The best place to invest in real estate isn’t always easy to find. Yet, some real estate investors are already making money this year because they have managed to find the best cities to invest in rental properties 2018.
How did they achieve this real estate investing feat? Well, there are two ways to find the best place to invest in real estate:
- Real estate investors analyze certain aspects of a real estate market.
- They use an investment property calculator.
For the first way, real estate investors identify and inspect certain characteristics of a real estate market that can make it the best place to invest in real estate. The second way, using an investment property calculator, provides real evidence for the success of rental properties in a real estate market.
Let’s explore both ways of identifying the best cities to invest in rental properties 2018. Then, with Mashvisor’s investment property calculator, we’ll list the cities where you should consider investing in rental properties this year.
What Do the Best Cities to Invest in Rental Properties 2018 Look Like?
Essentially, the best cities to invest in rental properties 2018 have all the characteristics of a good, stable real estate market, one that would be great for buying investment property in any year. These characteristics that lead to successful real estate investing in rental properties include:
- A thriving economy that is based on diversified industries
- An ever-growing population
- The lower the price-to-rent ratio, the better
- Low crime rates
- Good school districts
- Low chance for an increase in the supply of rental properties
- Favorable local law and taxes on rental properties (Airbnb or traditional)
While the ideal real estate market will have all, the best cities to invest in rental properties 2018 will have a combination of some of the above-mentioned characteristics.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
What about the Best Neighborhoods to Invest in Real Estate?
As you’ll see in our list of the best cities to invest in rental properties 2018, each location was chosen by narrowing down the exact neighborhood to invest in real estate. That’s because it is not enough to know the top cities for real estate investing. Every neighborhood within a city is different and has a different potential for real estate investing. So, what makes for the best neighborhoods to invest in real estate?
There are a few general factors. For instance, the neighborhood should be close to job centers and shopping centers. No one wants to drive two hours to get to a mall, supermarket, or workplace. The neighborhoods should be safe, relatively quiet places to live in that will attract all kinds of tenants.
Of course, all of these factors for both the best city and the best neighborhood can vary somewhat depending on if you are investing in short term rental properties or long term rental properties, as we will see.
Learn More: What Makes for the Best Place to Invest in Real Estate?
The Best Cities to Invest in Rental Properties 2018: How Does an Investment Property Calculator Identify Them?
It is definitely a good idea to implement the previous method when looking for the best cities to invest in rental properties. But where to start? Honestly, the best way to start your real estate investing journey is with a trusted investment property calculator.
Mashvisor’s investment property calculator, for instance, will show you any real estate market in the US. Within seconds, you can make the decision of whether or not the real estate market you are looking at is one of the best cities to invest in rental properties 2018. This is possible because of the following metrics that are provided by Mashvisor’s investment property calculator:
Cash on Cash Return and Cap Rate
Both the cash on cash return and the cap rate are metrics for measuring the return on investment of rental properties. When investing in rental properties, real estate investors look for a “good cash on cash return” and a “good cap rate.” It can be hard to define what is considered good for either of the return on investment metrics. For in-depth guides on deciding what is a good cash on cash return and cap rate for investing in rental properties, refer to:
- What Is a Good Cash on Cash Return?
- What Is a Cap Rate and How Do You Calculate It?
- What Is a Good ROI for Investing in Income Properties?
For the sake of identifying the best cities to invest in rental properties 2018, we will be looking at real estate markets that have a cash on cash return/cap rate higher than 8% for short term rental properties and 6% for long term rental properties.
Rental Income
When investing in rental properties with the buy and hold investment strategy, naturally, you are aiming to make as much rental income as possible. Rental income depends on a lot of factors, though, and a real estate investor cannot charge a ridiculous amount of rent as he/she pleases.
One of these factors that determines how much you can charge for rent is the location. Depending on the demand, the median price of investment properties, and real estate appreciation, rental income is set.
Mashvisor’s investment property calculator will show you the rental income that you can receive in a real estate market as well as for specific rental properties. The rental income may not always be extremely high, but it will be enough to receive a good return on investment.
Short Term Rental Properties Occupancy Rate
The final factor for determining the best cities to invest in rental properties 2018 is the occupancy rate, specifically the occupancy rate of short term rental properties. Investing in rental properties for Airbnb purposes is a great way to receive rental income as nightly rates can be pretty high. However, this is only true in areas with a good Airbnb occupancy rate. Of course, we are not talking about a 100% occupancy rate, as this is not realistic.
