Investor Blogs2021 Cash on Cash Return by City: What to Expect as a Real Estate Investor by Daniela Andreevska February 22, 2021February 14, 2021 by Daniela Andreevska February 22, 2021February 14, 2021When deciding where to buy an investment property, the main factor you should be looking at is profitability. As a real estate investor, your ultimate goal is to make money from your investment property. That’s why, if you are thinking about investing in a new income property in 2021, you should know what cash on cash return by city you can expect in the US housing market.We’ve put together this article which lists the 100 US cities with the highest CoC return for traditional rentals as well as the 100 US cities with the highest CoC return for Airbnb rentals. This will help you set up your expectations for return in the 2021 US housing market, regardless of which rental strategy you go for.In addition, we will show you a few other important metrics such as the median property price, the monthly rental income, the price to rent ratio (for long-term rental properties), the Airbnb daily rental rate, and the Airbnb occupancy rate (for short-term rental properties). These figures will help you make an informed – and thus profitable – real estate investment decision while taking all relevant factors into consideration.The numbers presented below are based on Mashvisor’s nationwide real estate market analysis and reflect the state of the US rental market in February 2021.2021 Cash on Cash Return by City for Traditional Rental PropertiesThe past twelve months were challenging for all residential real estate investors. The Covid-19 pandemic put investors to the ultimate test. Moreover, it somewhat reversed the trend from the previous decade when investors were switching from long-term rentals to short-term ones. The Coronavirus crisis showed that traditional rentals are generally more resilient and more stable than Airbnb rentals. After all, people will always need a place to live even if they temporarily stop traveling for business or leisure purposes.Despite the eviction ban, which threatened the sustainability and profitability of landlords, investors in traditional rental properties were largely able to continue their rental business and to even emerge profitable. This was partially supported by various mortgage relief programs which counteracted the negative impact of the eviction moratorium on investors.Related: Covid-19: Mortgage Relief Programs for Real Estate InvestorsAll in all, buying rental properties to rent out traditionally remains a viable – and profitable – real estate investment strategy. So, if you are considering this rental strategy for your next income property, you should focus your investment property search on one of the following 100 most profitable locations:Table 1: CoC Return by City for Long-Term Rental Properties City and StateTraditional CoC Return by CityTraditional Rental IncomeMedian Property PricePrice to Rent Ratio#1Mesquite, TX4.98%$1,481$226,14113#2Portsmouth, VA4.77%$1,345$213,56913#3Sumter, SC4.36%$1,119$199,68815#4Venice, FL4.28%$2,126$408,62816#5Jackson, MS4.26%$1,353$280,02217#6Greenville, NC4.19%$1,486$269,80315#7Lake Worth, FL4.18%$1,724$284,49814#8Baltimore, MD4.16%$1,669$306,95615#9Detroit, MI4.12%$990$180,99915#10Silver Spring, MD4.09%$1,968$372,42516#11Garland, TX3.98%$1,465$274,96416#12Rockville, MD3.93%$2,331$480,14917#13Buffalo, NY3.90%$1,043$200,98516#14Aurora, IL3.84%$1,555$222,39712#15Akron, OH3.82%$828$150,38115#16Springfield, IL3.81%$1,012$162,62213#17Fayetteville, NC3.76%$1,163$223,33716#18Sandy Springs, GA3.75%$2,382$450,35616#19Lakeland, FL3.73%$1,471$302,54317#20Alexandria, VA3.71%$2,308$561,70820#21Clearwater, FL3.71%$1,769$407,41419#22Chesapeake, VA3.68%$1,685$331,85816#23Wichita, KS3.65%$1,076$240,68619#24Augusta, GA3.64%$1,007$235,19319#25Norfolk, VA3.64%$1,468$308,40718#26Cleveland, OH3.59%$975$180,49915#27Hampton, VA3.53%$1,182$236,58417#28Abilene, TX3.53%$1,386$263,31916#29Baton