Where Should You Buy Investment Property in 2017?

Are you a real estate investor thinking about diversifying his/her portfolio? Are you still unsure which market to invest in? Let us help you by providing you with 10 of the best places to buy investment property in 2017.

What Is a Best Place to Buy Investment Property?

As a real estate investor, you must be asking yourself this question often: What makes a real estate market a top choice for investing in an income property? What makes one location better than another for buying a rental property? Well, it’s a combo of two main things: 1) housing or real estate market indicators and 2) more general economic trends. First of all, you want to invest in a market where prices are expected to go up in the short and long term. Even if like most real estate investors you are going for positive cash flow, real estate appreciation is still of crucial importance in determining your long run profitability. Second, a good market for real estate investments must enjoy an expanding economy, strong job creation, and a high number of people moving in (for school, work, retirement, etc.). And that’s exactly how the following list of 10 among the best places to buy investment property in 2017 has been prepared.

Forbes and Local Market Monitor, a North Caroline company, which tracks over 320 housing markets in the US, have put together a list of the best places to buy investment property in 2017. The selection criteria combine expected growth in property prices, jobs, and population.

Below, for each of the top 2017 real estate markets, you will find numbers on some of the main indicators a real estate investor should know before deciding to invest in any particular market. These figures have been provided by Mashvisor’s investment property calculator, which can compute for you the comps for numerous markets in the US, thus getting rid of the need to perform a real estate market analysis on your own, which as you are well aware is quite costly and time-consuming.

So, let’s take a look at 10 of the best places to buy investment property in 2017:

1. Sacramento

Median Property Price: $449,000
Traditional Rental Income: $1,370
Airbnb Rental Income: $2,210
Traditional CoC Return: 1.3%
AirbnbCoC Return: 4.2%
Traditional Cap Rate: 4.3%
Airbnb Cap Rate: 7.3%
Airbnb Occupancy Rate: 62.1%

The first in this list of the best places to buy investment property in 2017 is Sacramento, the capital city of the State of California and one of the two California cities here. Sacramento is a diverse city, which is always growing and whose economy is currently expanding at the fastest rate in the past 10 years. Although Sacramento might not look particularly affordable to the average American citizen, property prices are just about right, considering the average local income. Airbnb is more profitable in Sacramento than traditional renting in terms of both CoC return and cap rate, and Airbnb is definitely a possibility here though you will face some legal restrictions, according to a report by R Street Institute, which evaluates the legal framework for short-term rentals across a number of US cities.

2. Charlotte

Median Property Price: $441,000
Traditional Rental Income: $1,640
Airbnb Rental Income: $2,300
Traditional CoC Return: 2.4%
AirbnbCoC Return: 5.1%
Traditional Cap Rate: 5.1%
Airbnb Cap Rate: 7.9%
Airbnb Occupancy Rate: 52.6%

The next among the best places to buy investment property in 2017 is one of two North Carolina cities, Charlotte. Charlotte is the most populous city in the State of North Carolina, the second largest in the southeastern US (after Jacksonville, Florida), and the third fastest growing major city nationwide. In addition, it is a commercial hub in North Carolina. All these already sound like enough of an attraction for any real estate investor, whether interested in traditional or Airbnb rental strategy. Actually, Airbnb is the most profitable approach in Charlotte, which scored an overall B+ in the above mentioned report on Airbnb legal frameworks across the US. According to Forbes and Local Market Monitor, property prices in Charlotte are currently undervalued by 11% and are forecast to grow at an annual rate of 8%.

3. Raleigh

Median Property Price: $492,000
Traditional Rental Income: $1,560
Airbnb Rental Income: $2,290
Traditional CoC Return: 1.6%
AirbnbCoC Return: 3.5%
Traditional Cap Rate: 4.4%
Airbnb Cap Rate: 6.4%
Airbnb Occupancy Rate: 52.0%

#3 in this ranking of the best places to buy investment property in 2017 is another North Carolina city, Raleigh. Although median property prices here are about 10% higher than in Charlotte, they are still believed to be undervalued by as much as 15%. The capital city of the State of North Carolina, also known as the “City of Oaks”, is expecting 3-year population growth rate of 7.1%, which means that a lot of people will be moving in, i.e., there will be many new tenants looking for income properties to rent. Furthermore, property prices are forecast to grow at 7% per year, which implies some serious appreciation gains for real estate investors.

4. San Diego

Median Property Price: $828,000
Traditional Rental Income: $3,000
Airbnb Rental Income: $2,980
Traditional CoC Return: 2.3%
AirbnbCoC Return: 2.5%
Traditional Cap Rate: 4.8%
Airbnb Cap Rate: 5.1%
Airbnb Occupancy Rate: 66.6%

The second California city on the list is also the second most expensive one, according to data from Mashvisor’s rental property calculator. Nonetheless, San Diego investment properties are yet not overvalued for the local income but might make out-of-state real estate investing more challenging. The rental income is great, which makes profitability in San Diego good despite the high property prices. Traditional and Airbnb are comparable in terms of return on investment, and the Airbnb legal framework scored A-, which is more than excellent.

