With the current COVID-19 outbreak, real estate markets across the country have been seriously affected by the lockdowns. This has left many investors wondering whether to buy real estate this year if they can even be sure that they will have the finances available.
The next question is where to purchase property; many markets are in disarray and not all real estate markets are guaranteed to perform well when things go back to normal. Ideally, even under present circumstances, you’d like to buy something affordable now that will appreciate in value in the future.
Real estate investors around the country have expressed their concern for the housing market in light of the COVID-19 outbreak, but the proposition of lower property prices in the hottest markets could make this a good time to acquire a property. When it comes to rental property specifically, right now the market is in a slight downturn; however, this is temporary and experts predict that markets that performed well before the outbreak will do so again. A silver lining has already appeared in the form of relief measures that are being implemented for landlords and tenants in many different states.
Under normal investing circumstances, for rental properties to perform well there should ideally be some sort of job or population growth in the area, and a measure of affordability for potential tenants. Many of these factors have been thrown for a loop with current global events, but they are also the same factors that will dictate how successfully the market will rebuild after the pandemic.
These are some of the best places to buy rental properties in the USA right this year in light of the recent COVID-19 outbreak:
Orlando, Florida
Just prior to the outbreak of COVID-19 in the US, the demand for single-family homes had taken off in Orlando, Florida. Orlando has more to offer than just the happiest place on earth, boasting both a great climate and buzzing nightlife scene. This central region has enough real estate performance potential to attract investors, with the average property in Orlando costing $260,915 and home values going up 3.4% over the past year. This is one of the main reasons that Orlando is such a hot spot for buying and selling rental property.
So why should investors be on the lookout for property in this market? In the coming months of 2020, the home prices in Orlando are predicted to decrease by -1.6%, lowering the cost of entry significantly for those looking to acquire a home in this sought-after real estate market.
Many home seekers in this area are choosing to rent instead of buy due to high local property costs, even if there are more affordable surrounding areas they could choose to purchase their own homes in. This is because the location is the biggest draw with potential tenants and the sheer number of renters in Orlando reflects how high the demand is for rental properties. The other factor that investors should consider when looking to invest is that rental demand could increase due to the economic fallout caused by a nationwide lockdown. Investing in foreclosures in Florida can take the savings for the investor even further.
The chances are good that the Orlando real estate market will recover if given some time since it was ranked as one of the best places to buy a house by Forbes for multiple years in a row. Some of the best local neighborhoods for budding landlords to buy into are Lake Nona, Kissimmee, Oviedo, Orlando, and Winter Park as they have some of the highest demand and most consistent occupancy rates. Investors interested in buying rental homes in Orlando are likely to find tenants quickly.
Tampa, Florida
Another ranking for Florida on the list, Tampa on the west coast is another area showing good potential for rental property investment this year. Tampa is home to around 400,000 people and has popular rental locations on offer like Downtown, Harbour Island, North Hyde Park, and more. The biggest employer in the area is a large local air force base, and when it comes to rental property, Tampa has a strong local economy which has been called one of the fastest-growing throughout the country.
The other thing Tampa has going for it is a strong local job market with an unemployment rate of only 3% pre-lockdown. At the time of writing, unemployment rates in Tampa had increased to 4.3%, still relatively low compared to some of the worst affected cities in the country. This is because Tampa has always had a focus on ensuring job growth and has a well-established local financial and healthcare sector, good news for investors looking for a wide tenant base to draw from.
The average property price in Tampa is $251,387, with a forecasted decrease of 1.2% this year, very similar to Orlando’s forecasted numbers for the same timeframe.
The job growth rate in Tampa has been over two-thirds higher than the national average in the past year, and Tampa is also the home headquarters for several Fortune 500 companies which contribute significantly to the local employment rates and economy. With so many sectors creating employment opportunities, Tampa should get to the other side of the pandemic relatively unscathed, and in fact, these factors altogether make for some of the best potential in real estate investing.
Dallas, Texas
Dallas is one of the most populous areas in the country, built on the historical foundation of the oil industry, is now better known for its skyscraper skylines. Over the past few years, many companies from larger metros like Los Angeles have made the move to Dallas as a more affordable alternative for their business headquarters, and moves like these have caused a new local employment boom in the area.
The reasons for relocating to Dallas are clear; the state of Texas has made many provisions to create business-friendly environments. Some of the benefits these companies are hoping to gain include lower taxes, more affordable employee housing, and lower overall cost of living.
The draw for rental tenants is very similar – Dallas is slightly more affordable than many other real estate markets with the same scale of job opportunities and as a result, the local population is expected to double in the next 15 years.
The average property in Dallas comes in at a value of $226,145, and experts predict that this number will fall by nearly 2.5% over the rest of 2020. This is great timing for property buyers looking to enter the market this year, and the high demand for rental properties will ensure that your investment will be lucrative in years to come too.
Cleveland, Ohio
Cleveland, Ohio has one of the best-performing real estate markets in the country following a time of reinvention, providing investors with good cash flow and growth potential. The area is known for its’ cultural imprint, being home to many museums, art galleries, and theatres. On the business side, Cleveland is amongst the biggest economic regions within the US, bolstered by a recent influx of millennial buyers and renters looking for job opportunities and a lower cost of living in one package.
Over the past few years, there has been a 139% increase in the number of millennials who hold bachelor’s degrees moving to the Cleveland area. Many attribute this to the redevelopment of Downtown Cleveland that has taken place since 2010.
This redevelopment is renewing previously devalued neighborhoods, which will steadily increase property values over the next few years. Largescale redevelopments of this nature create more work opportunities and draw individuals to buy or rent due to the convenience of the location.
What’s great about Cleveland for rental property investors is that the barrier to entry is low; real estate in this area is much more affordable. The average property price here comes in at $68,757 according to Zillow, and the market is heating up rapidly. Experts predict that there will only be a slight decrease in market performance due to COVID-19 this year, and Cleveland has been ranked as one of the top places to earn good rental returns.
Huntsville, Alabama
Huntsville, Alabama has recently been listed as one of the top communities leading economic recovery in the country and is showing new potential for rental real estate investment. Huntsville is known to be one of the country’s most affordable investing markets paired with a low unemployment rate of 5%.
The biggest draw for tenants in this area is quality tertiary education options. There are several prestigious universities that are located in Hunstville, such as Alabama A&M University, Oakwood University, and the University of Alabama, and Huntsville, ranked as some of the top 50 best places for education and business in the country by Forbes.
The biggest employer in the area is the military, which provides over 30,000 jobs, followed by the NASA Marshall Space Flight Center – the second most prominent job provider. The median property price is $183,387, falling in the middle of the range for this list, with a positive forecast for investors once markets start to normalize again.
Final Thoughts
It may be difficult to think about acquiring property under the circumstances that are affecting the world right now, but some of the greatest deals have been found in highly volatile markets. It’s up to the investor that has the resources available to take advantage of the lower prices in popular real estate markets while they can in order to benefit down the line. The key to choosing a successful property investment in the current investing environment is much the same as it always was, and to find the best value deals, investors should rely on their house flipping market analyses.
The best places to buy a rental property in the USA will vary depending on the investor’s goals, but the options on this list indicate that there are locations that are suitable for every type of investor’s financial resources.
Real estate has historically been the strongest asset class, and investors can rest assured that rental markets will recover after the pandemic is over. Buying into stronger markets now at a lower price could lead to a big pay off as your property appreciates over time. Where you choose to invest will ultimately depend on your investment goals, the capital that is available to you, and the strength of the local markets to recover from this pandemic.