The Short Answer
In recent years, the real estate market has experienced significant fluctuations, posing challenges for those purchasing an investment property. However, savvy real estate investors have been able to achieve solid returns by focusing on the right areas for their investment property. With property values appreciating rapidly, the single-family rental market in the U.S. has become a prime investment property option, especially as commercial rentals have declined due to the work-from-home trend.
Important factors to consider when choosing an area for real estate investment include rising home values, positive population growth, high rental demand and low vacancy rates, high rental yield, low property taxes and rental laws that are fair for landlords.
12 Best Places to Buy Rental Property in USA
Over the last few years, the real estate market has been a rollercoaster ride, particularly for homebuyers. Real estate investors, however, have been able to earn good returns on their property investments, in the right area. With homes appreciating in value at record speeds, investors have been turning to rental investment property more. In fact, the single-family rental market in the US has become a solid place for investors to earn consistent returns, as opposed to commercial rental investment property which took a significant knock after the work-from-home trend began.
Let’s take a closer look at 12 of the best cities to buy rental property in the US, and why these cities are a great place to buy property, for investors who want to generate a steady monthly income through rental property investment.
Key Factors When Analyzing Rental Property
Investors who wish to delve into the world of rental property investment need to know how to analyze each property, to figure out whether it is going to be a good investment or not. The first step is choosing the right areas for rental real estate, and this requires knowing what to look for in each area. Consider the following factors, in order to make an informed decision when choosing the area you are going to invest in.
Property Values
One of the biggest indicators that an area is ready for investing, is rising property values. If property values are on the up, this means that your investment is likely to appreciate in value and this is a great place to start when it comes to returns. Home prices can fluctuate significantly each year, so it’s a good idea to find an area where prices are steadily rising, instead of rising and falling extensively.
Population Growth
Population growth in an area is always a good indicator of a robust economy, which bodes well for rental real estate investment properties. Population growth often goes hand in hand with high employment rates and a job-friendly economy, as well as a more affordable cost of living. Find an area where the population is growing and there is an abundance of job opportunities, which is typically a sign of higher demand for rental properties. It all comes back to the basics of supply and demand, the higher the demand for rental properties and the lower the supply, the better your chances of making a rental property successful.
Property Taxes & Laws
Not all areas have rental laws that are in favor of the landlord in certain situations and some can be tricky to navigate. Consider the rental laws in each area, before you pick a place to invest, as some places have fair laws, and others have laws that make life as a landlord more difficult. This will be a large factor for you, if you need to evict defaulting tenants, for example, and it can have a big impact on your ROI.
Along with this, property taxes are worth considering. Choosing an area with lower property taxes will be in your best interests, for rental real estate investment purposes.
Rental Demand & Occupancy Rates
The area where you choose to purchase a rental property investment should ideally have high rental demand and low occupancy rates. This goes back to the supply and demand equation we mentioned above. You’ll want to invest in an area where you’re not likely to have a high percentage of time where your property will be vacant or unoccupied as this is lost income for an investor. An area with a high demand ensures that tenants can be found quickly, and the property can start generating an income fast.
Rental Yield
Investing in a rental property means you’re looking to generate a rental income, and naturally this would mean generating the highest possible income. Looking at the gross rental yield in an area is a good factor to consider because this represents the percentage of a property’s cost that is recouped annually through rental income, before expenses are deducted. To calculate it, you would divide the gross annual rent by the property’s current market value. Ideally, a gross rental yield of 7% or higher is preferable.
12 Best Cities To Buy Rental Property In USA
1. Athens, Georgia
Athens is a college town in Georgia with a growing population, and one of the best places to buy rental property in USA. A student market is typically one with a high rental demand, and Athens therefore has a high demand for affordable rental housing around the University of Georgia. The number of relocations to Athens is high, with New York homebuyers searching to move into Athens more than any other metro.
As of June 2024, the median home sale price in Athens is $367k, and this is 8.3% higher than the same time last year. The gross rental yield is 40% which is vastly higher than the recommended 7% or higher. In other words, the rental yield will cover on average 40% of the property’s cost can be recouped by the rental income.
| Population | 128,561 |
| Gross rental yield | 40% |
| Median rent | $1,795 |
| Vacancy rate | 6.7% |
| Median home sale price | $367k |
| Home price change y-o-y | +8.3% |
2. Austin, Texas
Austin has rapidly become one of the top rental markets in the country, fueled by the booming technology sector. Tech giants such as Amazon, Facebook and Google have all expanded their operations in the city. This surge in high-paying tech jobs has attracted a wave of educated young professionals from across the US. As a result, the population growth has significantly outstripped new housing construction.