5. Las Vegas

Median Property Price: $225,000
Traditional Rental Income: $1,210
Airbnb Rental Income: $2,070
Traditional CoC Return: 3.5%
AirbnbCoC Return: 8.6%
Traditional Cap Rate: 7.4%
Airbnb Cap Rate: 12.8%
Airbnb Occupancy Rate: 28.5%

Las Vegas, the fifth city in the list of best places to buy investment property in 2017, is the most affordable one, with some very reasonable median property prices. Although Las Vegas has been recovering well from the real estate crisis a few years ago, properties are still undervalued by as much as 40%. This means that now is the time to buy a rental property here because this trend is not likely to continue for much longer. Airbnb is significantly more profitable here, but you will face some licensing requirements.

6. Boston

Median Property Price: $1,025,000
Traditional Rental Income: $2,810
Airbnb Rental Income: $4,250
Traditional CoC Return: 1.7%
AirbnbCoC Return: 3.4%
Traditional Cap Rate: 4.2%
Airbnb Cap Rate: 6.0%
Airbnb Occupancy Rate: 61.9%

#6 on the list is a city which does not stop being a hot market – Boston. The capital and largest city of Massachusetts is actually the only North Eastern city to make it to the list of the best places to buy investment property in 2017. Boston is by far the most expensive one, according to Mashvisor’s investment property calculator. Airbnb is preferable over traditional in Boston, despite some legal restrictions.

7. Columbus

Median Property Price: $248,000
Traditional Rental Income: $1,140
Airbnb Rental Income: $2,160
Traditional CoC Return: 1.9%
AirbnbCoC Return: 8.2%
Traditional Cap Rate: 6.6%
Airbnb Cap Rate: 13.4%
Airbnb Occupancy Rate: 49.0%

Next on the list is Columbus, the capital city and the largest one in the State of Ohio. Property prices are quite low and undervalued by 25%, which makes the moment perfect to go for investing in Columbus real estate. The expected rental income from Mashvisor’s rental property calculator is high enough to make return on investment – both in terms of CoC return and cap rate – great. If you like investing in Airbnb income properties, Columbus is the place for you with a median property price of $248,000 and a cap rate of 13.4% and a score of A- for the short-term rental legal conditions.

8. Atlanta

Median Property Price: $248,000
Traditional Rental Income: $1,620
Airbnb Rental Income: $1,690
Traditional CoC Return: 4.9%
AirbnbCoC Return: 5.9%
Traditional Cap Rate: 9.0%
Airbnb Cap Rate: 10.1%
Airbnb Occupancy Rate: 48.8%

#8 among the best places to buy investment property in 2017 is the capital and most populous city in the State of Georgia and actually the largest in terms of population in the whole list (for the metro area). Atlanta is the economic and cultural center of the Atlanta metropolitan area. Atlanta property prices are affordable as they are undervalued by 17%, in spite of significant recent increases, which are expected to continue in the future.

9. Phoenix

Median Property Price: $477,000
Traditional Rental Income: $1,580
Airbnb Rental Income: $2,610
Traditional CoC Return: 2.0%
AirbnbCoC Return: 4.6%
Traditional Cap Rate: 4.9%
Airbnb Cap Rate: 7.6%
Airbnb Occupancy Rate: 38.1%

Next on the list is Phoenix, the capital and largest city in the State of Arizona, as well as the 6^th most populous one across the US. Home prices are experiencing some strong growth, at an annual rate of 7%. If you are looking to buy an Airbnb rental property, think seriously about Phoenix as the legal framework is great, with an overall score of A-, and some good return.

10. San Antonio

Median Property Price: $330,000
Traditional Rental Income: $1,520
Airbnb Rental Income: $1,510
Traditional CoC Return: 1.6%
AirbnbCoC Return: 1.5%
Traditional Cap Rate: 6.1%
Airbnb Cap Rate: 6.0%
Airbnb Occupancy Rate: 33.4%

Last but not least in the list of best places to buy investment property in 2017, if you still haven’t found the right place for your 2017 real estate investment, is San Antonio, maybe the city for you. The second largest city in the State of Texas and the 7^th most populous in the US promises some good property price gains in the coming years, which means major appreciation. Income properties are still affordable, so hurry up. Traditional and Airbnb yield about the same return on investment in San Antonio, and the legal conditions for Airbnb are excellent.

Choosing the right location for purchasing an income property can be a daunting task. Thus, we’ve tried to help you by listing and describing some of the best places to buy investment property in 2017. Once you’ve made your choice for a city, don’t forget to go to Mashvisor’s rental property calculator to get data which will help you select the right neighborhood for your next investment.

Start Your Investment Property Search!

Boston MA Charlotte NC Las Vegas NV Raleigh NC Sacramento CA San Diego CA