While St. Louis, Missouri might not be your first option for investing in real estate, that doesn’t take away the fact that it holds significant investment potential.
If you’re interested in investing in rental properties for long-term appreciation and income potential, then you’ll find what you’re looking for in the St. Louis real estate market! Here’s what you need to know about the current state of the housing market before buying an investment property here in 2019.
St. Louis Real Estate Market Remains Affordable
It’s a known fact that property prices in the US housing market will continue to see a rising trend in 2019. In fact, many major cities and metropolitan areas have already seen house prices jump over the national average. St. Louis is NOT one of them! That’s right, the St. Louis real estate market continues to be one of the most affordable in the country. According to Mashvisor’s data, the median property price in St. Louis is $196,146 while the national average stands at $229,800 according to Zillow.
Want to learn more about what to expect from investing in real estate properties this year? Read US Housing Market Predictions: What’s to Come in 2019.
Moreover, as you can see in the table above, St. Louis came in at #7 on Knock’s forecast of the top 10 cities in the US housing market with the highest percentage of homes that’ll sell below their original list prices in 2019. Therefore, a St. Louis real estate investor can buy a rental property for sale for less than $100,000 and still get a great return on investment. For example, using our Property Finder Tool, we’ve found this single-family home for sale in St. Louis with a:
- Listing Price: $67,500
- Traditional Cash on Cash Return: 15%
- Airbnb Cash on Cash Return: 14%
In addition, Zillow also estimates that St. Louis home values have gone up 2.8% over the past year and predicts that they will rise 5.7% in 2019. This indicates that St. Louis investment properties are seeing steady growth and real estate appreciation, making the St. Louis housing market profitable as a long-term investment.
Job Market and Population Growth Trends
For many years, the main factor holding St. Louis back from becoming a prominent housing market was its slow job growth. Fortunately, the outlook for the St. Louis job market is bright, that is according to a study by Glassdoor, one of the world’s largest job and recruiting sites. Among the 50 largest metro areas in the US, Glassdoor named St. Louis the 2nd best city for jobs in 2018 (Pittsburgh took the #1 spot).
Thus, although the city’s job growth has been slower than the national average in the past few years, it’s definitely catching up in 2019. This will certainly benefit the St. Louis real estate market as more jobs in the city will bring more people looking for places to live. As a matter of fact, we can already see population growth in the city. The Saint Louis housing market is home to almost 3 million people. That makes it the 2nd largest city in Missouri and the 20th largest metro area in the US.
It’s also important to note that the St. Louis real estate market is becoming more popular among college students and graduates. In fact, St. Louis is one of the best cities in the US for recent college grads. So, if you’re interested in investing in college towns and renting out to students, St. Louis is definitely an area to consider for buying investment property in 2019.
Related: College Towns: The Best Places to Buy a Rental Property
St. Louis Has Strong Rental Demand
While the St. Louis real estate market remains more affordable than many other metropolitan areas, low inventory is putting upward pressure on prices. This, as a result, is making it harder for residents to afford to buy their own home. According to a study conducted by LendingTree, St. Louis is actually among the most competitive markets in the US for home buyers (along with Los Angeles and San Francisco).
The study has found that the average down payment for a St. Louis resident is 15%. Therefore, as the city’s population continues to grow, more residents are likely to rent over buy their own home. For St. Louis real estate investors, this translates into strong demand for rental properties. This is another reason why you should start searching for St. Louis houses for sale right now to buy and rent out for cash flow and a strong return on investment.
Another note worth mentioning is that Zillow predicts that St. Louis will remain a neutral housing market this year. This means that the market is balanced for both real estate sellers and buyers. However, based on the aforementioned affordability trend and high rental demand, we can say that the St. Louis real estate market is more favorable for buyers of rental properties in 2019!
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Missouri Is a Landlord-Friendly State
One of the many things to consider before buying investment properties in any housing market is to check whether or not it’s landlord-friendly. Not all states in the US have equal rental laws. Real estate investors might find themselves owning rental properties in states with high cap rate and strong rental demand, but then find that the state rental laws are too harsh or are affecting their rental yield and profits. This is why we advise you to buy investment properties in states that are landlord-friendly.
When it comes to Missouri, it’s definitely more landlord-friendly than other states in the Midwest, notably Illinois. For example, it is much easier to evict tenants who don’t pay their rent in Missouri. Landlords have the option to immediately terminate a lease and file for eviction when the tenant is just a few days late on rent. This is another benefit of investing in the St. Louis real estate market.
