If you’ve ever think of investing in real estate, this might be the right time.
Though this year has proven to have many financial ups and downs, you might have the opportunity to have a good profit from selling or renting out an investment property.
It’s one thing to know that residential real estate can be a smart investment; it’s another to know which homes will make the greatest profit when it’s time to sell.
As with all investments, you can increase your odds of a successful real estate investment by targeting the right cities.
So, there are cities that offer more opportunities for real estate investors. Read on to see the best cities you can invest in real estate.
The table of content below is an overview of the best cities to invest in real estate in 2021.
About Real Estate Investing
According to Wikipedia, Real estate investing is all about purchase, ownership, management, rental, and sale of real estate for profit.
Furthermore, Real estate is an asset form with limited liquidity relative to other investments (such as stocks or bonds that openly trade on financial markets).
Also, it is capital intensive (although capital may be gained through mortgage leverage) and is highly cash flow dependent.
If these factors are not well understood and managed by the investor, real estate becomes a risky investment.
Real estate generally breaks down into four categories which include residential, commercial, industrial, and land. So, we further explain the types of real estate investing below.
Types Of Real Estate Investing
Here are the four main types of real estate investing
#1. Residential Real Estate Investing
Residential real estate primarily consists of single-family homes, multi-family homes, townhouses, and condominiums. Occupants may rent or own the properties that they live in.
However, know that homes larger than four units are generally considered commercial property.
#2. Commercial Real Estate Investing (CRE)
This property is used mainly for the purpose of business, such as office space, retail space, or multi-family homes.
Examples of commercial real estate properties include business offices (office), restaurants (retail), and large apartment buildings (multi-family).
#3. Industrial Real Estate Investing
As the name implies, these properties serve an industrial business purpose. Some examples include shipping or storage warehouses, factories, and power plants.
Generally Land consists of undeveloped property with no structures on it. There are limited ways to earn money from land as an investment. So, as a Landowner, you can earn money through land usage, such as agriculture, or upon the development or sale of the land.
In addition to the types of property, there are three ways to make money from real estate investment which include, interest from loans, appreciation, and rent.
How To Choose Best Places To Invest In Real Estate
Real estate investing require in-depth research. So, to make it easy for you, we recommend contacting an investment counselor to help you invest in the right place.
You may be located anywhere in the world, know that the basic principles of real estate business remain unchanged – you choosing those places for your investment properties where the return-on-investment is high.
So, to maximize the returns from your real estate investment you need to buy property in places with the following features:
- High rental occupancy: Check how much of the available housing stock in an area is vacant;
- High rentals relative to your mortgage repayments: The more of your mortgage you can cover from rentals, the better; and
- A low tenant default rate: The last thing you want is to buy property in an area when tenants frequently miss rent payments.
List Of The Best Cities To Invest In Real Estate
When it comes to real estate investing, the location you choose can make all the difference. Aside from the property’s location, it’s also important to look at a few other key factors when evaluating rental returns and choosing where to invest.
For example, you should be aware of the location’s rent as a percent of income, jobs, vacancy rate, home prices, industry, and population and its growth rate.
Here is the list of some of the best cities you can invest in real estate.
- Austin, Texas
- Raleigh, North Carolina
- Nashville, Tennessee
- Boston, Massachusetts
- Dallas-Fort Worth, Texas
- Atlanta, Georgia
- Orlando, Florida
- Indianapolis, Indiana
- Phoenix, Arizona
- Las Vegas, Nevada
#1. Austin, Texas
This city is our top pick for real estate investments based on the expected investor demand and a high projected population growth rate of 2.2% over the next 5 years.
This a college town, it points to a deep pool of educated talent, a known and unique lifestyle, and a strong commitment to supporting both businesses and real estate expansion.
Right now, housing is affordable but rising pressure on prices and rents is increasing. So, this suggests a good investment opportunity for a careful buyer, especially in the industrial, office building, and apartment sectors.
#2. Raleigh, North Carolina
Raleigh is one of the best places to invest in rental real estate in 2021. The Raleigh metropolitan area – the city and its surrounding suburbs – accounts for about one and a half million people.
Recent forecasts and predictions for the Raleigh housing market suggest that home prices will continue rising.
In the Raleigh NC real estate market, the rate is 43%. This is partially due to the large student market, but it is also fueled by young people moving here for work.
That explains why downtown Raleigh rents grew 9% in 2018. It also explains why you can rent out a studio for $900 a month and one-bedroom apartments for a thousand dollars a month.
#3. Nashville, Tennessee
Nashville is among the top cities to invest in real estate for 2021 due to its remarkable job growth numbers and attractive social options. The city has a projected population growth estimate of 1.2% for the next 5 years.
Although recent quick growth may tax Nashville’s infrastructure and the city’s affordability has suffered as housing costs rise, investing in this booming real estate market seems like a decent option for the coming year.
#4. Boston, Massachusetts
Charlotte is one of the places to invest in real estate due to its rising business prospects and 1.4% expected 5-year population growth.
The city has taken strong steps to attract manufacturing and technology businesses to support its existing industrial profile, dominated for decades by banking.
Also, Charlotte is upgrading its infrastructure, although some improvements remain to be done, such as expanding its rainwater runoff systems.