The average home in Austin sells right around the asking price, and the vacancy rate in the city was 18% in 2023, which bodes well for rental real estate buyers who are concerned for their property standing vacant and losing income.
| Population | 974,447 |
| Gross rental yield | 8.48% |
| Median rent | $2,295 |
| Vacancy rate | 6.2% |
| Median home sale price | $586k |
| Home price change y-o-y | +3.7% |
3. Savannah, Georgia
Savannah has a diverse economy that remains robust by generating revenue from tourism, its vibrant port, historic district and more. As such, Savannah has a high demand for vacation rentals, and this is a good space for investors to capitalize on real estate in.
Savannah’s booming tourism sector generates a whopping $4.4 billion a year in revenue, and their tourism holds the economy steady. Homes in Savannah typically sell within 2% of the asking price, and are on the market for about a month.
| Population | 148,004 |
| Gross rental yield | 49% |
| Median rent | $2,200 |
| Vacancy rate | 7.1% |
| Median home sale price | $345k |
| Home price change y-o-y | +5.9% |
4. Jacksonville, Florida
Jacksonville is a seller’s market, despite the struggles the city’s real estate market experienced in 2023, with home prices now on the rise. Jacksonville is a haven for boat enthusiasts, with 198 neighborhoods along the St. Johns river.
Jacksonville is an attractive city thanks to its lower cost of living, and mild weather that attracts people from all over the country. It’s one of the fastest growing cities in the country, and this, coupled with its robust economy and home prices that have risen by 5% over the last year, make Jacksonville a good place for real estate investors to dip their toes in.
| Population | 971,319 |
| Gross rental yield | 44% |
| Median rent | $1,720 |
| Vacancy rate | 7.7% |
| Median home sale price | $315k |
| Home price change y-o-y | +5.0% |
5. Waco, Texas
The bustling real estate market in Waco has lower home prices than many other cities, but an appreciation in value of 30% in the last year according to Texas First National Bank. There are currently 258 rentals available in Waco, and the median rent price is lower than the national average, giving Waco a greater appeal for renters.
The abundance of homes valued under $100,000 creates an enticing rental property market, further enhanced by a strong gross rental yield. Waco’s strategic location between Dallas and Austin adds to its appeal, offering potential for both rental income and property value appreciation.
| Population | 143,984 |
| Gross rental yield | 55% |
| Median rent | $1,450 |
| Vacancy rate | 5.1% |
| Median home sale price | $287k |
| Home price change y-o-y | +0.9% |
6. Lakeland, Florida
Florida is one of the most popular states to invest in 2024, and Lakeland is an attractive area in this state. Lakeland has a large appeal to both families and retirees, driving the demand for rental properties up. Home prices in this area continue to rise as the local housing market remains robust and investment into the Lakeland area provides solid returns.
Lakeland is located near both Tampa and Orlando, which makes it ideally situated for those wanting to commute to these larger cities within an hour. The job market in Lakeland is thriving and the population is expected to grow by 7% over the next year, which bodes well for the rental market going forward, offering investors the opportunity for long-term growth.
| Population | 120,071 |
| Gross rental yield | 52% |
| Median rent | $1,800 |
| Vacancy rate | 9.6% |
| Median home sale price | $307k |
| Home price change y-o-y | +6.9% |
7. Oshkosh, Wisconsin
With a large home price growth year-on-year of 15.4%, Oshkosh is a thriving independent city with a housing market that is ripe for investing. Oshkosh is known for its solid economy which is kept afloat by manufacturing, health care, and education. The University of Wisconsin-Oshkosh creates a need for rental housing for students, which increases the rental housing demand in the city largely.