Related: Invest in Real Estate in the 5 Most Landlord-Friendly States
St. Louis Is the Biggest Airbnb Market in Missouri
St. Louis is a great market to consider not only for traditional real estate investors but for Airbnb hosts as well. This is mainly due to the fact that the city doesn’t enforce any strict Airbnb rental regulations. While the state of Missouri recently made a deal with Airbnb in which the company pays taxes back to it, the city of St. Louis hasn’t done so yet.
Airbnb estimates that there were more than 88,500 guest arrivals in St. Louis last year, earning more than $9 million for Airbnb hosts in rental income. Furthermore, AirDNA named the St. Louis real estate market among The 100 Best Places to Buy Vacation Rental Property in the United States in 2019, giving it the following scores:
- Market Grade: A- (79/100)
- Rental Demand: 81
- Revenue Growth: 33
- Seasonality: 73
- Regulation: 52
- Investability: 66
- Active Listings: 111
As a result, if your rental strategy of choice is to buy an investment property to rent out to short-term tenants on Airbnb, then St. Louis is a top choice to consider! In addition, predictive real estate analytics from Mashvisor show that investing in Airbnb vacation rental property is the optimal strategy to make money from real estate. To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
The Best Neighborhoods in the St. Louis Real Estate Market 2019
If you have made up your mind about investing in St. Louis rental property in 2019, then you need to know what the best neighborhoods are. Here are the top for both traditional and Airbnb investments, based on data from Mashvisor’s Investment Property Calculator:
Cheltenham
- Median Property Price: $109,900
- Price Per Sq/Ft: $137
- Traditional Rental Income $1,666
- Traditional Cash on Cash Return: 9%
- Airbnb Rental Income: $2,258
- Airbnb Cash on Cash Return: 10%
- Price-to-Rent Ratio: 6
- Airbnb Occupancy Rate: 62%
Ellendale
- Median Property Price: $124,633
- Price Per Sq/Ft: $100
- Traditional Rental Income $1,134
- Traditional Cash on Cash Return: 3%
- Airbnb Rental Income: $2,377
- Airbnb Cash on Cash Return: 10%
- Price-to-Rent Ratio: 9
- Airbnb Occupancy Rate: 63%
Forest Park Southeast
- Median Property Price: $208,367
- Price Per Sq/Ft: $115
- Traditional Rental Income $1,199
- Traditional Cash on Cash Return: 6%
- Airbnb Rental Income: $2,106
- Airbnb Cash on Cash Return: 9%
- Price-to-Rent Ratio: 14
- Airbnb Occupancy Rate: 67%
Clayton-Tamm
- Median Property Price: $185,938
- Price Per Sq/Ft: $158
- Traditional Rental Income $1,495
- Traditional Cash on Cash Return: 4%
- Airbnb Rental Income: $2,285
- Airbnb Cash on Cash Return: 8%
- Price-to-Rent Ratio: 10
- Airbnb Occupancy Rate: 60%
Tower Grove South
- Median Property Price: $180,596
- Price Per Sq/Ft: $102
- Traditional Rental Income $1,128
- Traditional Cash on Cash Return: 3%
- Airbnb Rental Income: $1,876
- Airbnb Cash on Cash Return: 6%
- Price-to-Rent Ratio: 13
- Airbnb Occupancy Rate: 63%
Hi-Pointe
- Median Property Price: $232,450
- Price Per Sq/Ft: $133
- Traditional Rental Income $1,292
- Traditional Cash on Cash Return: 3%
- Airbnb Rental Income: $2,091
- Airbnb Cash on Cash Return: 5%
- Price-to-Rent Ratio: 15
- Airbnb Occupancy Rate: 47%
To get your hands on an investment property in any one of these neighborhoods, click here.
The Bottom Line
Buying rental properties in the St. Louis real estate market is a smart investment decision for all the right reasons! Property investors can find houses for sale at an affordable price and the rental demand is high – the perfect combination for positive cash flow real estate investing. Moreover, the state of Missouri is landlord-friendly and gives you the option to rent out your property traditionally and on Airbnb for a great return on investment.
Want to start your search for lucrative investment properties in St. Louis? Sign up with Mashvisor to use our real estate investment tools to find the best properties on the market.