On the downside, housing costs have already risen, suggesting possibly lower investment returns and income than other top markets.
#5. Dallas-Fort Worth, Texas
The Dallas-Fort Worth metropolitan area has an impressive population growth line of 1.8% over the next 5 years making it one of the best cities to invest in real estate.
By allowing the perimeter of this already-large city to expand, land costs there tend to remain moderate.
Also, the demand for real estate in Dallas-Fort Worth by resident individuals and investors has yet to decrease, and property transactions remain active in the area.
#6. Atlanta, Georgia
Atlanta is also one of the best cities to invest in real estate due to its strong transaction volume seen over the past few years and the population growth line of 1.2% over the next 5 years.
Furthermore, Atlanta has a unique culture, an urban core that is ripe for renovation, and mixed-use suburban developments making the city an interesting place to live, although land, labor, and building cost rises have put pressure on affordability.
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#7. Orlando, Florida
Just to know, Orlando is home to the popular Disneyworld tourist attraction making it be among the best cities to invest in real estate.
While projected population growth is only 0.9% over the next 5 years, the city remains a strong buy in the multifamily and office-building sectors.
The development or redevelopment opportunities and homebuilding prospects continue to be in demand.
#8. Indianapolis, Indiana
If you haven’t heard the buzz about Indianapolis, it’s about time you get in the circle. Indianapolis, Indiana is rate as one of the best downtowns and is known for its entertainment and job market.
Also, the city has a population of over 2.1 million, and an 8-year population growth rate of 25%, making it be among the best cities to invest in real estate
#9. Phoenix, Arizona
Not only does Phoenix have hot temperatures and sunshine, but it also has affordable real estate and offers a strong return on investment.
Phoenix is known to be one of the highest appreciating locations in Arizona and the country. Due to its lower cost of living and variety of job opportunities, Phoenix is predicted to be one of the top housing markets this year and in years to come.
In addition, this is the largest city in Arizona and the fifth-largest city in the country with 1.7 million residents and a 1.6% population growth.
#10. Las Vegas, Nevada
Las Vegas, Nevada is known for its booming industries. Not only is the city popular for its tourism, gaming, and entertainment, but it also has a thriving industrial sector and growing high-tech, financial scape.
As new businesses continue to arise, Las Vegas is continuing to attract new residents and fuel this year’s real estate market trends.
Furthermore, the city is the most populated city in Nevada and 28th most populous city in the U.S. It has a population of about 2.7 million, a 2.98% increase from last year
Is Real Estate Investment a Good Business?
Yes, real estate is a great investment. If you know what you are doing, you can make a lot of money in real estate. Also, it is an important part of a healthy portfolio.
Another good thing about real estate investments is that there are so many levels of involvement from completely hands-off in the case of REITs (Real Estate Investment Trusts) to all-in in the case of flipping houses.
However, it offers a slow, predictable rate of return over the long run and can be a great way to build long-term wealth.
Simple Ways On How To Invest In Real Estate
Here are five simple ways you can invest in real estate
#1. Rental Properties
Owning rental properties can be a great opportunity for individuals with do-it-yourself (DIY) and renovation skills, also have the patience to manage tenants.
However, this approach requires substantial capital to finance up-front maintenance costs and to cover vacant months.
Furthermore, this kind of way provides regular income and properties can appreciate but can be tedious managing tenants.
#2. Real Estate Investment Groups (REIGs)
This is one of the simple ways to real estate investing.
Real estate investment groups (REIGs) are ideal for people who want to own rental real estate without the problems of running it. Investing in REIGs requires a capital cushion and access to financing.
Furthermore, this way provides income and appreciation, and there will be more hands-off than owning rentals but the disadvantage is that it has vacancy risks and it has similar fees as mutual funds.
#3. House Flipping
House flipping is for people with outstanding experience in real estate valuation, marketing, and renovation. House flipping requires capital and the ability to do, or oversee, repairs as needed.
This is the proverbial “wild side” of real estate investing. Just as day trading is different from buy-and-hold investors, real estate flippers are distinct from buy-and-rent landlords.
In addition, it ties up capital for a shorter period of time and it offers quick returns, but it requires a deeper market knowledge.
#4. Real Estate Investment Trusts (REITs)
A real estate investment trust (REIT) is best for investors who want portfolio exposure to real estate without a traditional real estate transaction.
Furthermore, a REIT comes in when a corporation (or trust) uses investors’ money to purchase and operate income properties. REITs are bought and sold on the major exchanges, like any other stock.
The advantage of REIT is that, it is essentially dividend-paying stocks and the main holdings tend to be long-term, cash-producing leases
While the disadvantage is that Leverage associated with traditional rental real estate does not apply.
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#5. Online Real Estate Platforms
These are for those that want to join others in investing in a bigger commercial or residential deal. The investment is done via online real estate platforms, also known as real estate crowdfunding.
Furthermore, It still requires investing capital, although less than what’s required to purchase properties outright.
Online platforms connect investors who are looking to finance projects with real estate developers. In some cases, you can diversify your investments with not much money.
In addition, you can invest in single projects or a portfolio of projects, but it tends to be illiquid with lockup periods.
Investing in real estate, especially in the above cities, can be very profitable. While there can be great reward, you should always remain careful before investing in real estate.