11 Best Places to Buy Rental Property in USA [2023] (2024)

Rental property investments can be a promising way to diversify your portfolio and create generational wealth. But with rental markets fluctuating in different parts of the country, where should you invest?

This blog will overview the best places to buy a rental property in the USA for 2023. We’ll discuss rental market trends, job growth, population increases, rental prices, and rental yields in each of the 11 locations.

We’ll also include information about the advantages of rental property investments, such as tax benefits and potential long-term returns. But, before diving into the best places to buy rental property in USA, let’s understand the rental market in the USA.

Overview of the Rental Housing Market in the USA

The US rental market has been strong recently, with the National Multifamily Housing Council reporting that nearly44 million American householdsare renters.

Furthermore, job growth and population increase in many areas of the USA have helped to create a positive outlook for real estate investors.

• In 2022, median rent prices increased by18%, and rental yields (the income a landlord receives in return for their investment) increased by7.51%.
• The median rent across the USA is currently$1,191 monthly – up from $1,104 in 2020. Rents have been rising faster than inflation in many cities, with 17 of the 30 largest cities reporting double-digit rent growth.
• Investing in rental property can benefit from potential monthly cash flow and tax benefits from depreciation deductions.
• Finally, job growth in many US cities has been strong over the past year, with job openings increasing by4.26 million between November 2020 and December 2022.

Additionally, rental properties are supported to acquire more rental units and more significant returns over time. Investors must research rental markets, prices, rental yields, job growth, and population increases before investing in a rental property.

Get a mortgage with no w2s or income proof.

What are the Advantages and Benefits for Real Estate Investors?

Rental property investments provide many potential benefits and advantages, such as:

• Monthly rental income
• Potential long-term capital appreciation
• Tax benefits from deductions for depreciation
• Ability to acquire more rental units by leveraging
• Possible cash flow, even during market downturns
• Easy Cash Flow Mortgage for rental property

Investing in rental properties can also provide an additional source of retirement income, and rental yields can be higher than other investments. Additionally, rental property investments can diversify your portfolio and have the potential for long-term returns.

What is the Reason for Rising Rents?

Rent continues to rise for a variety of reasons. However, there are three main reasons for the rising rents in the USA:

• Job growth and population increases(0.38% growth in 2022) have bolstered the rental market in many areas of the USA. As more people move into a room, demand for rental properties also rises – leading to increased rent prices. The population growth in some areas of the USA has outpaced the supply of rental units.
• As job opportunities increasein certain areas, renters can pay higher rents. It creates a positive feedback loop for real estate investors, as job growth leads to increased rental demand, better rental yields, and higher rent prices.
• Finally, inflation and rising construction costsalso contribute to rent increases in many areas of the USA. As inflation increases, so do the costs associated with renting – leading to high rental demand.

Now that we’ve established the job growth and population increases influencing rent prices, let’s look at the 11 best places to buy a rental property in the USA.

Get a mortgage based on rental income.

Top 11 Places to Invest in Rental Property (2023)

Investing in rental property can be an excellent way to generate steady income and build long-term wealth. But where should you invest?

The US real estate market is constantly transforming – job rise, population growth, and rental rates vary significantly from place to place.

To help investors make the best decisions for their investment portfolios, we’ve compiled a list of the top 11 rental property locations in the USA for 2023. So let us look at them now.

11. Detroit, MI

Detroit, MI, is a bustling city in the Midwest that offers a one-bedroom apartments with competitive prices and rent. The town also boasts fewer business regulations, making it attractive for entrepreneurs.

The metro area serves over 4 million people and continues to grow. The diversity of attractions and amenities makes Detroit an excellent place to live and work. Let us go through the pros and cons of living in Detroit.

Pros:

• A diverse and welcoming community.
• Unique culture, art, and music scenes to explore.
• Affordable housing costs relative to other cities.
• Abundant public transit options are available.
• A growing job market with numerous opportunities.

Cons:

• The high crime rate in some areas of the city.
• Icy winters that last for months at a time.
• Areas with higher poverty levels than national norms.
• Limited parking options in certain parts of the city.
• Numerous traffic congestion issues during rush hour periods

10. Salt Lake City, UT

Salt Lake City is ideal for real estate investing and rental real estate opportunities. In addition, it offers affordable housing prices compared to the national average, making it an excellent option for investment.

Many property options are available, from single-family homes to multi-unit complexes. In addition, the economy in Salt Lake City is booming, with plenty of job opportunities that ensure your investment will pay off in the long run.

