With the coronavirus pandemic, real estate markets around the country have been affected by the lockdowns. It left real estate investors wondering if buying rental property still makes for a good investment this year. How is the market doing? Will the housing prices continue to appreciate? What can investors expect when looking at 2022 best places to buy rental property?
Economists and housing experts were quick to assure people that today’s situation is not the same as what we witnessed during the 2008 Great Recession after the housing market crash. And now that more and more areas are easing restrictions and are on the road to economic recovery, investors can explore different locations to look for the best places to buy rental property in 2022. Real estate is still a safe haven and a good investment option for this year and beyond. The question you should be asking is: where are the best places to buy rental property in the US?
Related: The Beginner’s Guide to Rental Property Analysis
As you already know, location plays an important role in your real estate investment decisions. In the US housing market 2020, not all markets are guaranteed to perform well after the end of the coronavirus and when things go back to normal. To choose the best cities to invest in real estate under present circumstances, investors need to look for key indicators of a strong market. Many confuse these factors with current global events. But, there are the same factors that tell us how successfully the market will rebuild after the COVID-19 pandemic.
How to Find the Best Places to Buy Rental Property in 2022
Here are a few things to consider when looking for the best places to buy rental property this year:
1. Avoid Areas That Have Dipped Really Hard
Experts expect states and cities that already have weak economic foundations to be hit the hardest from the effect of the coronavirus. Therefore, these markets may also have a harder time recovering. North Dakota, for example, has already been struggling with oil prices collapsing since 2015. The area is facing even more challenges today. Additionally, big cities like New York, Los Angeles, and Chicago are getting hit hard due to the high numbers of coronavirus cases. While these cities generally have very strong economies to help them recover, they’re still very expensive, making it difficult to buy real estate there.
Hence, the best places to buy rental property in 2022 are growing metro areas that are both affordable and with diverse economies. Such real estate markets might have experienced a decline due to COVID-19, but would likely be quick to recover. In the said markets, home values are stable, which is why they offer some of the best real estate investments.
Related: How to Find Real Estate Opportunities during the COVID-19 Pandemic
2. Go Where the Jobs Will Return To
Even under present conditions, certain job sectors are still growing. It’s helpful for real estate investors to look into past trends and see if a market shows steady job growth trends before the coronavirus pandemic. This suggests that it’s likely for this trend to continue when things go back to normal. For example, Amazon warehouses were already a growing job trend, but are even more so today. The same is true for many businesses that were deemed “essential” like health care, military, tech industries, and higher education.
Another feature of the best places to invest in real estate to look for is big industries that employ a lot of people. While these industries are now on hold due to “stay-at-home” orders, these areas have very diverse employment and tend to overcome recessions quickly. For instance, Disney has been forced to lay off tens of thousands of employees in both Orlando and California. Businesses, however, will eventually return and start to pick up again once the economy recovers after the end of the COVID-19 pandemic.
Related: The Future of Real Estate Investing After the Pandemic
3. Find Where People are Moving/Will Move to
Under the typical real estate investing conditions, there should be some sort of population growth in the area for rental properties to perform well. Just like job growth, real estate investors should consider population growth trends prior to the pandemic when choosing a housing market. Spring season is usually the time when people begin making moves as summer approaches. But, fewer people are choosing to relocate after COVID-19. Though population growth may certainly slow in some markets, many people who have lost their jobs are looking for work in less impacted areas and stronger economies. For example, research shows that Texas, Alabama, and Florida are still seeing strong migration trends, making them 2022 best places to buy rental property.
The 5 Best Places to Buy Rental Property in 2022
Now that we’ve covered what makes for the best places to invest in real estate in the US housing market, let’s move on to list some cities for you to consider. According to our research and using data from Mashvisor’s real estate investment software, you’ll find this year’s best places to buy rental property in Orlando, Tampa, Dallas, Cleveland, and Huntsville. Here’s all you need to know about each real estate market and why you should buy rental property there:
1. Orlando, FL
Orlando offers more than just the happiest place on earth – it also has real estate performance potential that attracts many investors. Before the coronavirus pandemic, the demand for single-family homes had taken off in the city and home values have gone up 3.4% over the past year. According to Mashvisor’s data, the median price of Orlando investment properties is $335,973. Home prices in the Orlando real estate market are predicted to drop by 1.6%, lowing costs of entry for those looking to buy property in this sought-after market.
Moreover, many of the market’s residents are choosing to rent instead of buy due to the relatively high costs. The sheer number of renters in Orlando reflects the high demand for rental properties. This rental demand could increase due to the economic fallout caused by the nationwide lockdown. In addition, Orlando has ranked as one of the best places to buy rental property for multiple years in a row by numerous reliable sources like Forbes and the PwC. So, there’s no doubt that the Orlando housing market will recover after COVID-19. Looking for the best places to buy vacation rental property here? According to Mashvisor’s data, the best neighborhoods in Orlando are Timberleaf, Lake Fairview, Crescent Park, and The Willows.
To start looking for and analyzing the best rental properties in Orlando, click here.
2. Tampa, FL
Another ranking for Florida real estate on the list, Tampa is another city showing good potential for real estate investment this year. The average property price in Tampa is $420,114 according to Mashvisor’s real estate app, and prices are expected to drop 1.2% this year. When it comes to investing in rental properties, Tampa has a strong market and an economy which has been named one of the fastest-growing in the US. The city has always had a focus on ensuring job growth, with an unemployment rate of just 3% before the coronavirus pandemic.
