Where to Find the Most Profitable Rental Properties in the USA

You’ve heard it all before. Real estate investing is all about location. This blog will show you the top places for rental properties in the USA.

While there are lots of great real estate markets that can give you a good return on investment, the ten rental markets below will not only give you a good ROI but a positive cash flow as well. 

Table of Contents

1. What Makes a City in the USA a Good Place for Investing in Rental Properties?
2. Top 5 Cities for Long Term Rental Properties in the USA
3. Top 5 Cities for Short Term Rental Properties in the USA
4. How to Find Profitable Rental Properties in the USA

As a rental property investor, location should be front and center of your mind if you want to start a rental property business. The right location will ensure you generate enough rental income to make up for the initial property purchase payments and help keep it running smoothly. 

The property’s location plays an important role in any real estate investment. However, not all investors are gifted with the natural ability to spot a good investment location. In this article, we hope to help you learn how to identify what makes for a profitable investment location. We will also show you which real estate tool to use to point you in the right direction. 

That said, if you’re ready to start a thriving career in real estate investing, keep reading.

Related: 40 Best Places for Buying Investment Property in 2023

What Makes a City in the USA a Good Place for Investing in Rental Properties?

Important investment decisions require higher standards, especially if you want to make it big. Almost every investor prepares a certain checklist for what they want in an investment property. As an investor, you should also adhere to a set of standards to qualify potential investment locations. You would want to find an area with the following: 

Growing Business and Economy

One of the most important indicators that a city or town is ripe for investment is when its economy is stable and healthy. Local businesses are thriving. Job opportunities abound, and employment rates are low. Investors are coming in and opening more doors for future businesses. 

Typically, areas with a stable and growing economy give you a better cap rate and cash on cash return than others. Contrary to popular belief, you don’t need to invest in a metropolitan area or big city to thrive in rental property investing. All you need is a real estate market that is steadily growing and showing excellent promise as an economy.

Quality Educational Institutions

Another thing to be on the lookout for is how good the schools are in the area you’re considering. It is a very important decision-maker for families wishing to relocate. Couples with children will most likely make it one of their main considerations when deciding to move to another place. 

If you plan to start a rental business and want to land good long-term tenants, it is something you should keep in mind.  

Public Transport Accessibility

Public transport is something to also consider when looking for a real estate housing market. How do people get around town in a prospective location? Is traffic bad? Are important public amenities easily accessible and walkable where public transport is lacking?

You need to take into account what a location offers in terms of mobility and public transport. Cities and towns with a good public transport system that allows residents and visitors to get around make for great investment locations. 

Access to Public Amenities

On a similar note, places that give residents and visitors easy access to public amenities and facilities rank higher as ideal investment locations. Neighborhoods that have easier access to places such as shopping complexes, dining options, and parks are generally more attractive to potential tenants and visitors. 

The more attractive a place is to residents and tourists, the more profitable they are. 

Safety and Security

One of the most important factors to consider when looking for a location for an investment property is its safety. Take a look at the crime rate in the area of your choice. Although crime is interpreted in different ways in the USA, from DUI to terrorist threats, it is still best to check what the crime rate is in a given location. 

Basically, when looking for safe neighborhoods, you simply need to look at the following: 

• Crime Rate Statistics. Local crime data will give you a general idea of how safe an area is. Go to sites like CityProtect.com or MyLocalCrime.com for more information about your area of interest.
• Police Presence. There are two things to consider here. One, they regularly patrol the neighborhood and respond immediately to calls and emergencies. That’s safe. Two, if police are responding to calls multiple times a week, you may need to reconsider.
• Abandoned Properties. Vacant houses and closed businesses are clear indications of a declining neighborhood. The US Department of Housing and Development links such properties to lower property values and higher crime rates, as well as risks to public welfare.
• Community Events. Communities that typically hold regular events allow residents to meet their neighbors and grow a tight-knit community. 
• Neighborhood Watch Groups. The presence of these groups is a good way of gauging a neighborhood’s safety and security. They are groups of people who take it upon themselves to keep watch over their neighborhood and report suspicious activity.
• Kids Playing Outdoors. Kids at play outside their homes is a good sign that a neighborhood is a safe place to live in. Parents allow their children to play outdoors when they are confident that it’s totally safe for them.

Potential for Growth

Lastly, when evaluating an area for profitability, you need to know how much growth it can offer. Growth is measured in several ways. 

One, there are clear plans for economic growth in the area by way of investors and corporations coming in to create jobs for residents. Two, growth is also represented by housing development in the area. And three, you also need to look at the potential appreciation in value.