Algoma is one of the most popular areas in Oshkosh, and home prices in this area are more affordable than many other regions of the country. The rental demand in Oshkosh is high as people from Chicago and Milwaukee vacation here.
| Population | 65,948 |
| Gross rental yield | 43% |
| Median rent | $1,131 |
| Vacancy rate | 5.8% |
| Median home sale price | $225k |
| Home price change y-o-y | +15.4% |
8. El Paso, Texas
In May 2024, home prices in Texas had increased by 5.3% and 555 homes were sold in the city. El Paso is now the 22nd largest city in the US, and the family-friendly area is home to a large number of young people under the age of 25. This lends itself to a high demand for rental properties in this affordable and appealing city.
The cost of living in El Paso is 11% below the national average, and the city is near the US-Mexico border which allows for international trade and boosts the economy. El Paso has a median rent of $1,635 which is $24 higher than it was at the same time last year.
| Population | 677,456 |
| Gross rental yield | 61% |
| Median rent | $1,635 |
| Vacancy rate | 10.4% |
| Median home sale price | $256k |
| Home price change y-o-y | +5.3% |
9. Columbus, Ohio
In the last year, rent prices in Columbus have increased by $45, and the market has an increasing demand for rental properties. There are currently 2,353 rentals available in the city and the median rent is significantly less than the national average. Investors who are looking for a stable and profitable investment can look to Columbus as the rental market is bolstered by the city’s diverse economy and low unemployment rate.
Columbus offers affordable properties that give investors good returns, thanks to the property appreciation in the city. The job market is growing, which creates a higher demand for rental properties from young professionals and families who are moving to the city for work.
| Population | 907,971 |
| Gross rental yield | 11% |
| Median rent | $1,495 |
| Vacancy rate | 5.5% |
| Median home sale price | $290k |
| Home price change y-o-y | +1.8% |
10. Tallahassee, Florida
Tallahassee has a strong demand for student housing, thanks to the Florida State University. This, coupled with the strong economic climate in the city, make Tallahassee an ideal destination for rental real estate investors. College Town offers student housing which is a popular area for investing, and Killearn Lakes and Killearn Estates are planned communities offering further investment opportunities.
Tallahassee is the largest city in Florida’s northern panhandle and home prices are on the rise. In fact, prices have risen by 7.4% year-over-year and 250 homes were sold here in May 2024. Tallahassee’s median sale price is 34% lower than the national average.
| Population | 201,731 |
| Gross rental yield | 50% |
| Median rent | $1,500 |
| Vacancy rate | 6.8% |
| Median home sale price | $284k |
| Home price change y-o-y | +7.4% |
11. Durham, North Carolina
Durham is a medium-sized city that attracts visitors from all over the country, and from other countries. There are more than 300 healthcare companies in Durham, which means that healthcare provides the backbone of the city’s economy. Durham’s median sale price is 2% higher than the national average, while the cost of living is on par with that of the national average.
Last year, Durham was voted the second hottest housing market in the US, with Trinity Park and Duke Park as two of the most attractive neighborhoods in the city. Durham rent prices are $225 less than the national average.
| Population | 291,928 |
| Gross rental yield | 36% |
| Median rent | $1,925 |
| Vacancy rate | 6.2% |
| Median home sale price | $435k |
| Home price change y-o-y | +4.8% |
12. Orlando, Florida
Orlando is a popular tourist destination attracting visitors from all over the world every year, as such, the vacation rental property demand is high here. More than 60% of the population in Orlando are renting, which shows the solid demand for longer term rental properties as well. This makes Orlando a great place for rental real estate investors, both short and long term.
The city’s rental market isn’t likely to slow down any time soon as the population grows steadily each year and the economy remains strong, with over 150 international companies based here. This is another great place to consider rental property investment.
| Population | 316,081 |
| Gross rental yield | 42% |
| Median rent | $2,199 |
| Vacancy rate | 65% |
| Median home sale price | $405k |
| Home price change y-o-y | +7.9% |
Final Thoughts
Rental property investment can be a lucrative venture when approached with careful consideration of market dynamics and local factors. By focusing on areas with rising home values, robust population growth, favorable property taxes, and high rental demand, investors can maximize their returns and ensure a steady income stream.
The cities highlighted in this blog offer diverse real estate investment opportunities for rental real estate investment, catering to different investor needs and preferences, and are some of the best places to buy rental property in USA. As always, thorough research and strategic planning are essential for success in the ever-evolving real estate market.
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