Have you ever dreamed of being a property owner and earning a semi-passive income? With the looming economic recession and concerns about inflation, residential real estate may be the most lucrative investment you can make, despite rising interest rates.
Let’s take a look at 10 of the hottest U.S. Cities to invest in rental property, according to luggage storage company Stasher.
Birmingham, Alabama
Birmingham has turned from an industrial city to an attractive market for newcomers from more expensive locations. The local government has revitalized the city, making it home to a host of tech, publishing, banking and medical research companies.
Highlights:
- Median home price: $215,000
- Population growth: around 1%
- Rental vacancy: 5%
- Appreciation rate: at least 17%
- Average monthly rental income: around $1,300
- Unemployment rate: 2%
Youngstown, Ohio
Youngstown is movin’ on up, and you can invest in rental property here at rock-bottom prices, making the city an ideal choice for first-time investors. Youngstown is only a one-hour drive from both Pittsburgh and Cleveland, which means an easy commute to the city for work or play.
Highlights:
- Median home price: $42,000
- Population growth: around 1%
- Rental vacancy: 4%-7%
- Appreciation rate: 15% annually
- Average monthly rental income: around $850
- Unemployment rate: 1%
Austin, Texas
Austin is becoming the nation’s next most important tech hub after Silicon Valley companies like Tesla, Apple and Google migrated to the city for more affordable rents and no state taxes. Plus, Austin’s famed ‘weirdness’ fits well with the ideals of people moving from the expensive West Coast. Home values nearly doubled in 2020 alone!
Music City is also home to many of the country’s most celebrated festivals, making for excellent short-term rental potential.
Highlights:
- Median home price: $225,000
- Population growth: 3% and rising
- Rental vacancy: 5%
- Appreciation rate: 8% annually
- Average monthly rental income: $1,750
- Unemployment rate: 7%
Atlanta, Georgia
Atlanta’s relatively low-priced housing market means that you can buy a single-family rental for as little as $200,000. Furthermore, with an entertainment scene that includes music venues like the Fox Theater, Atlanta is ripe for short-term rentals for anyone who wants to experience the buzz here.
Airbnbs thrive during Atlanta’s festivals, major concerts and sporting events. You’ll increase your short-term rental income by partnering with local businesses and offering specialized services like Stasher’s luggage storage.
Highlights:
- Median home price: around $300,000
- Population growth: 14% over the past 10 years
- Rental vacancy: 20%
- Appreciation rate: 10%-15% per year
- Average monthly rental income: $1,700
- Unemployment rate: 2%
San Antonio, Texas
San Antonio lies within commuting distance of the Austin tech hub and may appeal to family-orientated tech workers, especially if they can work from home part-time. The San Antonio area has seen sharp increases in property values in the past few years.
Additionally, several military bases are in the area, and tons of military personnel look for housing off-base, giving the area an astronomically high rental occupancy rate. And considering San Antonio’s rich history and tourism industry, the city has excellent potential for short-term rentals.
Highlights:
- Median home price: around $300,000
- Population growth: 6% annually
- Rental vacancy: 9%
- Appreciation rate: 3%
- Average monthly rental income: $1,300
- Unemployment rate: 5%
Tampa, Florida
Tampa is experiencing a high population growth rate boosting home values. More northerners are retiring early due to the pandemic and looking for warmer climates to enjoy their golden years. Tampa is also attractive for the migration of younger people as many Fortune 500 companies operate in the city.
Highlights:
- Median home price: around $320,000
- Population growth: 6%
- Rental vacancy: 18%
- Appreciation rate: 9% in the past year
- Average monthly rental income: around $1,700
- Unemployment rate: 5%
Seattle, Washington
Seattle is ideal for investors with a little extra cash on hand. The population has grown at twice the national average in the past few years. Seattle is beginning to rival Austin as the next tech hub, attracting Silicon Valley workers from California’s expensive rental market.
Besides being the birthplace of Jimi Hendrix, Seattle was home to the 90s Grunge scene, making the city a mecca for people who enjoy live music — including aging rockers! — and is a fantastic place to offer short-term rentals.
Highlights:
- Median home price: $800,000
- Population growth: around 1%
- Rental vacancy: 6%
- Appreciation rate: 9.2% annually
- Average monthly rental income: around $2,200
- Unemployment rate: 8%
Boise, Idaho
I know what you’re thinking, “Idaho? Really?” Well, it turns out that Realtor.com ranked Boise as the #2 housing market for 2022. Housing prices have soared in the past few years and show no signs of slowing down. Exponential job growth and low unemployment rates mean little risk of getting tenants who can’t pay the rent.
Highlights:
- Median home price: $500,000
- Population growth: Triple the national average
- Rental vacancy: 2%
- Appreciation rate: 53%; 20% annually
- Average monthly rental income: around $2,000
- Unemployment rate: 2.2%
Columbus, Ohio
Columbus is family-friendly yet hip. With its relatively low cost of living, Columbus is becoming another refuge city for young homeowners and renters who have been priced out of areas like San Francisco and New York.
Highlights:
- Median home price: around $175,000
- Population growth: Triple the national average
- Rental vacancy rate: 72%
- Appreciation rate: 8% in the past year
- Average monthly rental income: $1,250
- Unemployment rate: 4%
Charlotte, North Carolina
Charlotte has over 35 colleges and universities, making it a massive attraction for younger investors and renters. The number of available jobs has expanded in recent years, provoking a significant migration to the city.
Highlights:
- Median home price: around $325,000
- Population growth: approximately 4%
- Rental vacancy rate: 12%
- Appreciation rate: 4%
- Average monthly rental income: around $1,700
- Unemployment rate: 5%
Any one of these cities might offer you a good opportunity to buy residential property at a price that you can recoup in rents. You could even consider buying and renovating a fixer-upper, and renting a self storage unit nearby to help you get the job done until it is ready to go. The prices in some cities are undoubtedly quite high, while others look like bargains in comparison. Either way, good opportunities can be found where you can look forward to some passive income on your real estate investment.