If you’re in the market for investment properties, you also need to ensure that the rental market is steadily growing. One way to do it is to take a look at how much cash on cash return you can get on a rental property. Cash on cash return is simply taking your property’s NOI and dividing it by the amount of out-of-pocket expenses used to purchase the property. 

While experts agree that an 8% to 12% cash on cash return is ideal, they are few and far between. At the very least, try to look for markets that offer 2% and above cash on cash return for better profitability in the long run. 

Related: What Is NOI in Real Estate?

Top 5 Cities for Long Term Rental Properties in the USA

We tapped into Mashvisor’s April 2023 data to find the best locations in the USA for long term rentals. We came up with the list below using the following criteria: 

• Each location must have a median property value of no more than $1,000,000;
• Each location must have at least 100 active listings on the long term rental market;
• Each location must offer a minimum of $2,000 in monthly rental income;
• Each location must have a cash on cash return of 2.00% and above; and
• Each location must have a price to rent ratio of no less than 20.

That said, according to cash on cash return value, here are the top five locations for long term rental investments in the US today:

1. Rockledge, FL

• Median Property Price: $491,002
• Average Price per Square Foot: $261
• Days on Market: 64
• Number of Long Term Rental Listings: 174
• Monthly Long Term Rental Income: $2,066
• Long Term Rental Cash on Cash Return: 3.37%
• Long Term Rental Cap Rate: 3.42%
• Price to Rent Ratio: 20
• Walk Score: 14

2. Port Orange, FL

• Median Property Price: $492,998
• Average Price per Square Foot: $255
• Days on Market: 106
• Number of Long Term Rental Listings: 112
• Monthly Long Term Rental Income: $2,036
• Long Term Rental Cash on Cash Return: 3.25%
• Long Term Rental Cap Rate: 3.30%
• Price to Rent Ratio: 20
• Walk Score: 35

3. Ormond Beach, FL

• Median Property Price: $554,452
• Average Price per Square Foot: $307
• Days on Market: 102
• Number of Long Term Rental Listings: 206
• Monthly Long Term Rental Income: $2,290
• Long Term Rental Cash on Cash Return: 3.22%
• Long Term Rental Cap Rate: 3.26%
• Price to Rent Ratio: 20
• Walk Score: 52

4. Tampa, FL

• Median Property Price: $637,707
• Average Price per Square Foot: $591
• Days on Market: 94
• Number of Long Term Rental Listings: 2,145
• Monthly Long Term Rental Income: $2,588
• Long Term Rental Cash on Cash Return: 3.20%
• Long Term Rental Cap Rate: 3.25%
• Price to Rent Ratio: 21
• Walk Score: 46

5. Cape Coral, FL

• Median Property Price: $585,570
• Average Price per Square Foot: $309
• Days on Market: 93
• Number of Long Term Rental Listings: 1,407
• Monthly Long Term Rental Income: $2,224
• Long Term Rental Cash on Cash Return: 3.19%
• Long Term Rental Cap Rate: 3.23%
• Price to Rent Ratio: 22
• Walk Score: 79

Start searching for profitable long term rental properties in the USA now.

Top 5 Cities for Short Term Rental Properties in the USA

If you’re in the market for vacation rentals,  the following list is for you. Using the same April 2023 database from Mashvisor, we found the top five areas with the best cash on cash returns for short term rentals. We used the following filters to prepare the list: 

• Each location should have a median property value of no more than $1,000,000;
• Each location should have no less than 100 active listings on the short term rental market;
• Each location must offer a monthly rental income of $2,000 and up;
• Each location should have a minimum cash on cash return of 2.00%; and 
• Each location must have an occupancy rate of 50% and above.

Ranked from highest to lowest cash on cash return, here are the five best vacation rental markets in the USA today:

1. Harvey, LA

• Median Property Price: $341,114
• Average Price per Square Foot: $156
• Days on Market: 49
• Number of Short Term Rental Listings: 1,029
• Monthly Short Term Rental Income: $3,944
• Short Term Rental Cash on Cash Return: 8.27%
• Short Term Rental Cap Rate: 8.42%
• Short Term Rental Daily Rate: $202
• Short Term Rental Occupancy Rate: 56%
• Walk Score: 52

2. Rileyville, VA

• Median Property Price: $353,448
• Average Price per Square Foot: $234
• Days on Market: 7
• Number of Short Term Rental Listings: 154
• Monthly Short Term Rental Income: $4,105
• Short Term Rental Cash on Cash Return: 8.15%
• Short Term Rental Cap Rate: 8.27%
• Short Term Rental Daily Rate: $235
• Short Term Rental Occupancy Rate: 56%
• Walk Score: 10