For each of the best cities to invest in rental properties 2018, the Airbnb occupancy rate will differ. However, you’ll see that it will bring a good return on investment for short term rental properties nonetheless.
The Best Cities to Invest in Rental Properties 2018: Long Term Rental Properties
The major thing to focus on when choosing a real estate market for investing in long term rental properties is the health of the economy. With growing jobs and industries comes population growth. This population will need a place to stay, and long term rental properties will provide this. The following are the best cities to invest in rental properties 2018 for long term real estate investing according to Mashvisor’s investment property calculator:
Columbus, OH – Indianola Terrace
- Median Property Price: $149,900
- Traditional Rental Income: $1,554
- Traditional Cash on Cash Return: 6.1%
- Traditional Cap Rate: 6.1%
Denver, CO – Montbello
- Median Property Price: $310,000
- Traditional Rental Income: $2,898
- Traditional Cash on Cash Return: 6.95%
- Traditional Cap Rate: 6.95%
Baltimore, MD – Pleasant View Gardens
- Median Property Price: $148,900
- Traditional Rental Income: $1,813
- Traditional Cash on Cash Return: 7.29%
- Traditional Cap Rate: 7.29%
Baltimore, MD – Heritage Crossing
- Median Property Price: $132,500
- Traditional Rental Income: $1,507
- Traditional Cash on Cash Return: 6.21%
- Traditional Cap Rate: 6.21%
San Jose, CA – North San Jose
- Median Property Price: $592,500
- Traditional Rental Income: $3,319
- Traditional Cash on Cash Return: 6.72%
- Traditional Cap Rate: 6.72%
Anaheim, CA – Platinum Triangle
- Median Property Price: $139,500
- Traditional Rental Income: $2,257
- Traditional Cash on Cash Return: 12.25%
- Traditional Cap Rate: 12.25%
Find long term rental properties in any of these cities right now. Click here to get started.
The Best Cities to Invest in Rental Properties 2018: Short Term Rental Properties
An additional factor that a real estate investor has to review when looking for a real estate market for short term rental properties is tourism. A city should see tourists throughout different seasons of the year, if not year-round. This could be due to different events, concerts, sports games, outdoor activities, and natural attractions or just unique shopping centers and restaurants. The following are the best cities to invest in rental properties 2018 for short term real estate investing according to Mashvisor’s investment property calculator:
Nashville, TN – East Nashville Block Club
- Median Property Price: $286,250
- Airbnb Rental Income: $3,612
- Airbnb Cash on Cash Return: 10.02%
- Airbnb Cap Rate: 10.02%
- Airbnb Occupancy Rate: 62.60%
Orlando, FL – Millenia
- Median Property Price: $115,000
- Airbnb Rental Income: $2,266
- Airbnb Cash on Cash Return: 11.72%
- Airbnb Cap Rate: 11.72%
- Airbnb Occupancy Rate: 55.64%
Kansas City, MO – Volker
- Median Property Price: $330,000
- Airbnb Rental Income: $4,101
- Airbnb Cash on Cash Return: 9.85%
- Airbnb Cap Rate: 9.85%
- Airbnb Occupancy Rate: 55.31%
Fort Lauderdale, FL – Oak River Homeowners
- Median Property Price: $259,750
- Airbnb Rental Income: $2,974
- Airbnb Cash on Cash Return: 8.33%
- Airbnb Cap Rate: 8.33%
- Airbnb Occupancy Rate: 51.55%
Fort Lauderdale, FL – Poinsettia Heights
- Median Property Price: $435,000
- Airbnb Rental Income: $5,102
- Airbnb Cash on Cash Return: 8.09%
- Airbnb Cap Rate: 8.09%
- Airbnb Occupancy Rate: 58.07%
Fort Lauderdale, FL – Chula Vista
- Median Property Price: $297,500
- Airbnb Rental Income: $3,567
- Airbnb Cash on Cash Return: 8.48%
- Airbnb Cap Rate: 8.48%
- Airbnb Occupancy Rate: 46.86%
Find an investment property in any of these cities right now. Click here to get started.
If you wish to start investing in rental properties this year, then choose from any one of the cities listed here, depending on which rental strategy you are interested in. Be sure that with Mashvisor’s investment property calculator, you will find success in real estate investing in the US housing market.
To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.
Related: Is the 2018 US Housing Market a Seller’s Market or a Buyer’s Market?