Rouge, LA3.50%$1,324$313,93520#30Troy, NY3.48%$1,194$192,49713#31Indianapolis, IN3.46%$1,127$263,23919#32Fort Wayne, IN3.46%$1,192$262,80918#33Birmingham, AL3.45%$1,324$306,78619#34Milwaukee, WI3.43%$1,059$201,43116#35Philadelphia, PA3.33%$1,484$374,50821#36Syracuse, NY3.33%$1,115$180,97014#37Honolulu, HI3.29%$2,295$852,91331#38Louisville, KY3.18%$1,146$262,67419#39Jacksonville, FL3.17%$1,272$282,32019#40Orlando, FL3.14%$1,567$328,14317#41Chattanooga, TN3.12%$1,420$331,39419#42Chandler, AZ3.07%$1,955$466,06520#43Irving, TX3.02%$2,009$394,85316#44Scottsdale, AZ2.90%$3,275$1,034,25126#45Memphis, TN2.90%$1,093$287,49322#46New Orleans, LA2.90%$1,839$477,50822#47Columbus, OH2.90%$1,204$272,79619#48Arlington, TX2.90%$1,617$318,82316#49Bakersfield, CA2.86%$1,580$380,97320#50St. Louis, MO2.84%$1,108$265,80020#51Virginia Beach, VA2.80%$1,592$412,79322#52Albany, NY2.80%$1,525$284,72016#53Sarasota, FL2.78%$2,313$730,32226#54Atlanta, GA2.77%$2,067$480,40919#55Colorado Springs, CO2.75%$1,607$472,27725#56Pittsburgh, PA2.75%$1,336$342,90021#57Richmond, VA2.73%$1,433$369,31821#58Nashville, TN2.72%$1,676$482,56524#59Fort Worth, TX2.71%$1,642$339,58917#60Tulsa, OK2.69%$1,220$407,27528#61Tampa, FL2.69%$1,766$488,75323#62Houston, TX2.66%$1,814$407,18619#63Cincinnati, OH2.65%$1,373$354,21722#64Anaheim, CA2.63%$3,252$736,56619#65Little Rock, AR2.62%$1,192$323,69423#66Durham, NC2.61%$1,467$407,09423#67Tallahassee, FL2.61%$1,219$286,59120#68Dearborn, MI2.60%$1,127$223,53817#69Albuquerque, NM2.58%$1,357$356,49822#70Rochester, NY2.57%$1,082$187,58014#71Charleston, SC2.55%$1,938$687,71430#72Grand Rapids, MI2.54%$1,162$308,54822#73Washington, DC2.53%$2,355$692,61025#74Las Vegas, NV2.48%$1,355$468,33729#75Arlington, VA2.44%$2,324$659,36024#76Tucson, AZ2.44%$1,166$320,66223#77Minneapolis, MN2.42%$1,776$369,51717#78Lexington, KY2.41%$1,219$339,35223#79Riverside, CA2.41%$2,073$542,63322#80Boca Raton, FL2.40%$2,234$691,19526#81Tempe, AZ2.40%$1,618$402,91321#82Kansas City, MO2.38%$1,231$313,75921#83Raleigh, NC2.37%$1,572$503,69227#84San Antonio, TX2.37%$1,452$288,00817#85Fort Myers, FL2.32%$1,477$334,42619#86Fort Collins, CO2.30%$1,940$540,75723#87Charlotte, NC2.29%$1,715$474,76923#88Greenville, SC2.27%$1,355$430,87927#89Phoenix, AZ2.26%$1,528$465,61025#90Miami, FL2.25%$2,605$618,44420#91Dallas, TX2.02%$1,854$465,53421#92Long Beach, CA1.96%$3,285$872,68822#93Madison, WI1.95%$1,466$415,30824#94San Diego, CA1.91%$2,635$843,90127#95Fort Lauderdale, FL1.91%$2,650$692,34022#96Los Angeles, CA1.90%$3,631$1,144,67526#97Oakland, CA1.85%$2,940$901,91426#98Providence, RI1.78%$1,522$376,91021#99Jersey City, NJ1.59%$2,188$669,65726#100Chicago, IL1.58%$2,019$471,89619If you’d like to see how CoC return expectations have changed since 2020, check out 2020 Cash on Cash Return by City: What Real Estate Investors Should Expect.Analysis of the Long-Term Rentals MarketA few important trends emerge when we look at the real estate data presented above.First, investors can expect a traditional cash on cash return by city of between 1.58% (in the Chicago real estate market) and 4.98% (in the Mesquite real estate market). This means that the return on investment on long-term rental properties in the 2021 US housing market will be higher than in 2020, when the range was 1.4% and 3.4%A second important real estate trend is that smaller markets are generally more profitable for traditional rentals. This is in line with the shift to suburban as well as secondary and tertiary markets which we’ve observed in recent months as people look for the safety of smaller towns amid the pandemic.In addition, real estate market analysis 2021 shows us that savvy investors can find profitable