When you're planning to invest in real estate, among the most important factors in selecting the right investments is to choose the ideal market to invest in. There's no such thing as a perfect market. The type of investor you are has a role in determining which markets are right for you.
Some investors choose to put their money in properties that are located in high-cost markets in the hope that values will continue to increase and rents will remain high. However, investing in an affordable market is a great way to spread your money further and get into a market that might not remain affordable forever. Even though property prices have increased considerably across most markets over the past few years, there are numerous locations that are still affordable and appealing to investors. These markets are detailed below.
Dallas is among the best places to invest in 2023. This city boasts high population growth every year. It also has a strong economy and a robust real estate market that provides opportunities for you to invest in commercial and residential properties. Unlike many other big cities in the U.S., Dallas has relatively affordable home prices, which has resulted in a high demand for housing as well as increasing home values. The median sale price for a home in Dallas is just $430,000, which is a 9% drop from last year.
With a growing population, investing in affordable real estate now allows you to benefit from scenarios where rents and property values are pushed higher because of the growing demand from new residents. Keep in mind that the Dallas real estate market is also a diverse one. You can select from an expansive inventory of apartments, single-family homes, townhouses, industrial facilities, office buildings, and shopping centers to put your money towards.
Atlanta, GA is another city that's gone through considerable growth over the past decade or so. At the moment, it's believed by many to be among the best cities to invest in real estate. Despite the fact that it's a popular destination among real estate investors, it still offers affordable prices. The median sale price for a single-family home was around $350,000 as of January 2023, which is a slight increase from the previous year.
Average rent prices have also increased at a consistent rate over the past two years, which gives you the ability to raise the rent rates on any property you purchase. Keep in mind that construction on multifamily properties throughout Georgia has grown by more than 100% between the beginning of 2022 and the start of 2023. Since new supply is expected to be placed on the market regularly, property prices should remain reasonable and may decrease over the next 12 months.
One reason why Atlanta should continue being a popular destination among renters is because it has a somewhat low cost of living when compared to other major cities. Even though the cost of living is around 2% higher than the national average, it's well below the cost of living for large cities like San Francisco and NYC. In fact, Atlanta's cost of living is currently 43% lower than what it is San Francisco. Because of these low costs, the city's population should continue to grow, which means that now is the perfect time to invest in this market.
Like several cities in Florida, Tampa offers affordable property prices for investors to take advantage of. The median sale price for a single-family home in Tampa is around $364,000, which is a small increase over what homes were valued at in 2022. While Tampa real estate is currently affordable, rent prices increased by around 5% from January 2022 to January 2023. New construction on multifamily properties is also very high in 2023.
Tampa is among the best places for you to invest in because of its low cost of living, easy access to sandy beaches, ample investment opportunities, and a growing population. This city should also remain popular among renters because of its in-demand tourist destinations. The Florida Aquarium and Busch Gardens are just two destinations that bring in tourists and cause demand for rental homes and properties to rise.
Although the Austin real estate market isn't as large as the one in Dallas, it does provide investors with plenty of investment opportunities. Despite the fact that Austin is smaller than Houston, Dallas, and San Antonio, its housing market is the 11th largest one in the country. Over the past few years, the city has become a technological hub, which has brought in many professionals who need to rent units in single-family homes or multifamily properties.
The Austin population has grown by around 2.40-3.40% in the years since 2019, which is a trend that's estimated to continue over the coming years. Since many of these new residents are young, Millennials will be a large part of the rental market.
In January 2023, the average sale price on a single-family home was $458,000, which is a 3.6% decrease. Rents have also increased by more than 3% year-over-year, which means that buying an affordable property now may allow you to charge higher rents when property values increase in the future. Along with the affordable home prices, you might also want to invest in Austin because of their:
There are a few large cities in North Carolina that have proven to be great places for real estate investors to invest in. The best of these is Charlotte, which boasts one of the fastest-growing metropolitan areas. As the largest North Carolina city, Charlotte is a central hub for entertainment, business, and education in the state, which means that it should continue being a good place to invest. Companies like Bank of America, Duke Energy, and Lowe's have their headquarters in Charlotte. Because of the diverse economy, there's a consistent base of buyers and renters in the market, which is perfect for real estate investors who want to gain high returns.
The median sale price for a home in Charlotte is $387,000, which is a slight drop from last year. Prices, however, won't drop forever, which makes now a good time to search for investment opportunities. Keep in mind that median rental prices in Charlotte are upwards of $1,767, which is an increase of around 2.8% from the previous year. Since Charlotte is home to several top-ranked universities and colleges, there's always going to be demand for rental properties among students and young adults.
Phoenix is a top destination on this list because of its affordable pricing as well as its rapid population growth. The year-over-year supply of homes in Phoenix has grown by a total of 2.71 months from January 2022 to January 2023, which is an increase of around 190%. With a much higher supply of properties on the market, investors are capable of obtaining relatively low prices for the homes or multifamily properties that they're interested in. The median price for a single-family home in January 2023 was $425,000, which marked a year-over-year drop of 4.5%. With home prices dropping temporarily, you might want to make an investment on a property that's more affordable than it would typically be.
At $1,858, rental rates in Phoenix haven't moved much over the past year. An increasing amount of multifamily supply has entered the market in recent months, which is part of the reason why rents aren't increasing. However, more supply means that multifamily properties should be more affordable. Population growth has increased by around 1-2% for the past two decades. Further growth is expected in the years to come. The city has a high rental demand, which is the result of a relatively large student population. When rental demand is high, investors likely won't find it difficult to generate rental income.
If you're thinking about making an investment or two in the Midwest, you can't go wrong with Columbus, OH. When it comes to population increases, Columbus is the fastest-growing destination in the Midwest. Over the next 10 years, their population is estimated to grow by around 10%. The city has proven to be popular because of its successful startup culture, premium infrastructure, affordable housing, and strong job market. Companies like American Electric Power and Nationwide Insurance have their headquarters in Columbus.
Even though Columbus is considered to be a major city, the cost of housing is lower than the national average, which makes the city an appealing option for investors who want to buy great housing at relatively low prices. At the start of 2023, the median sale price for a single-family home was $290,000, which is an 11.5% increase from the previous year. Rental rates have grown by upwards of 3.5% over the past year, which is much higher than the national average of 1.7%.
Aside from affordable pricing, Columbus is an appealing destination for investors because it plays host to Ohio State University, which has more than 60,000 students. Many of these students are in need of a place they can rent while attending college. Around 50% of the Columbus population rents, which makes this a premium spot for any investor who's searching for affordable options.
Even though interest rates are currently rising, making investments in real estate allows you to earn steady and recurrent income. Whether you're interested in investing in commercial properties or residential homes, focusing on affordable markets allows you to add more properties to your portfolio in a manner that improves diversification.
Let's say that you choose to invest in a single property in NYC instead of Charlotte. While there's a chance that the property you pay for in NYC will appreciate in value by more than the property in Charlotte will, you're taking a bigger risk since the first investment will cost more. If the property fails, your portfolio could incur significant damage. Before you decide to invest in any city, do your due diligence. By conducting extensive research and developing a well-rounded strategy, you can make rewarding real estate investments in 2023.