineau neighborhood (8% average cap rate).
To start your search for Minneapolis investment properties in the Midwest real estate market, click here.
#5. Kansas City, MO
- Median Property Price: $253,528
- Price to Rent Ratio: 18
- Average Days on Market: 104
- Monthly Traditional Rental Income: $1,186
- Traditional Cash on Cash Return: 1%
- Monthly Airbnb Rental Income: $2,061
- Airbnb Cash on Cash Return: 3%
- Airbnb Occupancy Rate: 53%
Kansas City closes off the list for the best cities for investing in the Midwest real estate market 2019. It offers a great deal of opportunity to make passive income and long term equity growth is also likely. Rental rates are increasing in Kansas City and you can still find many affordable listings below the median property price stated above.
Being one of the strongest housing markets this year, investing in Kansas City is how to make money in real estate in 2019. Sarritt Point is the top neighborhood for Airbnb rentals (12% average cap rate), whereas North India Mount is the place to invest for traditional long term rentals (7% average cap rate).
If you want to ensure you’re finding the best possible investments in your city of choice, sign up for a free account with Mashvisor and use our Property Finder Tool.