5 Best Rental Investment Markets for 2020

What are the three most important things when investing in real estate? You already know the answer: location, location, and location! The location of an investment property has the largest impact on its return on investment. So when considering where to invest in real estate, investors should always take a look at the best rental investment markets.

What are the best rental investment markets in the US for 2020? According to the PwC’s Emerging Trends in Real Estate 2020 report, the 5 best places to invest in real estate in 2020 are:

Austin, Texas
Raleigh-Durham, North Carolina
Nashville, Tennessee
Charlotte, North Carolina
Boston, Massachusetts

Today, we’ll show you why you should invest in these cities. We’ll also provide the real estate data of the rental markets and their best up and coming neighborhoods.

1. Austin, TX

Median Property Price: $581,727
Price per Square Foot: $296
Price-to-Rent Ratio: 24
Traditional Rental Income: $2,032
Traditional Cap Rate / Cash on Cash Return: 0.57%
Airbnb Rental Income: $3,629
Airbnb Cap Rate / Cash on Cash Return: 3.1%
Airbnb Occupancy Rate: 54.7%

The capital of Texas will be the best rental investment market in 2020. This ranking is an improvement from 6^th place for overall real estate prospects a year ago. And real estate investors have a choice of rental strategy here as the Austin real estate market will be one of the best places to buy a vacation home and a traditional rental property.

Much of the projected success of the traditional Austin housing market is due to its economy. High-paying tech jobs, in particular, are growing in the city. Apple’s planned $1 billion North Austin campus, for instance, is a clear testament to this fact. Overall, Austin has a below national-average unemployment rate of 2.7%. Its 47% ten-year job market growth forecast is also much better than the US average of 33.5%. Due to such economic success, Austin is estimated to have the highest population growth rate in the US for the next five years.

The Austin real estate market’s position as #1 of the best rental investment markets wouldn’t exist without its Airbnb success. As seen from Mashvisor’s data above, Airbnb investment property is very profitable in the Austin real estate market. With cultural events and venues, such as South by Southwest, Austin draws in millions of tourists annually. So it’s no surprise that Austin is among the most profitable Airbnb locations. Fortunately, Airbnb is fully legal in the Austin real estate market. You can learn more about its Airbnb laws and regulations by clicking here.

The Best Neighborhoods in Austin

Where should you invest in Austin real estate 2020? According to Mashvisor’s neighborhood analysis, the best neighborhoods in the Austin housing market are Johnston Terrace and North Lamar:

Johnston Terrace

Median Property Price: $242,310
Price per Square Foot: $173
Price-to-Rent Ratio: 11
Traditional Rental Income: $1,814
Traditional Cap Rate / Cash on Cash Return: 3.0%
Airbnb Rental Income: $4,174
Airbnb Cap Rate / Cash on Cash Return: 11.1%
Airbnb Occupancy Rate: 53.7%

North Lamar

Median Property Price: $309,850
Price per Square Foot: $214
Price-to-Rent Ratio: 13
Traditional Rental Income: $1,980
Traditional Cap Rate / Cash on Cash Return: 2.4%
Airbnb Rental Income: $3,903
Airbnb Cap Rate / Cash on Cash Return: 7.4%
Airbnb Occupancy Rate: 69.4%

To start looking for and analyzing the best investment properties in the Austin real estate market, click here.

2. Raleigh-Durham, NC

Median Property Price: $435,043
Price per Square Foot: $178
Price-to-Rent Ratio: 24
Traditional Rental Income: $1,508
Traditional Cap Rate / Cash on Cash Return: 1.2%

The Raleigh-Durham real estate market is second among the best rental investment markets for 2020. While it is second overall, it is the top rental market for homebuilding prospects, according to the PwC report. This is expected to help cool the current seller’s market and meet the high demand for property for sale as the year continues.

The metro’s booming tech industry, behind only Silicon Valley and San Francisco, will continue to play a large role in the demand for rental property. The most in-demand type of income property is multifamily properties.