3. Columbia, MO

• Median Property Price: $273,020
• Average Price per Square Foot: $132
• Days on Market: 151
• Number of Short Term Rental Listings: 289
• Monthly Short Term Rental Income: $2,837
• Short Term Rental Cash on Cash Return: 7.78%
• Short Term Rental Cap Rate: 7.98%
• Short Term Rental Daily Rate: $145
• Short Term Rental Occupancy Rate: 56%
• Walk Score: 30

4. Columbia Heights, MN

• Median Property Price: $292,297
• Average Price per Square Foot: $150
• Days on Market: 24
• Number of Short Term Rental Listings: 314
• Monthly Short Term Rental Income: $3,693
• Short Term Rental Cash on Cash Return: 7.69%
• Short Term Rental Cap Rate: 7.83%
• Short Term Rental Daily Rate: $159
• Short Term Rental Occupancy Rate: 57%
• Walk Score: 82

5. Bar Harbor, ME

• Median Property Price: $621,900
• Average Price per Square Foot: $402
• Days on Market: 113
• Number of Short Term Rental Listings: 297
• Monthly Short Term Rental Income: $6,594
• Short Term Rental Cash on Cash Return: 7.68%
• Short Term Rental Cap Rate: 7.75%
• Short Term Rental Daily Rate: $321
• Short Term Rental Occupancy Rate: 65%
• Walk Score: 77

Start searching for profitable short term rental properties in the USA now.

How to Find Profitable Rental Properties in the USA

Investing in rental properties in the USA is both an art and a science. It takes a certain amount of creativity to start and maintain a rental property. At the same time, there are also plenty of computations to be made for ROI and rental income projections. 

The excellent thing about investing in the digital age is that you can readily access and take advantage of technology. There are several great online platforms to find real estate investments. One such platform is Mashvisor. 

Launched in 2014, Mashvisor’s been helping countless investors make the right investment decisions. Subscribers are given access to tools such as: 

High-Quality Data

Mashvisor sources its data from places like Zillow, Realtor.com, the MLS, and Airbnb (for short term rental data). It covers nearly every market in all 50 states, which makes it one of the largest (if not the largest) databases out there today. 

Its database is regularly updated, so investors are confident that when they do the math, they only get highly accurate and realistic results.  

Market Finder

One of the great things about Mashvisor is its Market Finder tool. It gives you a bird’s eye view of real estate markets so you can easily compare them side-by-side. It uses a Mashmeter Score that shows you how a particular market performs under a specific category. Other categories you can use as filters are: 

• School Rankings
• Crime and Safety
• Property Value
• Monthly Rental Revenue
• Cap Rate
• Occupancy Rate

Related: How to Find Affordable Investment Properties With Huge Potential

Dynamic Pricing

If you’re interested in investing in a vacation rental property, then you should know how important nightly rates are to the overall success of your business. Mashvisor’s Dynamic Pricing tool allows you to manage your Airbnb listings and set nightly rates with ease. 

All you need to do is link your Airbnb account to the Dynamic Pricing tool and you can manage all of your short term rentals under one platform. Its incredibly intelligent AI taps into the site’s database and lets you adjust your prices using the rental comps in the area so you stay competitive.

Investment Property Calculator

Lastly, the website provides an investment property calculator that makes crunching numbers a lot easier. Real estate investing is a numbers game at the end of the day. The slightest miscalculation can lead to disastrous results. Using a tool like Mashvisor’s calculator will give you peace of mind and greater confidence in your investment property analysis. 

Get access to Mashvisor’s database and other tools to get you on your way to a thriving real estate investing career. Get started on your 7-day free trial today.

Wrapping It Up

Investing in rental properties in the USA is a worthwhile thing to get into. If you can get access to resources that will allow you to get into real estate investing, we say go for it. Real estate remains a reliable investment vehicle that almost always guarantees good returns. The key here is to do your due diligence. 

While obtaining enough resources is excellent, that’s only half the battle. The other half is very much related to acquiring a deeper understanding and familiarity with the real estate market of your interest. You need to put in the work if you want to succeed as a real estate investor. You must research market conditions and growth potential. 

To easily do that, we recommend signing up for Mashvisor’s services. As a Mashvisor subscriber and user, you will get access to high-quality data and relevant information you can use to make wiser decisions. Also, you’ll be able to use tools that will point you in the right direction and show you which markets and properties are worth investing in. 

If you need help in analyzing the profitability of investment properties in different markets across the USA, schedule a demo with Mashvisor today to get access to the best real estate data and tools.