Investing in property, especially the right property, brings many benefits and profits. However, doing so in an unplanned manner can be detrimental as well. The same holds for rental properties, where one must apply their mind carefully before investing.
To finalize the best place to buy rental properties, an investor or amateur buyer must consider many deal breakers or breaker factors. Be that as it may, the most significant aspect of investing anywhere is the location and, in a broader sense, the city.
To find the best city for investing and spending less initially, only to spend more later, check out this comprehensive list we have prepared for you!
What factors influence an investment?
Before investing anywhere, we must define the parameters governing our decision. Fulfillment of these parameters will assure a good buy.
Affordability
Probably the most common factor in any field, ensuring that the property you are willing to buy is cost-effective or, more importantly, affordable is important. This involves estimating the price-to-rent ratio, which explains if a property with a seemingly lower rent at a given time may have a higher rent in subsequent years.
Investing in prime areas with exorbitant rents and comparatively smaller areas is also ill-advised.
Job prospects
The potential for a city or an area to generate jobs is a direct factor that attracts investors. This is simply because better job opportunities attract more buyers and tenants who occupy the property. Further, suppose a place has reasonably good job opportunities. In that case, it indirectly creates a market of buyers with a stable salary and willingness to pay more rent for better facilities.
Population
Undoubtedly, an area with greater population density will automatically lead to higher demand. A steadily rising population bodes well for the housing market. While the growth keeps demand high, this can also work against the investor as multiple competitors try to please the buyer, which may force the investor to lower the property’s rent.
Tenant default rate
Getting tenants and obtaining rent from them on time is another. Ensuring that your investment lies in an area where tenants do not default on their payments is extremely important to keep a steady revenue stream.
Readers must note that there are factors apart from these. However, the factors mentioned above are the most significant.
Best places to own rental property
Now that we know the main parameters influencing investment, let’s look at the best places to buy a rental property.
Austin, Texas
The eleventh largest city in the country and fourth largest in the state, Austin has become a haven for investors and buyers. It has slowly become very conducive for the tech industries and employs a large workforce, especially young techies. It has seen a sudden boom in the last half decade and refuses to stop growing. The listing home price in Austin is around $350 per square foot. Apart from the IT industry being the biggest pull factor, other factors include:
- A low unemployment rate of 4.2%.
- Absence of income tax levied by the state of Texas.
- A diverse neighborhood with occupants of various ethnicities.
- A steadily growing population with an estimated growth rate of 2.5% annually.
Charlotte, North Carolina
The biggest city in the state, Charlotte, or Queen City, is home to the Bank of America and probably the greatest number of Fortune 500 and Fortune 1000 companies. The average rent here is close to $1690, seemingly affordable. It has a favorable climate and is considerably young in its population. Being a metropolitan area, it has immense job opportunities which attract many.
Other factors include:
- Presence of top schools, colleges, and Universities that bring in many students from across the country.
- Presence of multiple sectors such as banking, education, energy, and retail.
- Connectivity with other major cities.
- A steadily growing young population.
Phoenix, Arizona
Phoenix is another go-to place for investors, one of the largest cities in the country and on par with cities such as Los Angeles in terms of size, population, and cost of living. Phoenix has cemented its market position due to its high population size and real estate opportunities. Closer to the Desert, it attracts tourists all year round, creating a different opportunity for vacation rentals and short-term investments. Further, it is a gateway to the Southwest and is a developing transportation hub. Distinguishing features include:
- Growing student population.
- Lower real estate expenditure in comparison to other cities of equal magnitude.
- Low unemployment rate and diversification in the market.
- Reasonably low median listing home price per square foot of around $280.
Orlando, Florida
Synonymous with Universal Studios and Disney, Orlando is the perfect holiday destination and, in the larger scheme of things, a perfect holiday investment. Orlando means business, and it is one of the biggest commercial hubs in the country. It caters to all kinds of businesses. Most importantly, being a tourist attraction, there is a huge inflow of tourists driving rates of rental properties and sometimes commercial as well. The tourism industry also opens doors to unorthodox investments, which is not the case in other cities. Additionally, it is also favorable due to:
- A good employment rate of over 4%.
- High rental yields of above 8%.
- Reasonably affordable cost of living.
- Educated and skilled workforce.
Ocala, Florida
Not very far from Orlando. Ocala is a pleasant place with scenic beauty, a relaxing atmosphere, and the perfect retirement place. Its connectivity with big cities such as Tampa and Orlando makes it even more favorable. The feather in Ocala’s cap is its booming healthcare industry that has shored up commercial demand for the creation of more medical facilities. Other features include:
- Considered the safest place to live in Florida.
- Tourist attractions such as the National Forest and Silver Springs State Park lead to an inflow of tourists.
- High rental yields even with low vacancy rates.
Frequently Asked Questions (FAQs)
Which parameter takes priority while investing?
While one must pay heed to all parameters equally, it usually boils down to affordability and how much the investor or buyer is willing to spend.
Are multiple investments advisable?
If you are an amateur buyer, it is better to invest in a single property and venture out later; for seasoned investors, buying multiple sites is not that difficult, and if it brings profit, then why not.
Should I invest in highly expensive locations?
Again, if you are a simple buyer, purchasing sites at locations such as Los Angeles and New York is not ideal simply because of the high process and low return on investments.
Conclusion
Thus, we have dug deep into all the possible options to make the right investment. Hopefully, you will buy your dream property or site with the information provided!
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