Whether you’re looking for a commercial or residential estate, Salt Lake City has everything you need for success. But first, let us examine the pros and cons of investing in Salt Lake City.

Pros of Renting Property in Salt Lake City

• A thriving economy with job opportunities in multiple industries
• Affordable housing and rental options
• Variety of outdoor activities to enjoy, such as skiing and biking

Cons of Renting Property in Salt Lake City

• High cost of living compared to the national average
• Challenging winter weather conditions
• Limited public transit options

9. Portland, OR

Portland, OR, is an exciting city that continues to grow in popularity due to its beautiful landscape, trails, and rivers. The single-family rental market has been booming with locals and visitors alike as the demand for housing increases.

Businesses in or around the city benefit from lower taxes through Oregon’s state tax program, helping create a positive cash flow environment. Portland is also one of thebest cities to invest in when buying a house under 500k.

Portland has pros and cons to consider when deciding to live or work in the area.

The Pros Include:

• Abundant natural beauty and outdoor activities
• Low Business-related Taxes which promote a positive cash flow
• Great shopping, dining, and entertainment options

The Cons of Living in Portland Include the Following:

• High housing prices make it difficult for the single-family rental market
• Congested traffic in some regions of the city
• Heavy rain during the winter months

If you are interested in buying the rental property, you can qualify for a mortgage based on the rental income you will generate from your property. It’s called cash flow mortgage, and HomeAbroad can connect with cash flow mortgage lenders.

8. Charlotte, NC

Have you ever considered the Charlotte real estate market? The third quarter saw a spike in interest in residential properties — specifically, an increase in median home prices and low available inventory.

This trend indicates the firm and growing economy this city is experiencing. Buyers should take advantage of current conditions before prices rise too high!

Let’s view the pros and cons of investing in Charlotte.

Pros:

• Low unemployment rate (3.8%)
• More affordable home prices compared to other cities in the US.
• Good job growth and population increase
• No income tax by the State for property owners.

Cons:

• Strict regulations for renting properties
• The high crime rate in some areas.

7. Orlando, FL

Orlando is an attractive location for investors because of the Orlando real estate market’s diverse economy, reasonably low unemployment rates, and the potential for long-term returns.

The area’s rapid growth has also led to higher rent prices and more opportunities for rental income. Let’s look at some pros and cons of investing in the Orlando real estate market.

Pros:

• Affordable home prices compared to other cities in the US.
• High job growth and population increase (3rd highest among the central metro area of USA)
• Reasonable unemployment rates.
• A diverse economy and a variety of job opportunities.

Cons:

• Strict regulations for renting properties.
• Higher insurance costs due to hurricane risk.

Secure an investment mortgage for your rental property in Orlando without needing solid financial evidence, w2s, or employment history. Instead, you may obtain the loan based on the estimated earnings of the real estate you purchase.

Therefore, your asset’s capacity to generate cash and pay off the mortgage will be the sole qualifying factor for this loan. Contact a cash-flow mortgage provider to obtain this loan and commence your real estate investment journey.

6. Austin, TX

The Austin real estate market is booming. With a rapidly growing metro area and steady cash flow, there’s no better time to jump in and invest. In addition, this thriving city offers diverse communities, abundant outdoor recreational activities, and a desirable family-friendly atmosphere.

Whether you’re knowledgeable in investing or just getting your feet wet in the market, now is the ideal time to take advantage of this vibrant real estate landscape. Let us view the pros and cons of investing in Austin.

Pros:

• Strong economy
• Low cost of living
• Tax incentives for investors
• Growing technology and innovation sector
• Many companies are relocating to the city

Cons:

• Competition among businesses
• High real estate prices
• Difficulty in finding qualified employees
• Traffic congestion increasing
• Taxes increasing

You can read this blog to learn more aboutAustin’s real estate market.

5. Chicago, IL

Chicago is a great place to call home for landowners. With no state income tax, the city offers residents plenty of amenities and activities. From a one-bedroom apartment in Lincoln Park to sprawling historic homes in Hyde Park, there’s something to suit every budget and lifestyle.

Let’s see the pros and cons of investing in Chicago.

Pros:

• No state income tax for property owners.
• More affordable housing prices than other cities in the US.
• Good job growth and population increase.

Cons:

• The high crime rate in some areas.
• Strict regulations for renting properties.
• Lower rental yields compared to other cities.

Get quotes from cash-flow mortgage lenders.

4. Wahington, DC

Washington, DC, is one of the top housing markets in the nation. Home prices have skyrocketed as more people flock to the metro area to take advantage of its numerous job opportunities and vibrant culture.

