What to Look for When Choosing An Area to Buy Rental Property
Choosing a good location for a rental property is important because it can significantly impact the success of the rental. A rental property in a desirable location will typically be more attractive to potential tenants, which can lead to a higher occupancy rate and potentially higher rental income.
Additionally, a good location can often lead to a higher resale value for a rental property. Properties in desirable locations tend to appreciate in value over time, which can be a lucrative investment for landlords. Here are a few other key factors to consider when looking to buy a rental property:
- Research demand: Look at the current rental market in a particular area and see if there is a high demand for rentals. This can be done by looking at vacancy rates, rental prices, and the number of people moving into the area.
- Analyze population growth: If a particular area has a growing population, there will likely be an increased demand for rentals. This can be due to an influx of new residents, such as young professionals moving to the area for work or families relocating to the area for a better quality of life.
- Evaluate the local economy: A robust local economy can drive demand for rentals as more people can afford housing. Look at factors such as job growth, income levels, and business development in the area.
- Consider location: Location is a major factor in rental demand. Look for areas that are close to amenities, transportation, and employment centers, as these are likely to be more desirable for renters.
- Monitor the housing market: Keep an eye on the local housing market and see if there is a shortage of housing options or if prices are too high for many potential buyers. This could indicate that there is a need for more rentals in the area.
7 Best Places to Buy Rental Property
When considering all of these factors outlined above, there are a few cities that stand out as fantastic places to invest in real estate. We’ve compiled a list of these cities, so you can purchase your own property in one of these markets or look for markets with similar features within your own area:
1. Dallas, Texas
Dallas is an excellent place to buy rental property, as it has a strong economy, high job growth, and a growing population. The city is home to many Fortune 500 companies, including AT&T, Southwest Airlines, and ExxonMobil, so there is a strong demand for rental housing. Additionally, Dallas has a low cost of living compared to other major cities, making it an attractive destination for young professionals and families.
2. Seattle, Washington
Seattle is another thriving city that has a growing economy and population. The city is home to many tech giants, including Amazon, Microsoft, and Boeing. Additionally, Seattle has a strong culture and is home to many popular attractions, such as the Space Needle, the Pike Place Market, and the Pacific Northwest Ballet. With popular attractions and amenities and strong employment opportunities, it’s an excellent place to purchase a rental.
3. Austin, Texas
Austin has a rapidly growing population and a limited housing supply, which has led to high demand for rental properties. This can make it easier to find tenants and potentially command higher rental rates. The city is home to many tech companies, including Apple, Google, and Dell, which means there is a strong demand for rental housing. Texas also has some of the lowest property taxes in the country, which can be a financial benefit for property owners.
4. Denver, Colorado
Denver has experienced steady population growth in recent years, with an estimated population of over 2.9 million people in the metropolitan area. This increase in population means a higher demand for rental properties. Despite being a popular city, Denver has relatively affordable real estate prices compared to other major cities. This makes it an attractive market for investors looking to buy rental properties.
Denver has a strong and diverse economy with a variety of industries, including healthcare, technology, and education, which attract a lot of talented professionals. Additionally, Denver has a strong outdoor recreation scene, with easy access to the Rocky Mountains and numerous ski resorts.
5. Portland, Oregon
Portland is a thriving city that has a strong economy. The city is home to many tech companies, including Intel, HP, and Nike. Portland has a strong culture that is very popular with younger generations and is home to many popular attractions, such as the Portland Art Museum, the Portland Japanese Garden, and the Portland Zoo.
Portland also has relatively tenant-friendly rental laws, which can make it easier for landlords to manage their properties and tenants. This can lead to a more positive and successful landlord experience.
6. Boston, Massachusetts
Boston is a thriving city with some of the highest rental rates in the New England area. The city is home to many tech companies, including Apple, Google, and Facebook. Boston is also home to many top-ranked universities, including Harvard, MIT, and Boston College, which means there is a strong demand for student housing.
7. Tampa, Florida
Tampa is a bustling city that has high job growth and a thriving culture. Amazon has many large distribution centers within the Tampa area. Tampa is home to many popular attractions, such as the Tampa Bay Buccaneers, the Florida Aquarium, and the Busch Gardens theme park. The city has a well-developed transportation network, including highways, buses, and the Tampa International Airport, making it easy for people to travel to and from the city.
Tampa has a warm and sunny climate which makes it a popular tourist destination, which means you have the potential to rent out your property to tourists during peak seasons. You can dramatically increase your rental income by renting out your property with Airbnb or other vacation rental platforms during the summer months.
What if you Don’t Live Near one of these Cities?
If you don’t live close to one of these major metropolitan areas, you can still find areas to purchase a profitable rental. Look for cities that have strong job growth and great employers. Find areas with a nice mix of culture and good school systems, with significant market demand for rentals. Work with a realtor that is familiar with the local markets and follow their guidance, as they can direct you to highly desirable areas.
Learn Build Profit is a financial literacy blog providing expert insights on income investing and passive income generation through dividend stocks and real estate.
