St. Louis Real Estate 2020: 4 Reasons to Invest

The Midwest real estate market is popular among investors because here, they can always find affordable and profitable investment properties. If you’re looking to invest in one of the best Midwest markets in 2020, then consider the St. Louis real estate market! To learn why and where to invest in St. Louis investment properties, keep reading.

Related: 10 Best Places to Invest in Real Estate in 2020

St. Louis Real Estate Market: Mashvisor’s Investment Data

First thing’s first- why is the St. Louis housing market a top investment location? The answer becomes clear when we look at both the St. Louis market trends for 2020 and the housing market data.

We’ll cover the details of St. Louis real estate trends shortly. As for the data, we’ve compiled it for you below from Mashvisor’s investment property calculator. If you’re interested in learning more about how Mashvisor’s tools can help you with buying investment property, click here! In the meantime, take a look at the data for the St. Louis real estate market.

• Price per Square Foot: $125
• Price-to-Rent Ratio: 17
• Traditional Rental Income: $1,176
• Traditional Cap Rate / Cash on Cash Return: 1.6%
• Airbnb Rental Income: $2,115
• Airbnb Cap Rate / Cash on Cash Return: 3.7%
• Airbnb Occupancy Rate: 53%

Related: 5 Best Real Estate Investment Tools for 2020

Why You Should Invest in St. Louis Real Estate in 2020

So, why should you invest in St. Louis real estate? By learning about the following four St. Louis housing market trends, you’ll understand why!

• St. Louis Property Prices Will Be Affordable

As mentioned earlier, because it is part of the Midwest, St. Louis real estate will be very affordable. The median St. Louis investment property price is $242,233, as seen from Mashvisor’s data. This is lower than both the state median ($250,429) and the national median ($299,400). Many of the best neighborhoods in the city have low St. Louis house prices as well (these are listed below).

• Traditional and Airbnb Real Estate Investing Will Be Profitable

The second reason why investing in St. Louis real estate is smart is the fact that it’s profitable. In fact, both traditional and Airbnb rental properties are expected to remain lucrative in 2020. You will be able to find some of the most profitable investments in the Missouri housing market in St. Louis.

Want to view a few of them now? Click here to see St. Louis investment properties for sale that have a high rental income and return on investment.

• Airbnb Will Be Legal, But Will Come with High Taxes

Fortunately for Airbnb St. Louis real estate investors, Airbnb is legal in the city. This topic is extremely detailed, so we recommend you visit the City of St. Louis website to learn it all. We will, however, discuss the two most notable aspects of St. Louis Airbnb laws here.

Firstly, non-owner occupied rentals are allowed. Unfortunately, there has been some controversy regarding Airbnb regulation and taxes. In early 2019, the City Council began reclassifying St. Louis short-term rentals as commercial properties. This reclassification requires Airbnb hosts to pay a 32% property tax rate. Airbnb hosts are also required to pay a 3.5% Hotel/Motel Room Sales Tax and a 3.75% Convention and Tourism Tax.

Because the property tax spike received a lot of negative feedback, some expect the situation to change in 2020. Regardless, St. Louis real estate investors can find profitable Airbnb short-term rentals using Mashvisor’s Rental Property Finder.

• Demand for Real Estate Property Will Grow

Finally, demand for St. Louis real estate will grow in 2020. The demand will come from both real estate investors looking to buy property as well as tenants looking for rental properties. So owning a rental property in St. Louis next year will be profitable whatever real estate investment strategy your choose- flipping or renting out.

According to the PwC’s Emerging Trends in Real Estate 2020 report, St. Louis ranked highly for both overall real estate prospects and homebuilding prospects. Zillow reports that the city is a hot seller’s market as opposed to a buyer’s market. Despite the competition, demand from investors will continue to grow in St. Louis. This growth is caused by a recent expansion in the city’s metro area and suburbs.

An inexpensive cost of living is what continues to drive demand for rental properties in the St. Louis real estate market. And while you might expect that with affordable house prices and an affordable cost of living, more people would be buying homes than renting, there is actually a high population of tenants in the city. According to NeighborhoodScout, about 58 percent of the city’s residents live in St. Louis rental properties.

Best Neighborhoods in St. Louis for Buying Traditional Rentals

We can tackle our final question: Where to buy rental property in the St. Louis real estate market? According to Mashvisor, the following neighborhoods are the best for traditional St. Louis houses for sale.

Vandeventer

• Median Property Price: $177,339
• Price per Square Foot: $95
• Price-to-Rent Ratio: 9
• Traditional Rental Income: $1,640
• Traditional Cap Rate / Cash on Cash Return: 11.0%

JeffVanderLou

• Median Property Price: $125,000
• Price per Square Foot: $77
• Price-to-Rent Ratio: 10
• Traditional Rental Income: $1,070
• Traditional Cap Rate / Cash on Cash Return: 3.3%

Ellendale

• Median Property Price: $333,888
• Price per Square Foot: $167
• Price-to-Rent Ratio: 15
• Traditional Rental Income: $1,896
• Traditional Cap Rate / Cash on Cash Return: 3.2%

Dutchtown

• Median Property Price: $120,234
• Price per Square Foot: $58
• Price-to-Rent Ratio: 11
• Traditional Rental Income: $877
• Traditional Cap Rate / Cash on Cash Return: 3.2%

Holly Hills

• Median Property Price: $146,368
• Price per Square Foot: $89
• Price-to-Rent Ratio: 12
• Traditional Rental Income: $985
• Traditional Cap Rate / Cash on Cash Return: 2.6%

Best Neighborhoods in St. Louis for Buying Airbnb Rentals

What about Airbnb St. Louis rentals? According to Mashvisor, the best neighborhoods in the St. Louis real estate market for Airbnb are the following:

Columbus Square

• Median Property Price: $163,600
• Price per Square Foot: $115
• Price-to-Rent Ratio: 13
• Airbnb Rental Income: $1,093
• Airbnb Cap Rate / Cash on Cash Return: 6.6%
• Airbnb Occupancy Rate: 61%

Gravois Park

• Median Property Price: $104,781
• Price per Square Foot: $54
• Price-to-Rent Ratio: 12
• Airbnb Rental Income: $1,261
• Airbnb Cap Rate / Cash on Cash Return: 5.7%
• Airbnb Occupancy Rate: 57%

Holly Hills

• Median Property Price: $146,368
• Price per Square Foot: $89
• Price-to-Rent Ratio: 12
• Airbnb Rental Income: $1,643
• Airbnb Cap Rate / Cash on Cash Return: 5.5%
• Airbnb Occupancy Rate: 60%

Ellendale

• Median Property Price: $333,888
• Price per Square Foot: $167
• Price-to-Rent Ratio: 14.68
• Airbnb Rental Income: $2,837
• Airbnb Cap Rate / Cash on Cash Return: 5.4%
• Airbnb Occupancy Rate: 62%

Clifton Heights

• Median Property Price: $183,929
• Price per Square Foot: $145
• Price-to-Rent Ratio: 13
• Airbnb Rental Income: $2,253
• Airbnb Cap Rate / Cash on Cash Return: 5.2%
• Airbnb Occupancy Rate: 60%

There are even more profitable neighborhoods in St. Louis for Airbnb and Traditional rentals! Check them out here.

 Related: Airbnb Occupancy Rate 2020: What to Expect

The St. Louis real estate market is undoubtedly a top-tier market in the Midwest rental market 2020. To find an affordable and profitable St. Louis real estate investment, click here to start your 14-day FREE trial with Mashvisor!