Every real estate investor knows that when buying a rental property, the location plays a tremendous role in the process of making money in real estate. Finding the best places to buy rental property requires a lot of patience and hard work. Many real estate investors assume that by buying an investment property in one of the top, most famous, housing markets, they will start making money in real estate straight away. The reality is, however, that in order to find the best places to buy rental property, a real estate investor should perform various types of analysis, such as real estate market analysis and investment property analysis. What is surprising is the fact that it is not always the case that the hottest real estate markets are the most profitable ones. To prove this, we will reveal ten surprising best places to buy rental property. We will review them on the basis of the rental strategy suitable for income properties in the chosen housing markets. Here we go.
#1 The Best Places to Buy Rental Property: Traditional Rental Strategy
Traditional rentals are primarily good investment opportunities in places which attract tenants long-term. Real estate investors need to make sure that there is a demand for such properties in a specific market before purchasing an investment. If chosen with care, a traditional rental property might result in generating constant positive cash flow for its owner. Here are some of the surprising best places to buy rental property and rent it out long-term. To understand how to find the best long-term rental properties, please visit “Traditional Rentals: Finding Income Properties Using a Heatmap.”
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Camden, New Jersey
Camden is a city in the state of New Jersey. The city is situated directly across the Delaware River. The city has a population of around 77,000 people. It is interesting to observe that 45% of the economy is run by the “eds and meds” sector. There are many job opportunities in the city which increase the demand for traditional rental properties.
Median Property Price: $83,858
Traditional Rental Income: $998
Traditional Cash on Cash Return: 4.74%
Traditional Cap Rate: 4.74%
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Wareham, Massachusetts
Wareham is a university hometown located in Plymouth County, Massachusetts. The city has nearly 22,000 inhabitants and it is famous for its cranberry growers. Despite the fact that the city is still an attractive summer destination, there is a strong preference for long-term rental properties.
Median Property Price: $331,064
Traditional Rental Income: $2,656
Traditional Cash on Cash Return: 4.47%
Traditional Cap Rate: 4.47%
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Clarkstown, New York
Clarkstown is the most densely populated city in Rockland County in the state of New York. This makes it one of the attractive real estate markets for long-term investment properties. An additional reason for choosing Clarkstown when wondering where to invest in real estate is the fact that the city has numerous business districts. Consequently, it attracts many long-term tenants.
Traditional Rental Income: $1,880
Traditional Cash on Cash Return: 4.31%
Traditional Cap Rate: 4.31%
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Toledo, Ohio
Toledo is a city full of culture situated in the state of Ohio. The city is the ideal destination for investing in an income property for several reasons. First of all, there is a university located in Toledo. Respectively, all the students are in need of long-term accommodation. Besides that, there are many companies, thus, work possibilities in the city. As you can imagine, the demand for traditional rental properties is high. Therefore, Toledo can be considered as one of the best places to buy rental property.
Median Property Price: $86,480
Traditional Rental Income: $1,012
Traditional Cash on Cash Return: 4.1%
Traditional Cap Rate: 4.1%
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Fairbanks, Alaska
Fairbanks is the biggest city of the Interior region in the state of Alaska. The city is a famous sports center with a well-developed economy. The population in Fairbanks is around 33,000 inhabitants. Additionally, University of Alaska Fairbanks has its base in the city. All of this makes Fairbanks one of the desired housing markets for financing investment properties at the moment.
Median Property Price: $$256,561
Traditional Rental Income: $$1,814
Traditional Cash on Cash Return: 4.09%
Traditional Cap Rate: 4.09%
#2 The Best Places to Buy Rental Property: Airbnb Rental Strategy
A short-term rental property, on the other hand, should be located in a place which attracts travelers. Such places are typically tourist destinations and business meeting points. The benefit of such an investment property is the fact that it typically generates higher rental income per night compared to a traditional income property. However, it requires more work as well. Anyway, here are some of the surprising best places to buy rental property and rent it out as an Airbnb. You can learn more about short-term rentals by reading “Real Estate Investment Strategies Guide: Short Term Rentals.”
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Sonoma, California
Sonoma is a city full of culture and history in the state of California. Moreover, the city is located in a winemaking region. It attracts many tourists yearly due to its galleries and the colonial-era Sonoma Plaza. Buying an investment property in Sonoma might turn out to be one of the greatest decisions a real estate investor can make.
Median Property Price: $1,355,975
Airbnb Rental Income: $7,257
Airbnb Cash on Cash Return: 5.27%
Airbnb Cap Rate: 5.27%
Airbnb Occupancy Rate: 59.86%
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Cathedral City, California
Cathedral city is situated between Rancho Mirage and Palm Springs in California. The city is one of the best places to buy rental property and rent it out as an Airbnb income property. The reason for buying a rental property in the city is that it hosts many guests every year. Cathedral City has various attractions and leisure activities to offer to its visitors. Moreover, the city hosts various events throughout the year which make it a strongly desired destination.
Median Property Price: $314,840
Airbnb Rental Income: $3,050
Airbnb Cash on Cash Return: 5.26%
Airbnb Cap Rate: 5.26%
Airbnb Occupancy Rate: 42.19%
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Key West, Florida
Key West is an island city in Florida and it seems to be an amazing place for buying an investment property and renting it out as a vacation home. With its beachy ocean views, Key West is truly one of the places where to invest in real estate.
Median Property Price: $948,095
Airbnb Rental Income: $7,659
Airbnb Cash on Cash Return: 5.22%
Airbnb Cap Rate: 5.22%
Airbnb Occupancy Rate: 66.78%
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Ypsilanti, Michigan
Ypsilanti, or Ypsi for shorter, is a city in Michigan with a broad history and many cultural sights to see. Such are, for instance, the Michigan Firehouse Museum, the Ypsilanti Water Tower, the Dreamland Theater and many more. Airbnb income properties in Ypsi prove to be a smart real estate investing choice.
Median Property Price: $212,426
Airbnb Rental Income: $1,461
Airbnb Cash on Cash Return: 4.6%
Airbnb Cap Rate: 4.6%
Airbnb Occupancy Rate: 47.24%
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Lake Worth, Florida
The city of Lake Worth is located in Palm Beach County, Florida. The city is famous for its water-related destinations, such as the Lake Worth Lagoon and the Oceanfront Park Beach. Additionally, the city has many parks and a botanical garden, which are an interesting sight for the incoming tourists. Here is why buying a rental property in Lake Worth is worth your attention.
Median Property Price: $305,070
Airbnb Rental Income: $2,243
Airbnb Cash on Cash Return: 4.54%
Airbnb Cap Rate: 4.54%
Airbnb Occupancy Rate: 51.36%
#3 Finding the Best Places to Buy Rental Property: The Investment Property Calculator
As previously mentioned, finding the best places to buy rental property is strongly related to conducting comparative market analysis and investment property analysis. However, the completion of real estate market analysis and investment property analysis is a difficult task to finish manually. An investment property calculator is a tool which can help you with this assignment in a fast and efficient way.
To illustrate the effectiveness of the tool for conducting real estate market analysis and investment property analysis, just look at the data above. All of the data above for the different real estate markets have been acquired through Mashvisor’s investment property calculator. Besides comparative market analysis, the tool provides information for individual income properties. This way, in addition to deciding on where to invest in real estate, you can choose the most profitable investment properties. To learn more about this tool, make sure to read “Investment Property Calculator For Analyzing Real Estate Investments.”
To start looking for and analyzing the best places to buy rental property and start making money in real estate, click here.
