Real estate investing is so accessible today that you no longer need to reside in the same state you invest in.
This begs the question for real estate investors just getting started: How do you choose a real estate market that is profitable and checks all the boxes in terms of safety and being in a desirable location?
If you don’t live close to your investment properties, you’ll need to hire a property manager to handle the day-to-day upkeep which is an added expense that many new investors don’t have the budget for.
But if you’re in a place where you’re trying to choose a real estate market, this article will lay out everything you need to know before settling on a location to put down your roots. We’ll also discuss the top 7 real estate markets that are the best choices to invest in real estate today.
Choosing a Real Estate Market the Right Way
Believe it or not, there’s a right and wrong way to choose a real estate market.
The right way involves research and determining the market has price points you can afford in desirable areas. The last thing you’ll want is to wake up to a call from your property manager about a break-in or other similar crimes.
Even the most expensive markets have undesirable areas, so you’ll need to research different neighborhoods in each market and determine where you can afford.
Other factors you should consider when choosing a real estate market include:
Geographic location
Are you comfortable living away from your investment property? Although not required, most investors live in the same market as their investment properties.
Property types
Some markets are great for duplexes and triplexes, while others are perfect for condos or single-family homes. Make sure you know what property type you’re looking to invest in before making any big decisions.
Financing
Can you afford homes in the market you’re looking at? What if there is an unexpected capital expenditure that you need to finance? You should ensure you have enough cash reserves to account for these expenses and possible vacancies.
Cash-on-cash return
Before you choose a market, you should get some experience running the numbers on different properties to see if you can generate a positive return on investment.
One of the best ways to do this is by calculating the cash-on-cash return, which is a rate of return that determines the total cash you’ll make on your cash investment into a property.
Economic Factors to Consider When Choosing a Real Estate Market
There are additional economic factors that real estate investors should consider before deciding on a market to invest in.
Job Growth and Employment Trends
You should be aware of the unemployment rate in the area before investing since stagnant job growth and high unemployment rates often lead to high vacancies and a decreased demand for housing.
Population Growth
If you can’t find qualified tenants to rent your investment property, it won’t be possible to generate a positive return on your investment. Having steady population growth is a good sign for a real estate market that may be a good investment.
Top 7 Real Estate Markets to Invest In Today
Not every location will be a good investment in today’s real estate market, so we decided to highlight the top 7 real estate markets to invest in today which gives you the highest chance to succeed as a real estate investor.
- Austin, Texas
Austin is on its way to becoming the next Silicon Valley with the number of unicorn startups migrating to the growing city. Its tech scene is booming, and plenty of brilliant businessmen and women are coming to Austin and need housing. Other factors that make Austin a great place to invest in real estate include low inventory, rising home prices, and high demand for affordable housing.
- Boise, Idaho
Boise has a track record of being one of the best long-term housing markets in the United States, which is why we believe it deserves a spot as the second-best real estate market to invest in. It continues to have steady job growth, and home prices have risen by 8.1% since 2020.
- Las Vegas, Nevada
Las Vegas thrives as a destination for business retreats and conventions, and its tourism industry is back on track after a rough stretch at the beginning of the pandemic. Vegas experienced a population growth of 2.5% and a 10% increase in average rent prices throughout the bustling city.
- San Antonio, Texas
The second largest city in Texas is also one of the best places to invest in real estate today because of its strong local economy and average rent growth of over 4% since last year. San Antonio has plenty of eclectic eateries and tourist attractions that consistently draw in visitors in need of housing each year.
- Atlanta, Georgia
Atlanta is another ideal place for real estate investors because of its steady population growth of 14% over the last ten years and being one of the ten most productive metropolitan areas contributing to the United States annual GDP. The city is experiencing an economic boom that presents plenty of opportunities for investors looking to capitalize on the growth in Atlanta.
- Tampa, Florida
Tampa has a population exceeding 4 million and consistently ranks as one of the top tourist destinations in the country. Many experts say that Tampa is the hottest real estate market in the US since home values have skyrocketed over 5% in the past year with a median home value of $250,000.
- Durham, North Carolina
Durham is one of the markets that may surprise you on our list. However, it ranks as one of the best real estate markets to invest in because of increasing rent values (up 10% since 2016) and the influx of affordable housing and apartment buildings for millennials. It’s a college town with plenty of bars and nightlife available for those wishing to partake.
The Bottom Line
If you’re a new real estate investor deciding on a real estate market today, we recommend doing plenty of research and determining what you can afford and how your geographic location affects your investment decisions.
Choosing one of the top 7 real estate markets we mentioned presents plenty of opportunities for investors. Still, you should be familiar with many different markets and run the numbers on each before you decide on a market to invest in.
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