The Top 5 Cities to Invest In and How to Find the Right Ones

Market Insights
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11 Jan 2022
5 min read
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Many regions of the country are experiencing huge booms in demand and the price of homes is rising sharply as a result – higher than the rate of inflation, in fact. This has influenced the renter’s market – people are renting longer than they have in previous decades – and is priming the investment opportunities for 2021. For those who have rushed to buy in a competitive market, their priorities of what a forever home should include have shifted.

This is especially true when considering the influx of transplants that some of the overlooked cities or towns have experienced in light of the pandemic. Affordability, space, and higher quality of life have altered people’s wish lists of what they’d like to see their homes have. As an investor, the opportunities for fix-and-flip, rental properties, and property development are ripe for the picking, but as is the case with all things real estate, research reigns supreme. If you’re thinking about where to invest, this list should offer some guidance on which markets are worth seriously considering for your next project.

Charlotte, North Carolina

With record-low unemployment and low-interest rates,Charlotte is considered a top city for rental real estate investment in 2021.Until March 2020, the real estate sales were going steady in the entireCharlotte Metropolitan Statistical Area – 3,630 homes were sold in March, which is a year-over-year increase of 4.9%.

Moreover, Charlotte’s appreciation rates in the last quarter were at 0.52%, equating to the annual appreciation rate of 2.10%. Average rent for an apartment? $1,259 – a 6% increase compared to the previous year.

Denver, Colorado

Home to seven Fortune 500 companies, a low unemployment rate(2.3% as of December 2019), and with a third of the Denver-metro area residents renting, this is a place primed for an investor who is looking to build their portfolio with rental units. Rentals have been gradually increasing over the years, driven by a buoyant economy and younger population of transplants moving in for career opportunities and the joy of being in a city with great outdoors activities.

Chicago, Illinois

Did you know that over 50% of the population in Chicago rents? The Windy City is looking a little less blustery. Chicago has a large population, high private sector employment, and a diverse economy that draws in people for career opportunities and a healthy work-life balance (have you ever been to the beach with skyscrapers surrounding you?). Between its affordable real estate, rising rent prices, and a healthy mix of blue- and white-collar work, the rental investment opportunities are broad and easily within reach. 

Phoenix, Arizona

For those living in high-price areas like Los Angeles orSeattle, it’s a good thing Arizona is a hop and a skip away – by plane, anyway.Phoenix has become a top destination for those looking to stick with the warm weather living without leaving all their income on rent. Of course, Phoenix’s numbers have grown as a result.

Home values have gone up 8.0% over the past year and the housing market has been one of the highest appreciating communities in the nation. Wide, open spaces, a growing economy, and affordability when compared to its neighboring cities make Phoenix an investible market worth exploring.

Columbus, Ohio

The residential property in Columbus sells for a median price of $174,109, creating the ideal circumstances for rental yields to be high. The market has seen a steady growth with a whopping 8.4% increase in the past year alone. For those looking to invest in fix-and-flip properties, there is a great demand for older, renovated homes in established neighborhoods. With a lower cost of living than the neighboring Chicago, Columbus attracts residents who earn just as much but can stretch their dollar further.

Things to Look for in Investable Markets

Growth – While real estate investing can be tricky, it’s important to do your research and select markets that show growth in such areas as population, development, and employment opportunities. More importantly, look at what a market’s projected growth will be in three, five, or 10 years. If trending in the right direction, it’s best to strike when properties are still affordable and investible.

Vacancy rate and current home prices – Ideally, you will want to find a balance between occupancy and profitability and finding a market that can deliver you both is key. Avoid areas with high vacancy rates or high housing prices. The latter could mean owning investment property that might be difficult to fill.

If you’re ready to grow your investment portfolio, contact Temple View Capital to learn more about how we can partner with you.