The US real estate market is divided into many regions, each characterized by its best cities and their unique traits. One of these regions is the South. If you’re a Southern investor or you wish to become one, you’re probably wondering where to buy investment property in 2019. Well, you don’t need to wonder any longer! Read this blog to learn which Southern cities to invest in this year!
Related: 10 Best Places to Invest in Real Estate in 2019
Features of the Top Southern Cities
We’ll be focusing on the best places to invest in real estate in the South for both traditional and Airbnb rental properties. Before we dive into that, let’s talk about the two prominent real estate trends in these Southern cities.
The bread and butter of any investment property is cash flow. The most profitable investments generate plenty of cash flow, which leads to a high return on investment. This is one key feature of the Southern US real estate market: its profitability.
Along with profitability comes another key feature: affordability. The US median property price during the last 12 months ranged from approximately $300,000 to $320,000. The median property price in 5 of the 6 best Southern cities we’ll mention range from about $120,000 to $250,000, highlighting the South’s real estate affordability.
As a real estate investor, you can find even more affordable and more lucrative investments in the South. By using Mashvisor, you can find such properties when searching where to buy investment property. To learn more about Mashvisor’s product, click here!
Where to Buy Investment Property: Best Southern Cities for Traditional Investing
The best cities for real estate investment for traditional renting are Eight Mile, AL, Lake Charles, LA, and Jackson, MS.
1. Eight Mile, Alabama
- Median Property Price: $121,350
- Price per Square Foot: $80
- Price-to-Rent Ratio: 10
- Rental Income: $1,056
- Cap Rate / Cash on Cash Return: 4.9%
Buying an investment property in Eight Mile, Alabama is a bankable investment. With an average traditional rental income of $1,056 and return on investment of 4.9%, there are many opportunities for positive cash flow in the city. To cap it all off, the city’s median property price is slightly over $121,000, the most inexpensive on this list. Eight Mile is the quintessential answer when asking “Where to buy investment property in the South?”
2. Lake Charles, Louisiana
- Median Property Price: $225,195
- Price per Square Foot: $116
- Price-to-Rent Ratio: 10
- Rental Income: $1,826
- Cap Rate / Cash on Cash Return: 4.8%
Lake Charles is a city that is on the up and up. With a projected 10-year job growth of a whopping 54.2%, compared to the national 33.5%, the city will most definitely draw in more residents. Here’s another reason why Lake Charles is a great place to buy an investment property: it is in the top 20% for appreciation nationally. These trends, along with the city’s inexpensive prices and high rental income, make Lake Charles a top destination in both the Southern real estate market and the overall US housing market 2019.
3. Jackson, Mississippi
- Median Property Price: $213,511
- Price per Square Foot: $62
- Price-to-Rent Ratio: 14
- Rental Income: $1,285
- Cap Rate / Cash on Cash Return: 3.3%
As previously mentioned, affordability is a selling feature of the Southern real estate market. Not only is Jackson, Mississippi a hotbed of inexpensive real estate properties, its cost of living is also affordable. The city’s cost of living is 10.7% lower than the US average. The traditional opportunities in Jackson are magnified by its profitability, as it is home to some of the most profitable investments in the state.
Related: Location, Location, Location: What Makes for the Best Place to Invest in Real Estate?
Where to Buy Investment Property: Best Southern Cities for Airbnb Investing
What about Airbnb? Where should you buy investment property for short-term renting in Southern cities? According to Mashvisor, these cities are Birmingham, AL, Tuscaloosa, AL, and Charlottesville, VA.
1. Birmingham, Alabama
- Median Property Price: $236,556
- Price per Square Foot: $138
- Price-to-Rent Ratio: 17
- Rental Income: $2,208
- Cap Rate / Cash on Cash Return: 5.1%
- Occupancy Rate: 49%
Birmingham, Alabama draws in many tourists from across the nation, visiting the city for its history. Airbnb investors have been benefiting from this success, earning a lot of positive cash flow and high return on investment. Airbnb is fully legalized in the city as well. Its tax rules include a 4-5% State Lodging Tax and a City 6.5% Lodging and Hotel Tax.
2. Tuscaloosa, Alabama
- Median Property Price: $250,277
- Price per Square Foot: $128
- Price-to-Rent Ratio: 23
- Rental Income: $3,285
- Cap Rate / Cash on Cash Return: 8.5%
- Occupancy Rate: 44%
Another Alabama city, Tuscaloosa is an excellent Airbnb city in the Southern US real estate market. Like Birmingham, Airbnb is legalized in the city, and investors must pay the aforementioned State Lodging Tax and a city 11% Lodging Tax. Tuscaloosa is rich in history, arts, sports, and Airbnb return on investment. With an ROI of 8.5%, Tuscaloosa is by far one of the best places for where to buy investment property in the South.
3. Charlottesville, Virginia
- Median Property Price: $481,967
- Price per Square Foot: $205
- Price-to-Rent Ratio: 25
- Rental Income: $3,864
- Cap Rate / Cash on Cash Return: 5.0%
- Occupancy Rate: 58%
Charlottesville, or C’ville, is the last entry on our list of where to invest in real estate in the South, but it certainly isn’t the least. Airbnb is legal in Charlottesville, and investors must pay a 7% Transient Occupancy Tax, among other regulations. While it is the most expensive of the Airbnb Southern cities on this list, it also has the highest Airbnb rental income average.
Related: Short-Term Rental Strategy: Best Cities for Airbnb Rental Income
All in all, the South is one of the most affordable and profitable regions in the US real estate market. To learn where to buy investment property in the best Southern cities, click here to start your 14-day FREE trial with Mashvisor!