Turnkey rental properties can be purchased in 10 top cities in the U.S. in 2020 and beyond. Year after year, the best metropolitan neighborhoods change based on housing data. For investors, know where to find a property that will earn considerable profits is difficult. Without having access to current data, it can be difficult to make an informed decision. Below are the top 10 cities in the US to invest in turnkey rental properties in 2020.
Key Metrics to Understand Before Buying
No smart investor puts money into a property without doing some due diligence. Average home prices for a particular market are not a key index for rental properties specifically. New home construction and inflated prices in some markets can drive pricing upward. While the rental market does increase in value, it can also decrease in value.
There is no such thing as a nationwide CAP rate. Every city has its own good and bad neighborhoods. The return on investment minus expenses can be hard to calculate. The best measurement is a self calculation that requires someone on the ground to gather accurate data.
Occupancy rates and tenant turnover are important to consider. There is no point in investing in a single-family, duplex or apartment complex that has super high turnover. These types of properties cost a lot of money to maintain. It will not matter what city the property is in if the residence is not occupied.
Top 10 Cities to Buy Rental Property in 2020 List
Smart investors understand that the best properties are not only located in major cities. A lot of major growth is happening in smaller cities across the United States. This list combines major and smaller cities for the best rental growth in the year 2020.
The average nationwide rental price per month in the US is $1,436.
1. Dallas, Texas
The average rental price for a single-family house in Dallas is $1,148. The market here continues to expand as more people from California and other cities make their home in Texas. The growing neighborhoods and expanding economic area are driving factors for rental growth in this city.
2. Detroit, Michigan
Jobs are continuing to come to Detroit this year. With more factories and companies expanding, the population growth over the next few years is expected to continue. The average rental price for a property in Detroit is now $1,001. Many properties need a lot of work although many neighborhoods have been improved in recent years.
3. Cincinnati, Ohio
The metro Cincinnati market includes Northern Kentucky, Southern Indiana and Dayton. Growing towns like West Chester and Montgomery continue to attract more renters. The average price for a rental in the Cincinnati area is $1,336 per month. Areas in downtown like OTR (Over the Rhine) continue to expand as the population grows.
4. Buffalo, New York
Buffalo, NY has an average rental price of $1,016 per home. While this is just an average, Millennial renters and other target groups continue to move here. Prices continue to rise, and it makes this area a hotbed for people moving out of NYC specifically. Neighborhoods like West Seneca, Kenmore and others are growing.
Nearby cities like Rochester are also expanding in growth. Towns like Irondequoit offer quiet neighborhoods that are attracting more renters.
5. Philadelphia, PA
The price to rent a home in Philadelphia, PA is about $1,499 per month. Certain expenses are higher in this city compared to others in Pennsylvania. Investors must consider rental licenses, local taxes and other expenses when factoring in investment types in this city.
The nearby New Jersey cities like Camden and Cherry Hill have expanded in population recently. People who move out of the metropolitan North and South Philly area often choose to go to nearby NJ.
6. Jacksonville, Florida
Duval County, in Jacksonville, FL, has a media rental price of $994 per month. This figure can rise depending on where in the county a person buys a property. Every landlord or property management company has a difference in their asking price. However, market factors and neighborhood expansion do play a role in how much a renter pays in this city.
Many investors buy and hold houses in the local area due to the high demand. High turnover can be an issue in Duval County due to the ‘renter’s market’ that is available.
7. Mesa, Arizona
Home ownership in Maricopa County is rising. Even as homes are being sold, the rental market is also strong. The price to rent a home in Mesa, AZ is $1,995. Schools are prominent in many neighborhoods and this attracts more families. The economic outlook is strong for the city, and this means population growth for the next few years.
8. Charlotte, NC
Mecklenburg County is where Charlotte, NC is located. As one of the most visited cities in the U.S., Charlotte is also a great rental community. The typical price to rent a house here is $1,145. This level of monthly rental profit attracts a lot of new investors. Because the price of home ownership is higher here than in most cities nationwide, adults turn to rental as an alternative.
9. Houston, TX
Houston, TX has long been a driving force in the national real estate industry. As its population continues to grow, more people are now living in the inner city and local towns nearby. A person can rent a home in Houston, TX for $1,070 to $1,591 per month. This is an attractive rent index for a new or experienced investor.
While CAP rates are hard to determine due to different expenses, someone considering Houston as a market should consider more than one factor before investing there.
10. Tampa, FL
Tampa, as part of the Hillsborough County area, continues to expand. While homes near the Bay command a higher price, $1,217 to $1,470 is the monthly rental average. Many smaller communities a little outside of the city are points of interest to investors. While the market is crowded in Tampa, there are plenty of opportunities left for investors to prosper.
This page is frequently updated with new housing data as it becomes available.