Ultimately, every real estate investor is in the business for one thing: rental income. There’s one essential way to achieve this goal: invest in the best places to buy a rental property for rental income!
Rental income is the building block of profitability for traditional rentals and Airbnb rentals. This factor is so vital that a real estate market analysis and an investment property analysis almost always begin with comparing and studying rental income.
So, where are the top locations for rental income in the US housing market? We’ve got them right here, all from Mashvisor’s investment property calculator and real estate market analysis.
Related: How Mashvisor Revolutionized Cap Rate and Investment Property Analysis
Best Places to Buy a Rental Property for Traditional Rental Income
1.) Mill Valley, California – $5,198
2.) San Marino, California – $4,761
3.) San Mateo, California – $4,733
4.) Santa Barbara, California – $4,625
5.) San Francisco, California – $4,469
6.) Palo Alto, California – $4,273
7.) Scottsdale, Arizona – $4,015
8.) Belmont, California – $4,000
9.) Mountain View, California – $3,839
10.) Agoura Hills, California – $3,750
11.) New York, New York – $3,557
12.) San Rafael, California – $3,560
13.) Naples, Florida – $3,218
14.) Cambridge, Massachusetts – $3,099
15.) Miami Beach, Florida – $3,087
Takeaways from the Best Real Estate Markets for Traditional Rental Income
What sticks out like a sore thumb in this list is that the rental income in these best places to buy rental property is high (obviously). The lowest monthly income in these top locations is just over $3,000, which is absolutely mind-boggling.
Another takeaway from the list is that most of the top locations are in California. As a matter of fact, two-thirds of the cities on the list are in The Golden State. Why?
High Rental Income Does Not Always Mean Most Profitable
This leads us to the caveat of the list. A lot of the best places to buy rental property in California are expensive markets. To give you some perspective, the only Californian city to have a median property price of under a million dollars was San Rafael at $843,833, which is still expensive. Expensive real estate markets naturally lead to high rental income. For the record, most of the other cities on the list do not follow this trend.
Does this mean that the only way to make a lot of rental income is to purchase expensive long-term rentals? Not at all! If you can locate cheaper deals in expensive cities, which you most certainly can with Mashvisor’s investment property calculator, you could end up with a reasonably priced property and high rental income.
The previous point breaks down the two main problems with oversaturated cities. For one, they are too expensive. And because they are so expensive, they normally have lower return on investment metrics, which are truly what determines profitability of traditional rentals and Airbnb rentals.
So, what we need to look for are the top locations for traditional rental income in terms of ROI and affordability. How can we find these best places to buy a rental property? Once again, Mashvisor’s investment property calculator and real estate market analysis come to the rescue!
Best Places to Buy a Rental Property for Traditional Rental Income: Best ROI
1.) Naples, Florida: Traditional Rental Income: $3,218, Traditional Cash on Cash / Cap Rate: 6.48%
2.) Santé Fe, New Mexico: Traditional Rental Income: $2,530, Traditional Cash on Cash / Cap Rate: 6.3%
3.) Scottsdale, Arizona: Traditional Rental Income: $4,015, Traditional Cash on Cash / Cap Rate: 5.24%
4.) Baltimore, Maryland: Traditional Rental Income: $1,525, Traditional Cash on Cash / Cap Rate: 5.13%
5.) Wareham, Massachusetts: Traditional Rental Income: $1,997, Traditional Cash on Cash / Cap Rate: 5.1%
6.) Ithaca, New York: Traditional Rental Income: $1,658, Traditional Cash on Cash / Cap Rate: 4.54%
7.) Bridgeport, Connecticut: Traditional Rental Income: $1,270, Traditional Cash on Cash / Cap Rate: 4.45%
8.) Burien, Washington: Traditional Rental Income: $2,787, Traditional Cash on Cash / Cap Rate: 4.39%
9.) Troy, New York: Traditional Rental Income: $1,053, Traditional Cash on Cash / Cap Rate: 4.36%
10.) Venice, Florida: Traditional Rental Income: $1,937, Traditional Cash on Cash / Cap Rate: 4.29%
11.) Silver Spring, Maryland: Traditional Rental Income: $1,909, Traditional Cash on Cash / Cap Rate: 4.1%
12.) Lake Worth, Florida: Traditional Rental Income: $1,656, Traditional Cash on Cash / Cap Rate: 3.95%
13.) Miami, Florida: Traditional Rental Income: $2,658, Traditional Cash on Cash / Cap Rate: 3.86%
14.) Ypsilanti, Michigan: Traditional Rental Income: $1,269, Traditional Cash on Cash / Cap Rate: 3.85%
15.) Waianae, Hawaii: Traditional Rental Income: $1,644, Traditional Cash on Cash / Cap Rate: 3.77%
Related: Understanding Real Estate Return on Investment
Best Places to Buy a Rental Property for Traditional Rental Income: Most Affordable Cities
1.) Troy, New York: Traditional Rental Income: $1,053, Median Property Price: $153,639
2.) Bridgeport, Connecticut: Traditional Rental Income: $1,270, Median Property Price: $185,000
3.) Baltimore, Maryland: Traditional Rental Income: $1,525, Median Property Price: $218,531
4.) North Miami, Florida: Traditional Rental Income: $1,898, Median Property Price: $242,531
5.) Lake Worth, Florida: Traditional Rental Income: $1,656, Median Property Price: $243,933
6.) Pompano Beach, Florida: Traditional Rental Income: $1,557, Median Property Price: $291,451
7.) Waianae, Hawaii: Traditional Rental Income: $1,644, Median Property Price: $299,360
8.) Venice, Florida: Traditional Rental Income: $1,937, Median Property Price: $300,394
9.) Tampa, Florida: Traditional Rental Income: $1,501, Median Property Price: $306,060
10.) Wareham, Massachusetts: Traditional Rental Income: $1,997, Median Property Price: $309,450
11.) Plantation, Florida: Traditional Rental Income: $1,836, Median Property Price: $312,952
12.) Minneapolis, Minnesota: Traditional Rental Income: $1,906, Median Property Price: $326,876
13.) Hollywood, Florida: Traditional Rental Income: $2,382, Median Property Price: $341,780
14.) Chicago, Illinois: Traditional Rental Income: $1,880, Median Property Price: $360,023
15.) Jersey City, New Jersey: Traditional Rental Income: $2,013, Median Property Price: $376,998
Takeaways from the Best Real Estate Markets for Traditional Rental Income, ROI, and Affordability
The ROI metrics of the best places to buy a rental property for traditional income are very encouraging. The cap rate and cash on cash return.s for these cities are merely averages, which means that actual traditional rentals will have higher rates. But even without this, the ROI metrics of these top locations indicate that they are very profitable. You can analyze the ROI of any property in the best places to buy a rental property in the US housing market through Mashvisor’s investment property analysis.
The best places to buy a rental property in terms of affordability are also appealing. Only the last two cities had a median price of long-term rentals that was above the national average of $350,000. Another notable feature of the list is that a number of the top locations were in Florida. If you’re familiar with the US housing market, then this should not be surprising. After all, Florida is among the best places to buy a rental property in terms of ROI and affordability.
Related: Is This the Best Time to Buy Property in Florida for Real Estate Investing?
Want to invest for rental income in these top locations for traditional rentals? Looking for the best real estate markets for Airbnb rentals instead? If your answer is yes to either one, or both, then head on to Mashvisor! Use Mashvisor’s investment property calculator for the most comprehensive real estate market analysis and investment property analysis that exist! Start your trial with Mashvisor today to begin searching for the best places to buy a rental property!