opportunities across the US as long as they are willing to conduct diligent market research and investment property analysis.2021 Cash on Cash Return by City for Airbnb Rental PropertiesThe impact of the initial shock of the Covid-19 pandemic was even bigger on the Airbnb rental business. As soon as the global pandemic was announced, the Airbnb occupancy rate dropped significantly in all major US cities.However, according to Mashvisor Airbnb data analysis, by September 2020 the US short-term rental industry was already on the road to recovery. Nationwide the Airbnb occupancy rate had increased by 13% after the initial drops in March 2020. Moreover, with the rollout of the Covid-19 vaccine, the Airbnb occupancy rate is expected to be back to sustainable growth by September 2021. And as savvy real estate investors know, the occupancy rate is one of the two main drivers of return on investment when it comes to vacation rentals, along with the Airbnb daily rate.Based on Mashvisor’s real estate market analysis, one of the most important things that the Covid-19 pandemic confirmed is the crucial importance of location in rental property investing. Initial recovery has been starkly different, with the Midwest generally leading the road. Another important conclusion we can draw is that the Airbnb rental industry is a resilient one and should not be underestimated.Indeed, the new reality of remote work is opening a whole new market for Airbnb hosts. With more and more professionals working remotely, people will be looking for long-term Airbnb rentals as soon as things start going back to normal.So, if you think that Airbnb might be the right strategy for you in 2021, check out the Airbnb cash on cash return by city which you can expect this year:Table 2: CoC Return by City for Short-Term Rental Properties City and StateAirbnb CoC Return by CityAirbnb Daily RateAirbnb Occupancy RateAirbnb Rental IncomeMedian Property Price#1San Angelo, TX7.58%$12374$3,291$361,635#2Chesapeake, VA6.84%$15769$3,501$331,858#3Valdosta, GA6.21%$9570$2,179$286,698#4Canton, OH6.06%$10654$2,965$200,989#5Portsmouth, VA6.05%$12665$2,469$213,569#6Independence, MO5.99%$10761$1,697$192,067#7Eau Claire, WI5.99%$12765$2,642$305,419#8Fayetteville, NC5.92%$9871$2,162$223,337#9Springfield, MO5.79%$10059$2,225$285,676#10Fort Wayne, IN5.71%$8268$2,293$262,809#11Jackson, MS5.71%$9767$2,590$280,022#12Riverside, CA5.69%$15667$4,467$542,633#13Johnson City, TN5.67%$10961$2,110$303,953#14Richardson, TX5.66%$19367$3,466$401,900#15Arlington, TX5.61%$18062$2,745$318,823#16Bakersfield, CA5.46%$13574$3,016$380,973#17Ypsilanti, MI5.39%$15567$2,489$278,978#18Richmond, VA5.38%$14065$2,937$369,318#19Hattiesburg, MS5.29%$9860$1,979$268,147#20Visalia, CA5.27%$8478$2,697$394,158#21Columbus, GA5.24%$9867$1,828$254,838#22Springfield, IL5.22%$10063$1,566$162,622#23Roanoke, VA5.18%$10668$2,407$322,907#24Reno, NV5.13%$14265$3,514$581,879#25Tucson, AZ5.06%$10265$2,515$320,662#26Norfolk, VA5.05%$15862$2,567$308,407#27San Marcos, TX5.03%$17746$3,119$324,936#28Chico, CA4.99%$15269$3,563$535,701#29Wichita, KS4.96%$9566$2,027$240,686#30Kalamazoo, MI4.96%$10269$2,781$330,304#31Birmingham, AL4.95%$11962$2,378$306,786#32San Bernardino, CA4.95%$13173$2,936$380,438#33Wilmington, NC4.74%$13957$2,676$412,973#34Colorado Springs, CO4.73%$14762$2,915$472,277#35Frederick, MD4.73%$12564$3,397$428,542#36Charlottesville, VA4.72%$29054$3,969$565,639#37Traverse City, MI4.71%$20945$3,171$535,442#38Virginia Beach, VA4.70%$31051$3,330$412,793#39El Paso, TX4.56%$8368$2,254$248,999#40Montgomery, AL4.46%$11163$1,895$289,152#41Appleton, WI4.44%$12361$2,214$288,003#42Memphis, TN4.42%$12559$2,299$287,493#43Jacksonville, FL4.41%$12959$2,111$282,320#44Gainesville, FL4.40%$14758$2,217$311,458#45Augusta, GA4.40%$19053$1,712$235,193#46Lakeland, FL4.33%$11058$2,237$302,543#47Lexington, KY4.33%$13953$2,215$339,352#48Albany, NY4.33%$11966$2,707$284,720#49Little