‘Invest where you live’ is one of the best pieces of advice we can give investors if they are looking for ways to make big financial wins long term in real estate investing.
In this blog post, we dissect why investing in international real estate is a bit more challenging than investing in nearby real estate markets as well as give you a breakdown of the best cities to invest in real estate this year. We will give you both sides of the story and leave it up to you to decide what is the best way for you to make money in real estate investing for 2018 and onward.
Related: Is the 2018 US Housing Market a Seller’s Market or a Buyer’s Market?
Go Big or Go Home?
When it comes to real estate investing, it is definitely better to go home and by this, we mean investing locally and/or in the country you reside in. For the purpose of this blog post, we will focus on the best cities and neighborhoods for buying real estate investments in the US real estate market for 2018. But before we do, here are the top challenges real estate investors will face if they choose to invest in an international real estate market today.
Top Challenges of an International Real Estate Market
1. Owning and managing an investment property out of state is tough if real estate investors do not have sufficient hands-on experience and knowledge in real estate investing.
2. It is especially difficult to stay up to date with the constant changes in the market if you are not living there.
3. There will be a lag in adapting your real estate strategy and responding to changes in the market that could signal the need to sell before market prices plummet.
4. Investing in an international real estate market is much harder to manage than a local market, and it is also very expensive.
5. Hiring the wrong property management can have severe consequences on the bottom line.
Best Cities to Invest in the US Real Estate Market in 2018
To switch it up, here is the list of best cities to invest in the US real estate market this year and win big!
#1 US real estate market: Orlando, Florida
- Job Growth Rate (1 Year): 4.2%
- Unemployment Rate: 3.1%
- Population Growth Rate (5 Year): 14.2%
- Equity Growth Rate (5 Year): 66.40%
- Cost of Living Index: 70.78
- Airbnb Rental Income: $1,156
- Airbnb Cash on Cash Return and Cap Rate: 1.46%
- Traditional Rental Income: $1,554
- Traditional Cash on Cash Return and Cap Rate: 1.48%
#2 US real estate market: Tampa, Florida
- Job Growth Rate (1 Year): 2.1%
- Unemployment Rate: 3.6%
- Population Growth Rate (5 Year): 8.7%
- Equity Growth Rate (5 Year): 4.6%
- Cost of Living Index: 71.82
- Median Property Price: $368,521
- Airbnb Rental Income: $1,481
- Airbnb Cash on Cash Return and Cap Rate: 2.03%
- Traditional Rental Income: $1,586
- Traditional Cash on Cash Return and Cap Rate: 1.62%
#3 US real estate market: Cleveland, Ohio
- Job Growth Rate (1 Year): 1.2%
- Unemployment Rate: 6.1%
- Population Growth Rate (5 Year): -1%
- Equity Growth Rate (5 Year): 15.1%
- Cost of Living Index: 69.62
- Airbnb Rental Income: $567
- Airbnb Cash on Cash Return and Cap Rate: 0.26%
- Traditional Rental Income: $917
- Traditional Cash on Cash Return and Cap Rate: 0.43%
#4 US real estate market: Columbus, Ohio
- Job Growth Rate (1 Year): 2.35%
- Unemployment Rate: 3.4%
- Population Growth Rate (5 Year): 7.08%
- Equity Growth Rate (5 Year): 24.39%
- Cost of Living Index: 67.45
- Median Property Price: $255,303
- Airbnb Rental Income: $1,455
- Airbnb Cash on Cash Return and Cap Rate: 1.33%
- Traditional Rental Income: $1,241
- Traditional Cash on Cash Return and Cap Rate: 1.23%
#5 US real estate market: Chicago, Illinois
- Job Growth Rate (1 Year): 0.7%
- Unemployment Rate: 4.5%
- Population Growth Rate (5 Year): 0.45%
- Equity Growth Rate (5 Year): 18%
- Cost of Living Index: 77.1
- Airbnb Rental Income: $1,714
- Airbnb Cash on Cash Return and Cap Rate: 0.59%
- Traditional Rental Income: $1,866
- Traditional Cash on Cash Return and Cap Rate: 0.71%
#6 US real estate market: Kansas City, Missouri
- Job Growth Rate (1 Year): 1.3%
- Unemployment Rate: 3.9%
- Population Growth Rate (5 Year): 4.5%
- Equity Growth Rate (5 Year): 16.5%
- Cost of Living Index: 66.36
- Airbnb Rental Income: $803
- Airbnb Cash on Cash Return and Cap Rate: 1.15%
- Traditional Rental Income: $1,088
- Traditional Cash on Cash Return and Cap Rate: 1.76%
#7 US real estate market: Atlanta, Georgia
- Job Growth Rate (1 Year): 2.9%
- Unemployment Rate: 4.5%
- Population Growth Rate (5 Year): 9.2%
- Equity Growth Rate (5 Year): 53.8%
- Cost of Living Index: 72.64
- Airbnb Rental Income: $1,882
- Airbnb Cash on Cash Return and Cap Rate: 2.39%
- Traditional Rental Income: $1,793
- Traditional Cash on Cash Return and Cap Rate: 1.82%
#8 US real estate market: Houston, Texas
- Job Growth Rate (1 Year): 0.5%
- Unemployment Rate: 4.5%
- Population Growth Rate (5 Year): 14%
- Equity Growth Rate (5 Year): 44.2%
- Cost of Living Index: 63.04
- Airbnb Rental Income: $1,990
- Airbnb Cash on Cash Return and Cap Rate: 1.41%
- Traditional Rental Income: $1,819
- Traditional Cash on Cash Return and Cap Rate: 1.34%
Related: The 20 Best Places to Buy a Vacation Home in the US at the Beginning of 2018: Part 1
Tips for Investing in an International Real Estate Market
If you are still keen on investing in an international real estate market this year, make sure you have the following in mind to find positive cash flow properties.
1. Have your finances in order first and foremost
If you are planning to invest in an international real estate market, you must have the financial means to buy lucrative real estate investments with a hefty price tag.
2. Check the state laws before you jump head first
Beware of the state laws and property taxes in the location you are planning to invest in. If the taxes are too high, it might eat into your profits and burn a deep hole in your pocket.
3. Price to rent ratio
Use price to rent ratios and be sure to calculate the capitalization rate, the cash on cash return, the occupancy rate, and the rental income. The price to rent ratio, specifically, gives real estate investors a good idea of where to buy real estate for profit.
Related: The Best Real Estate Markets to Invest in the US for Price to Rent Ratio
4. Keep an eye on the latest trends in the market
It goes without saying the importance of tuning into the market conditions and general trends of the international real estate market you want to invest in.
5. Find the right property management team
Invest in the right people and the right property management team to run your real estate properties internationally.
Conclusion
Investing in real estate is a very lucrative business proposition and for most, making money in real estate is definitely feasible. There is no roadmap and the locations and opportunities are plentiful, to say the least. Whether you choose to invest in an international real estate market or US real estate market depends on your business vision and risk tolerance. All in all, investing locally should be your first step before you branch out and explore international real estate markets.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