From quaint neighborhoods like Capitol Hill to bustling city blocks like Dupont Circle, Washington offers something for everyone. There are alsonine critical statistics about the Washington housing marketthat you should note.

Whether looking for luxury condos, historic townhouses, or affordable apartments, this area has it all! But what are some pros and cons of rental real estate in Washington?

Pros:

• High job growth and population increase.
• High rent prices (above the national average)
• Good rental yields.

Cons:

• High housing prices.
• Strict regulations for renting properties.

3. San Diego, CA

San Diego, California, is an excellent market for rental housing and an ideal place to invest in real estate. It boasts some of the best property values in the United States and offers an incredibly diverse landscape that appeals to outdoor enthusiasts and families alike.

There are plenty of possibilities for those looking for rental housing or to invest in property values here in San Diego–making it one of the best real estate markets in the USA! Let us see some of the pros and cons.

Pros of Renting a Property in San Diego:

• Access to the Beautiful California Coastline
• Enjoyable Climate Year-Round
• Variety of Attractions and Cultural Experiences
• Reasonable Cost of Living Compared to Other Major Cities

Cons of Renting a Property in San Diego:

• High Cost of Real Estate
• High Rental Rates During Peak Season
• Increased Traffic Congestion in Popular Areas
• Limited Availability for Single Bedroom Apartments

If you want to buy rental properties in California’s best cities, then you must read this blog about the11 best cities in California to buy a house.

2. Miami, FL

Miami is another excellent option for real estate investors, with job growth and population increases driving rental demand in the area. To buy investment property in Florida, read thisblog to understand the Florida market.

Let’s review a few pros and cons of investing in Miami real estate.

Pros:

• Affordable housing prices.
• High job growth and population increase.
• Good rental yields.

Cons:

• Rates of appreciation are lower than in some other areas of the USA.
• The property tax rate is higher than the national average.
• Higher insurance costs due to hurricane risk.

1. New York, NY

New York City, NY, is one of the most sought-after places to invest in rental properties. With rising job growth and population increases, New York City has become a hotbed for real estate investors.

You can also learn more about theplaces to purchase a house in New Yorkthrough this blog.

The median rent price in NYC is$2,024 per month, with rental yields averaging around4.78%.Let’s examine some of New York City’s pros and cons for real estate investors.

Pros:

• High job growth and population increase
• High median rent prices (above the national average)
• Good rental yields

Cons:

• High real estate prices
• Complex tax laws for landlords
• Strict regulations for renting properties.

Get a mortgage based on the potential rental income of your property. It’s called a cash flow investor mortgage, and we can connect you with the right lender to get you the best loan terms.

Overview of the Critical Advantages of Rental Property Investments

Rental property investments have several advantages for real estate investors, such as potential long-term returns, tax benefits, and increased cash flow from rental income.

• Rental yields typically range from5% to 8%, higher than most other investment options.

Additionally, there is a potential to make money even when the housing market is in decline since rental prices are usually more stable than home values. Thus, investing in rental property can effectively support those seeking income stability and capital growth.

Are you interested in investing in rental property? With careful planning and the right mortgage lender, a rental property in the US can offer multiple advantages to help you achieve your financial goals.

How to Qualify for Mortgage Based on Rental Income

Lenders will consider several factors when applying for a mortgage based on rental income. Generally, lenders require borrowers to provide proof of current rental income from an investment property.

• The average gross rent multiplier (GRM) is around 25 – 30%, and this number serves as an indication of your debt-to-income ratio and creditworthiness.
• Additionally, lenders may require a 20%-25% down payment to invest in rental properties, though some will accept lower prices if the investment is low-risk.

Finally, borrowers should have sufficient cash reserves to cover unexpected costs or repairs from owning an investment property. By understanding these requirements and having an experienced lender, investors can successfully invest in rental properties and build wealth.

If you are looking for a lender to help you qualify for a mortgage based on rental income, then HomeAbroad is just the place for you. We can assist you in connecting with lenders who meet your needs.

Summary

Investing in rental property can be a terrific way to grow your finances and generate passive income. Whether you’re looking for a commercial or residential estate, there are many attractive locations in the US with plenty of potential for success.

The top 11 best places to buy a rental property in the USA discussed in this article have all proven their worth as desirable real estate markets, offering investors various options, such as affordable housing, good rental yields, job growth, and population increases.

However, it is essential to thoroughly research each city and its real estate housing market before investing to ensure the best possible return on your investment. Lastly, investors should take advantage of all the tax benefits of owning rental property.

Frequently Asked Questions