Rock, AR4.31%$10175$2,435$323,694#50Lubbock, TX4.31%$13958$2,409$294,471#51Henderson, NV4.29%$22664$3,574$600,245#52Abilene, TX4.29%$17162$2,065$263,319#53Grand Rapids, MI4.28%$12561$2,236$308,548#54Chandler, AZ4.25%$16065$3,144$466,065#55Baton Rouge, LA4.24%$13055$2,301$313,935#56Syracuse, NY4.20%$10663$1,920$180,970#57Carrollton, TX4.20%$16364$2,578$333,023#58Spartanburg, SC4.05%$10762$1,813$231,403#59Madison, WI4.03%$19960$3,131$415,308#60Pensacola, FL3.96%$13466$3,102$522,086#61Rockville, MD3.92%$15069$2,888$480,149#62Columbus, OH3.91%$12761$1,940$272,796#63Waco, TX3.90%$16852$2,058$306,287#64Tempe, AZ3.86%$18160$2,788$402,913#65Rochester, NY3.81%$11963$2,197$187,580#66Knoxville, TN3.80%$12762$2,301$361,306#67Las Vegas, NV3.73%$20562$2,463$468,337#68Cincinnati, OH3.73%$13359$2,462$354,217#69Spokane, WA3.70%$10161$2,320$360,374#70Chattanooga, TN3.67%$11967$2,298$331,394#71Tallahassee, FL3.66%$14751$1,799$286,591#72Albuquerque, NM3.49%$10366$2,135$356,498#73Durham, NC3.43%$11158$2,333$407,094#74Columbia, SC3.43%$13657$1,735$293,565#75Fort Worth, TX3.43%$13660$2,555$339,589#76St. Louis, MO3.40%$12055$1,955$265,800#77Tulsa, OK3.38%$10664$2,153$407,275#78Indianapolis, IN3.36%$13555$1,718$263,239#79Greenville, SC3.32%$13359$2,301$430,879#80Bloomington, IN3.29%$17847$2,114$387,652#81Pittsburgh, PA3.26%$12259$2,121$342,900#82Charleston, SC3.26%$26959$3,263$687,714#83Decatur, GA3.23%$15354$2,161$341,173#84Fort Collins, CO3.21%$15667$3,038$540,757#85Tuscaloosa, AL3.16%$50229$1,828$326,716#86Raleigh, NC3.16%$12865$2,429$503,692#87Phoenix, AZ3.15%$17164$2,569$465,610#88Irving, TX3.15%$14864$2,582$394,853#89Philadelphia, PA2.89%$13551$1,997$374,508#90San Antonio, TX2.89%$12557$2,149$288,008#91Saint Paul, MN2.70%$14759$2,102$283,394#92Louisville, KY2.68%$21354$1,725$262,674#93Santa Fe, NM2.57%$19962$2,661$693,388#94Minneapolis, MN2.48%$14557$2,142$369,517#95Baltimore, MD2.38%$12854$1,835$306,956#96Bend, OR2.38%$17560$3,421$792,462#97Providence, RI2.25%$16360$2,194$376,910#98Honolulu, HI1.90%$29256$2,262$852,913#99Iowa City, IA1.59%$16654$2,036$333,496#100New Orleans, LA1.59%$19640$1,825$477,508Please note that the cities listed above face various legal requirements and restrictions which govern the short-term rental industry. Thus, it is crucially important to conduct diligent research on the Airbnb laws before deciding to buy an investment property to rent out as a vacation home rental in any of these markets.Analysis of the Short-Term Rentals MarketNow let’s take a look at what the numbers above are telling us about investing in a vacation home rental in 2021.Most importantly, investors can expect a return on investment ranging between 1.59% (in the New Orleans real estate market) and 7.58% (in the San Angelo real estate market). Interestingly, the most profitable locations for both traditional and Airbnb rentals in 2021 are located within the Texas real estate market.Cities in Texas Offer the Highest 2021 Cash on Cash Return by CityOverall, the cash on cash return by city of Airbnb rental properties has decreased from 2020, when the expected range was 3.6%-7.58%. This comes as no surprise considering the slower than expected rate of Covid-19 vaccinations in the US. However, as the vaccination rate picks up, the short-term rentals industry is expected to be back on the path to sustainable growth by September 2021. This means that investors should not feel discouraged from buying an Airbnb property as they are expected to become once again the winning rental strategy by the end of the year.Another significant conclusion is that despite the unrejectable negative impact of the Coronavirus pandemic, short-term rentals in the US housing market 2021 are still more profitable than long-term rentals. This is a key indicator for