While the area’s traditional market is among the best places for buying rental property, the same cannot be said of its Airbnb market. Non-owner occupied properties are illegal for Airbnb real estate investing in the Raleigh-Durham housing market.

Still, investors who rent out traditionally will enjoy a high return on investment through the metro’s rental income and real estate appreciation rates. Both the Raleigh and Durham rental markets are projected to have among the highest appreciation rates in 2020. According to Zillow, properties in the Raleigh real estate market will appreciate by 4% in 2020. Durham house prices are expected to increase by 4.4%.

The Best Neighborhoods in Raleigh/Durham

Raleigh and Durham deserve their spot among the best rental investment markets for 2020. But where should you invest in these markets? The best neighborhood for owning a rental property in Raleigh is North Central. For Durham, Mashvisor’s real estate heatmap lists Rockwood as the top neighborhood.

Raleigh – North Central

Median Property Price: $414,844
Price per Square Foot: $280
Price-to-Rent Ratio: 18
Traditional Rental Income: $1,942
Traditional Cap Rate / Cash on Cash Return: 2.0%

Durham – Rockwood

Median Property Price: $154,125
Price per Square Foot: $122
Price-to-Rent Ratio: 8
Traditional Rental Income: $1,566
Traditional Cap Rate / Cash on Cash Return: 6.7%

To start looking for and analyzing the best investment properties in the Raleigh-Durham real estate market, click here.

3. Nashville, TN

Median Property Price: $450,006
Price per Square Foot: $1,183
Price-to-Rent Ratio: 21
Traditional Rental Income: $1,757
Traditional Cap Rate / Cash on Cash Return: 1.8%
Airbnb Rental Income: $3,364
Airbnb Cap Rate / Cash on Cash Return: 4.6%
Airbnb Occupancy Rate: 56.4%

Nashville, Tennessee is next up on the list. With a jump from 5^th to 3^rd in overall real estate prospects, the Nashville real estate market is projected to continue its success in 2020.

Strong investor demand, high homebuilding prospects, and strong development and redevelopment opportunities are among the highlights of the Nashville housing market. The city also boasts a very strong economy. Its unemployment rate is 2.7%, which is 1.2% lower than the US average. Its job market is expected to grow by a whopping 48.3% in the next 10 years.

As one of the best rental investment markets, profitable long-term rental properties aren’t all Nashville real estate has to offer. Airbnb is legalized in the Nashville real estate market, which you can learn more about here. The catch is that licenses for new Airbnb non-owner occupied properties can only be issued in non-residential zones. Owner-occupied rentals are allowed everywhere in the city which means if you are a local real estate investor, you can try house hacking.

The Best Neighborhoods in Nashville

With positive real estate data and trends, the Nashville housing market belongs among the best rental investment markets. Where should you invest in the city? For 2020, Mashvisor’s predictive analytics rank Belair and Kenilworth Estates as Nashville’s best neighborhoods.

Belair

Median Property Price: $231,000
Price per Square Foot: $169
Price-to-Rent Ratio: 12
Traditional Rental Income: $1,586
Traditional Cap Rate / Cash on Cash Return: 3.6%
Airbnb Rental Income: $4,765
Airbnb Cap Rate / Cash on Cash Return: 15.7%
Airbnb Occupancy Rate: 47%

Kenilworth Estates

Median Property Price: $89,900
Price per Square Foot: $140
Price-to-Rent Ratio: 8
Traditional Rental Income: $930
Traditional Cap Rate / Cash on Cash Return: 4.5%
Airbnb Rental Income: $1,891
Airbnb Cap Rate / Cash on Cash Return: 9.4%
Airbnb Occupancy Rate: 54.9%

To start looking for and analyzing the best investment properties in the Nashville real estate market, click here.

4. Charlotte, NC

Median Property Price: $401,170
Price per Square Foot: $195
Price-to-Rent Ratio: 21
Traditional Rental Income: $1,566
Traditional Cap Rate / Cash on Cash Return: 1.3%
Airbnb Rental Income: $2,241
Airbnb Cap Rate / Cash on Cash Return: 2.4%
Airbnb Occupancy Rate: 53.8%

The North Carolina real estate market is home to many of the best rental investment markets 2020. Besides Raleigh-Durham, the Charlotte real estate market is an excellent market for traditional real estate investing. Charlotte has an advantage over the metro area, however, as it is also one of the best vacation rental investment markets.