As of this writing, Tampa’s unemployment rate went up to 4.3% which, compared to some of the worst affected cities in the country, is still relatively low. After all, job market growth in Tamp has been over two-thirds higher than the national average in the past year. Tampa is also home to headquarters for many Fortune 500 companies that contribute to the local employment rates and economy. With many factors creating employment opportunities, experts predict the Tampa real estate market will get to the other side of the pandemic relatively unscathed. This is good news for those looking to start real estate investing in the best places to buy rental property. The best neighborhoods to consider for investing in Tampa are North Hyde Park, Courier City, West Riverfront, and South Seminole Heights.
To start looking for and analyzing the best rental properties in Tampa, click here.
3. Dallas, TX
Next up on our list of the best cities for real estate investment is the Dallas housing market. Dallas is one of the most populous cities in the US as people and businesses alike have relocated there over the past few years. One of the main reasons why many major companies have made the move to Dallas is the business-friendly environment that the state of Texas has to offer. Benefits companies gain also include lower taxes, more affordable employee housing, and lower overall cost of living. Of course, when companies move to a certain market, this causes employment and the population to boom there as well.
The Dallas real estate market is also slightly more affordable than many other real estate markets with the same scale of job opportunities. According to property data gathered by Mashvisor, the median property price in Dallas is $408,752. Housing experts predict this number to fall by nearly 2.5% over the rest of the year. As a result, this draws the attention of rental tenants, attracting them to work and live in Dallas. For real estate investors, this makes Dallas one of the best places to buy rental property as investing here will ensure a high rental income and good return on investment for years to come. Mashvisor’s data shows that the best neighborhoods in Dallas for buying an investment property are Arts District, City Center District, Main Street District, and West End Historic District.
To start looking for and analyzing the best investment properties in Dallas, click here.
4. Cleveland, OH
Following a time of redevelopment, Cleveland earned its stop as one of the best places to invest in real estate in the US. Redevelopments have renewed previously devalued neighborhoods in the area, which will lead to property values steadily increasing over the next few years. As home to many museums, theatres, and art galleries, the area is known for its cultural imprint. On the business side, Cleveland became one of the biggest economic areas within the US, providing real estate investors with good cash flow and growth potential. Experts predict that there will only be a slight drop in market performance due to COVID-19.
Largescale redevelopments typically create more work opportunities and draw individuals to the area. This is what the Cleveland real estate market has been experiencing ever since 2010. For a decade, there has been an influx of millennial buyers and renters moving to Cleveland looking for job opportunities and a lower cost of living in one package. When you buy Cleveland rental properties, you’ll also benefit from the low cost of homes. The median property price in Cleveland is $173,453 according to Mashvisor. So, besides being one of the best places to buy rental property, Cleveland is also one of the most affordable housing markets this year. Top neighborhoods in Cleveland include Tremont and Euclid Green.
To start looking for and analyzing the best rental properties for sale in Cleveland, click here.
5. Huntsville, AL
While it might be a surprising location to some, Huntsville has recently been listed as one of the top cities leading economic recovery in the nation. Located in the northernmost part of Alabama, Huntsville is the 4th largest city and the 2nd most populated metropolitan area in the state. It has been enjoying a 10-year rise in population paired with a low unemployment rate of just 2.4%. The demand for rental properties in Huntsville has been increasing thanks to many reasons. The main reason, however, is the quality education options as Huntsville is ranked as one of the top 50 best places for education and business in the country by Forbes.
The Huntsville real estate market is also showing new potential as one of the best places to buy rental property this year. Huntsville is one of the most affordable real estate markets in the nation with a median property price of $345,694 according to Mashvisor’s data. When it comes to business and the job market, the biggest employer in the city is the military, providing over 30,000 jobs, followed by the NASA Marshall Space Flight Center. These factors give property investors a positive forecast for the Huntsville real estate investments once the COVID-19 pandemic is over and the market starts to normalize again. The best neighborhood for real estate investing in Huntsville is Sherwood Park.
To start looking for and analyzing the best rental property for sale in Huntsville, click here.
Final Thoughts for Real Estate Investors
It may be difficult to think about buying an investment property under the circumstances that are affecting the US housing market right now. However, real estate has historically been recognized as the strongest asset class, so investors can assure that the rental market will recover after the coronavirus pandemic is over. Savvy real estate investors can take advantage of the currently lower home prices and interest rates to benefit down the line. Now, you have the opportunity to find the best real estate deals in strong markets at a lower price. This could lead to a big profit as your property appreciates over time.
The key to finding the best places to buy rental property is much the same as it always was. Where you choose to invest in real estate should depend on your goals, available capital, and most importantly, how quickly the housing market will recover from this pandemic. To find real estate deals in the best places and learn how to invest in real estate, investors should rely on their housing market analysis, as well as their rental property analysis. Mashvisor can help you conduct both analyses using a number of real estate investment tools including a Real Estate Heatmap, Property Finder, and Investment Calculator.
Sign up for Mashvisor now with a 15% discount with promo code BLOG15 to access our tools and find the best rental properties for sale in any US market from the safety of your home.