the resilience of this rental strategy.A final trend to keep in mind is that – generally speaking – smaller markets offer more profitable investment opportunities than the largest US cities. This is very similar to the expected return on investment for traditional rentals.What Is Cash on Cash Return?Now that you know the best places to invest in real estate 2021, it might be time to take a step back and look at this return on investment formula.In case you are new to real estate investing, you should know that CoC return is one of the best return on investment measures for both long-term and short-term rental properties. Unlike the cap rate, the cash on cash return is a very comprehensive metric for target returns as it takes into consideration the method of financing. This is particularly important for beginner real estate investors who usually have to take a mortgage loan to finance the purchase of their first rental property.So, here’s how to calculate cash on cash return in residential real estate investing:Cash on Cash Return FormulaCoC Return = Annual Before-Tax Cash Flow/Total Cash Investment x 100%Beginner investors are frequently wondering “What is a good cash on cash return for a rental property?”. After all, all the above-listed cash on cash return by city numbers don’t really tell us whether these markets are good for investing in rental properties or not unless we know how to interpret them.While this is a really important question in real estate investing, it doesn’t have a straightforward answer. What is good cash on cash return depends on the price point, the method of financing, and other factors. Nevertheless, generally speaking, a good return on investment is 8% and more.Related: How to Calculate Rate of Return on a Rental PropertyHow to Buy a Top-Performing Rental Property Based on CoC ReturnIf you are reading this article, you are most likely interested in buying a profitable rental property in 2021. So, let’s take a look at what goes into such an investment decision. Even though it’s important to know which markets offer the highest cash on cash return by city in 2021, unfortunately this is not enough to guarantee a good deal.Step #1: Start with a Few Top Locations for Rental PropertiesThe first step to buying a top-performing rental property is to select a few of the most profitable markets for your preferred rental strategy from the lists above. An important consideration to keep in mind is your budget which should be in line with the median property price in your market of choice.Another decision to make is whether you’d like to invest close to home or go for out of state real estate investing. Remember that investing in your local real estate market is not always optimal, especially if you live in an overpriced market. At the same time, out of state investing is an absolutely viable investment option as long as you rely on rigid real estate analysis, solid real estate investment tools, and professional property management.Step #2: Find Out the Best Neighborhood for Your Rental StrategyAs soon as you’ve selected a couple of markets which match your investment needs and criteria, it’s time to move to detailed neighborhood analysis. As you will soon realize, not all areas within a city offer the same return on investment potential.To find out the neighborhoods with the highest cash on cash return in your city of choice, we recommend the use of the Mashvisor real estate heatmap. This is one of the leading real estate investment tools which shows you a color-coded map of any city within the US market. You can analyze areas by:Listing priceTraditional cash on cash returnTraditional rental incomeAirbnb cash on cash returnAirbnb occupancy rateAirbnb rental incomeYou can use our real estate heatmap to locate a few neighborhoods which offer the best CoC return