Here are the 5 major cities in the U.S. that are optimal places to invest for cash-flow. As for appreciation, that’s not something you can usually generalize because appreciation is not always a guarantee.
Atlanta is the headquarters for some of the most well known companies, making it a great job market and attractive to moneymaking tenants. Some companies include AT&T, Coca-Cola, Delta Airlines, and UPS. The job market is diverse and is one of top business cities. Atlanta has one of the largest populations of college graduates and is being flocked by fresh graduates looking for jobs and housing. Besides the many job opportunities, Atlanta has a unique culture—a mix of Southern charm, history, and urbanity. Tourists enjoy festivals, street-art, diverse food, and of course, the Atlanta Falcons.
Buying an income property in Atlanta could be a dream for investors because of the low home prices and highly educated, employed tenants. It’s one of the most visited cities in America, making it an even better Airbnb investment, based on cash flow. In 2015, investors made 16.5 percent returns in 2015 from a mix of cash flow and appreciation.
- City Average Traditional CoC Return: 58 percent
- City Average Airbnb CoC Return: 04 percent
- Top Neighborhood: Lindridge—Martin Manor
- Neighborhood Average Traditional CoC Return: 08 percent
- Neighborhood Average Airbnb CoC Return: 73 percent
2. Saint Louis
St. Louis is also home to several big companies including Enterprise Rent-A-Car and Express Scripts. In 2015, St. Louis was listed as one of the top 10 cities for creating a startup company based on capital, affordability, early-stage success, and community.
St. Louis has one of the best markets for property tax at a low 0.43 percent. Homes are fairly well-priced and the housing market is stable. The stability is due to its manufacturing, trade, transportation, and tourism industries. Investors here can expect to appreciate well. If you’re considering St. Louis, act now because the market is picking up. Homes are being sold, there is less competition amongst sellers, buyers and sellers are motivated, and closings are doing well. Right now, it’s a buyer’s market.
- City Average Traditional CoC Return: 28 percent
- City Average Airbnb CoC Return: 33 percent
- Top Neighborhood: Old North St. Louis
- Neighborhood Average Traditional Coc Return: 41 percent
- Neighborhood Average Airbnb CoC Return: 22 percent
3. Las Vegas
Las Vegas has certainly become a real estate icon in recent years, for several reasons. Firstly, properties are “cheap.” The median home price is $203,000 which is less than the national average by $14,000. Las Vegas went through a three-year period in which appreciation levels skyrocketed, paving pathways to success for investors. In 2013, homes were appreciating at 65.4 percent while they are currently at 11.6 percent.
The market in Vegas has been stable in the past five years, and local and international investors have been taking advantage of the buy-and-hold market. While home prices are on the lower side, rent is high—which is why Vegas is considered a place to buy and not to rent. The high rental rates could be the underlying reason to why short-term renting on Airbnb has been very lucrative for Airbnb investment properties in Vegas. The unemployment rate is above the national average at 7.1 percent. This may not bring the best long-term tenants, but could perform well through Airbnb.
- City Average Traditional CoC Return: 53 percent
- City Average Airbnb CoC Return: 97 percent
- Top Neighborhood: Downtown
- Neighborhood Average Traditional CoC Return: 91 percent
- Neighborhood Average Airbnb CoC Return: 13 percent
In late 2015, Home Union completed a study revealing the top 10 investment markets for single-family rentals. Charlotte, aka, “Queen City” was listed as No. 1 because of the job market growth. Of the 10 cities in the study, Charlotte came in third for best job-growth rate out of the top 55 metropolitan statistical areas. The city also ranked No. 21 in investment home price and No. 27 in gross rental yield.
Charlotte is also a major financial city. The major industries are financial services, motorsports, and energy. You might be surprised to know that Charlotte is now the second largest banking center in the U.S. after New York City. Forbes listed Charlotte as No. 14 on its 2015 list for Best Places for Business and Careers.
Home prices are relatively low and Charlotte alone has over eight colleges and universities—making it easy to find tenants.
- City Average Traditional CoC Return: 95 percent
- City Average Airbnb CoC Return: 87 percent
- Top Neighborhood: Revolution Park
- Neighborhood Average Traditional CoC Return: 74 percent
- Neighborhood Average Airbnb CoC Return: 44 percent
5. Washington, D.C.
Half a million dollars might buy you a nice one-bedroom apartment in D.C. or you could rent it for $2,500 per month. Why would anyone want to invest here with these home prices and high rental rates? Well, high rental rates can mean big returns for investors. In the D.C. and Northern Virginia area, there are over a dozen colleges and universities with students digging for off-campus housing. A furnished bedroom in D.C. can rent out for $900 or $1,000 per month!
So in this case, the home prices here aren’t as ridiculous as San Francisco or New York City, but the rental rates are significant. It’s also a touristy city which means an optimal location for an Airbnb investment property. The top neighborhood listed here gives investors the opportunities to buy low and appreciate well, unlike other neighborhoods in D.C.
Investing in D.C. takes extra creativity and research. Investors who bought properties in 2009 did well. The opportunities are a bit harder to find these days, but are still out there.
- City Average Traditional CoC Return: 81 percent
- City Average Airbnb CoC Return: 33 percent
- Top Neighborhood: Skyland
- Neighborhood Average Traditional CoC Return: 52 percent
- Neighborhood Average Airbnb CoC Return: 36 percent