Where are the best places to buy rental property?
If there’s one thing we say over and over again, it’s that location is key when it comes to real estate investing. But it’s not always easy finding the right place for investing in rental and income properties. So where should you look? And what indicators and factors should you keep in mind when trying to find the best places to buy rental property? Continue reading to find out.
Know the Market(s)
Generally speaking, to know where the best places to buy rental property are, you need to know the market you’re investing in pretty well. This requires research on your part. Look out for the latest market trends, consumer habits, demographic changes, and learn to predict these changes in the market.
Additionally, make sure to stay well connected with like-minded real estate investors. Building your real estate network will provide you with a platform in which you can meet different investors, buyers, lawyers, etc., all of whom can help you navigate through real estate investing as well as helping you find the best places to buy rental property. One of these people may know someone who knows someone who’ll get you the perfect real estate deal!
The US housing market is related to the economy at large and the job market. Simply said, where there’s job growth, there’s an influx of people and an influx of potential tenants. Not only that, job growth also increases people’s abilities to purchase properties. As an investor, you need to be on the lookout for cities and/or areas with job growth or potential for job growth to maximize on your real estate investment opportunities. So when looking for the best places to buy rental property, consider areas where there’s job growth and opportunities created by job growth.
Follow the Millennials
Demographically speaking, millennials are the largest generation in US history. A fun fact, yes, but it’s really important to keep in mind when it comes to real estate investing. After all, among the best places to buy rental property is where millennials are flocking. In the US market, millennials represent opportunity and prospective tenants.
The most popular cities among millennials include Atlanta, Austin, Seattle, Denver, Houston, Boston, San Francisco, San Diego, Minneapolis, and Pittsburgh. And among these cities are some of the nation’s best real estate markets. So following millennials is definitely a good idea! It’s no secret that millennials are changing the make-up of real estate markets nationwide, so make sure to keep that in mind when looking for the best places to buy rental property, and to keep up with consumer habits in real estate markets.
Off-peak seasons are the best time to invest. Summer is usually a busier time for real estate markets. On the other hand, winter months are when real estate markets nationwide slow down and become more favoring towards buyers. It is not to say that they become buyer’s markets necessarily, but conditions are less challenging for buying an investment property. Because of this, investors find that it is easier to negotiate with sellers during these off-peak seasons and to get a better deal during the market slow down. Spring is also a good time to look at rental properties; supply is higher than winter, and demand is less crazy than summer. Some say it’s the best time to search for investment property for sale. So even when looking for the best places to buy rental property, consider avoiding the peak seasons and bidding wars over investments.
Watch the Numbers
One way to find the best places to buy rental property is to watch for the numbers. Look for markets where real estate indicators are promising. Look for positive values for cash on cash return, cap rate, expected rental return, occupancy rate and cash flow.
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Look in Less “Popular” Areas
We can all agree that investing in a city like San Francisco or New York City is profitable. Sometimes, however, it can be more profitable to invest in more low-key or less popular cities and/or neighborhoods. These include ones that are up and coming, undergoing construction, or being gentrified. Many cities and neighborhoods are undergoing new construction and development plans aimed at not only creating new job opportunities but also investment opportunities.
Many of these less popular areas are also less problematic in terms of legal regulations, they can be significantly more affordable, and there’s often less competition when it comes to real estate investing. Investing in Cypress, Texas, for example, can be more profitable than an investment in New York City if you find the right property. There’s significantly less regulation in Cypress, and rental properties are notably more affordable and are less competitive.
To find the best places to buy rental property, use Mashvisor’s rental property calculator. Mashvisor allows you to conduct comparative market analysis, investment property analysis, and location analysis. Mashvisor’s investment property calculator helps you find where the best places to buy rental property are. It will also give you access to different real estate indicators such as cash on cash return, cap rate, occupancy rate, rental income, NOI, ROI, among others. This also means that you no longer have to use spreadsheets since Mashvisor organizes all the data for you. What else does an investor need?
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All in all…
Finding the best places to buy rental property is a challenge, but looking out for the above factors will definitely help you in the process. Make sure to stay up to date with real estate markets nationwide to find the best market to suit your real estate investment needs!