rates within your budget. Then you can use the Mashvisor real estate investment calculator to deepen your neighborhood analysis. For each neighborhood, you can access detailed analysis including but not limited to the median property price, traditional and Airbnb cash on cash return, traditional and Airbnb income, and optimal rental strategy. Moreover, you can check out what property type and what number of bedrooms promise to generate the highest return on investment.Step #3: Conduct Detailed Investment Property AnalysisThe next step in the process of buying a positive cash flow rental property is to use the Mashvisor search engine to find the top-performing investment properties in these neighborhoods.For each property, you can view detailed investment property analysis conducted by Mashvisor’s cash on cash return calculator. This analysis includes various metrics such as the listing price, one-time startup costs, recurring monthly expenses, expected rental income, cash flow, cap rate, and – of course – cash on cash return. All these numbers are available for both the traditional and the Airbnb strategy.Moreover, our interactive rental property calculator allows you to easily explore how your expected CoC return will change if you go for a mortgage.Related: How to Do Investment Property AnalysisStep #4: Use Real Estate Investment ToolsLast but not least, in order to conduct all the necessary research and analysis in a timely manner before someone else snatches your opportunity, it’s crucially important to use the best real estate investment tools.The Mashvisor real estate investment software hosts all the tools that you need in order to make profitable rental property investing decisions in 2021 and beyond. Click here now to sign up with a 15% discount for industry-leading real estate data and analytics.Related: 5 Best Real Estate Investment Tools for 2020Amid the overall uncertainty of the past 12 months, the real estate industry demonstrated remarkable resilience. The global pandemic showed once again that real estate is one of the safest and least risky investment strategies. The US housing market was quick to start recovering after the initial shock. Investing in rental properties – both traditional and Airbnb – remained a profitable business. If you are ready to join the hundreds of thousands of successful real estate investors, sign up for Mashvisor now to start searching for your rental property in one of the markets with the highest cash on cash return by city in 2021. Start Your Investment Property Search! START FREE TRIAL AirbnbCash on Cash ReturnInvestor ToolsMarket AnalysisReturn on InvestmentTraditional 0FacebookTwitterGoogle +PinterestLinkedin Daniela AndreevskaDaniela is Marketing Director at Mashvisor. She has been writing about real estate investing for a number of years. Previously, she worked in economic policy research and fundraising. Daniela holds a Master degree in Middle East and Mediterranean Studies from King’s College London. Previous Post House Hacking: How I Got Started in Real Estate at 23 Next Post How to Find Wholesale Properties in Any Real Estate Market Related Posts FAQ in Real Estate Investing: Are Rental Properties Profitable? Real Estate Arbitrage: A Complete Guide for Beginners 5 Best Tools for Airbnb Property Management Buying a Rental Property How to Calculate Cash on Cash Return Without a Rental Property Calculator The Best Real Estate Investing Tips for Beginners Residential Real Estate Investing Is the Best Investment Strategy There Is Where to Invest in the Minneapolis Real Estate Market in 2019 Getting a Rental Property to Cash Flow Positive from Month #1 Learn How to Invest in Rental Properties as a New Investor Jersey City Real Estate Market: Should You Invest Here in 2019? Buying Rental Properties: What Tools Do You Absolutely Need?