Charlotte is right behind Raleigh-Durham in homebuilding prospects, ranking second overall in the PwC report. The Charlotte housing market 2020 will also generate strong investor demand and development and redevelopment opportunities. Even with the high demand, Charlotte home prices will be relatively affordable. According to Mashvisor’s real estate market analysis, the Charlotte real estate market has the cheapest median property price of the best rental investment markets. However, as one of the top up and coming cities, Charlotte’s house prices will increase in 2020. According to Zillow, properties in the Charlotte real estate market will appreciate by 5% in 2020. This is the highest appreciation rate among the best rental investment markets.

Charlotte real estate investors will also benefit from Airbnb real estate investing as Airbnb is legal in the Charlotte real estate market. You can learn more about Charlotte’s Airbnb laws on the Airbnb Help Page.

The Best Neighborhoods in Charlotte

Where should you invest in the Charlotte rental market? According to Mashvisor, Idlewild South and Sugaw Creek-Ritch Ave are the best neighborhoods in the city for 2020.

Idlewild South

Median Property Price: $187,975
Price per Square Foot: $131
Price-to-Rent Ratio: 13
Traditional Rental Income: $1,191
Traditional Cap Rate / Cash on Cash Return: 2.5%
Airbnb Rental Income: $2,896
Airbnb Cap Rate / Cash on Cash Return: 8.8%
Airbnb Occupancy Rate: 63.9%

Sugaw Creek-Ritch Ave

Median Property Price: $146,200
Price per Square Foot: $107
Price-to-Rent Ratio: 11
Traditional Rental Income: $1,116
Traditional Cap Rate / Cash on Cash Return: 3.2%
Airbnb Rental Income: $1,985
Airbnb Cap Rate / Cash on Cash Return: 7.1%
Airbnb Occupancy Rate: 44.7%

To start looking for and analyzing the best investment properties in the Charlotte real estate market, click here.

5. Boston, MA

Median Property Price: $972,783
Price per Square Foot: $738
Price-to-Rent Ratio: 29
Traditional Rental Income: $2,795
Traditional Cap Rate / Cash on Cash Return: 0.56%

The fifth entry of the best rental investment markets is Boston, Massachusetts. As the other markets on this list, the traditional Boston real estate market is thriving.

Boston’s strong economy has a major positive impact on its traditional rental market. According to the PwC report, Boston has the sixth highest GDP per capita in the US. Demand is another key player in the Boston real estate market. Boston was second place for projected investor demand. Only the Austin housing market will have a higher demand. However, the market’s high development and redevelopment opportunities will help to meet the demand for property. Boston is the only cool buyer’s market among the best housing markets for 2020, according to Zillow.

You may have noticed that we did not include data on Airbnb Boston. Unfortunately, non-owner occupied rentals are illegal in the Boston housing market.

The Best Neighborhoods in Boston

The Boston housing market is home to many up and coming neighborhoods. Which ones are the best? According to Mashvisor’s real estate heatmap, Boston’s best neighborhoods are Mattapan and West End.

Mattapan

Median Property Price: $341,832
Price per Square Foot: $211
Price-to-Rent Ratio: 14
Traditional Rental Income: $2,090
Traditional Cap Rate / Cash on Cash Return: 2.8%

West End

Median Property Price: $606,981
Price per Square Foot: $635
Price-to-Rent Ratio: 17
Traditional Rental Income: $3,059
Traditional Cap Rate / Cash on Cash Return: 1.6%

To start looking for and analyzing the best investment properties in the Boston real estate market, click here.

The Bottom Line

Real estate investing is all about location. By investing in the best rental investment markets, real estate investors will achieve the highest return on investment in 2020. Want to invest in these cities for 2020? To start searching for investment properties for sale, CLICK HERE to start your 14-day FREE trial with Mashvisor!

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