If you’re hunting for prime real estate investment opportunities in the U.S., looking south is a savvy move. A 2023 Rocket Homes survey revealed that 9 out of the 10 Best Areas to Invest in Real Estate are located in the Southeast states or Texas. The attributes of the property are vital, but the location is equally important, as it greatly influences prospective tenants and the overall investment income. Whether you’re a seasoned investor or just dipping your toes into the market, the key is knowing where to put your money.
How We Determined the Best Cities for Real Estate Investors
Investing in real estate isn’t just about the property itself; location plays a significant role in determining potential returns. To identify the top cities for real estate investment, we analyzed several key market indicators including population growth, gross rental yield, vacancy rates, unemployment rates, and the ratio of renters to homeowners. Here’s what each metric tells us:
- Population Growth: A growing population often indicates a thriving economy with job opportunities, a lower cost of living, and increased demand for housing. Cities experiencing population growth are typically great spots for real estate investment.
- Gross Rental Yield: Gross yield reflects the percentage of the property’s cost that is returned annually in rent before expenses. A yield of 7% or higher is ideal for investors.
- Vacancy Rate: This shows the percentage of rental properties that are currently unoccupied. A healthy vacancy rate falls between 5% to 10%, indicating a balanced market with sufficient demand.
- Housing Price Index Growth: The housing price index tracks changes in market prices over time, providing insight into potential returns on investment. A higher index growth rate suggests a robust real estate market.
- Median Home Sold Price: This figure represents the midpoint of home prices in a market and is a more accurate reflection of typical property values compared to average prices.
The Top 10 Best Areas to Invest in Real Estate in 2024
Here’s a closer look at the cities that are currently showing the most promise for real estate investors.
1. Athens, Georgia: Best Areas to Invest in Real Estate
Athens, home to the University of Georgia, is not just about college football and charming Southern vibes. It’s a city where home values are on the rise, yet property prices remain well below the national average, making it a great spot for investors. In September 2023, the median home sold price in Athens was $328,265, a 9.3% increase from the previous year. The student population and thriving cultural scene ensure a steady demand for rentals.
- Population: 128,561
- Gross Rental Yield: 40%
- Vacancy Rate: 48%
- Housing Price Index 5-Year Growth: 9%
- Median Home Sold Price: $328,265
2. Savannah, Georgia: Best Cities for Real Estate Investors
Savannah is more than just cobblestone streets and historic charm; it’s an investor’s playground with a diverse economy powered by tourism, a bustling port, and vibrant cultural attractions. Savannah’s median home price is affordable at $327,125, and the city boasts a high gross rental yield of 49%. Neighbourhoods like the Historic District and Ardsley Park attract both long-term renters and tourists seeking short-term rentals.
- Population: 148,004
- Gross Rental Yield: 49%
- Vacancy Rate: 14%
- Housing Price Index 5-Year Growth: 22%
- Median Home Sold Price: $327,125
3. Waco, Texas: Best Places To Invest Real Estate
Waco, Texas, is a city on the rise. With its below-average property prices and a booming real estate market, it’s no wonder investors are flocking here. The median home sold price is $252,500, with values appreciating nearly 96% in the last five years. The city’s development plan, which focuses on creating walkable communities, adds further appeal for both renters and homeowners.
- Population: 143,984
- Gross Rental Yield: 55%
- Vacancy Rate: 82%
- Housing Price Index 5-Year Growth: 79%
- Median Home Sold Price: $252,500
4. Jacksonville, Florida: Best Cities for Real Estate Investors
Jacksonville combines the charm of old Southern neighbourhoods with 22 miles of oceanfront, making it a unique market for investors. With a population nearing one million and a thriving rental market, the city is a hotspot for both long-term and vacation rentals. The median home price is $297,538, and demand remains high, even as other markets struggle.
- Population: 971,319
- Gross Rental Yield: 44%
- Vacancy Rate: 4%
- Housing Price Index 5-Year Growth: 99%
- Median Home Sold Price: $297,538
5. Lakeland, Florida: Best Places To Invest Real Estate
Nestled between the two fast-growing urban centers of Tampa and Orlando, Lakeland features a charming small-town atmosphere while ensuring easy access to a variety of city amenities. The real estate market here has seen a 5-year growth rate of 86%, making it a strong investment choice. The median home price is $314,800, and the city’s gross rental yield of 52% is appealing for investors seeking solid returns.
- Population: 120,071
- Gross Rental Yield: 52%
- Vacancy Rate: 57%
- Housing Price Index 5-Year Growth: 7%
- Median Home Sold Price: $314,800
6. Oshkosh, Wisconsin: Best Cities for Real Estate Investors
Oshkosh stands out as the only northern city on this list, boasting a strong economy and a significant student population thanks to the University of Wisconsin-Oshkosh. The city’s lakeside location adds a vacation-like appeal that attracts both renters and homebuyers. Property values rose over 12% in 2023, with the median home price at $222,366.
- Population: 65,948
- Gross Rental Yield: 43%
- Vacancy Rate: 17%
- Housing Price Index 5-Year Growth: 71%
- Median Home Sold Price: $222,366
7. El Paso, Texas: Best Areas to Invest in Real Estate
El Paso’s growing population and vibrant cultural mix make it an attractive spot for real estate investment. With a median home price of $250,570, the city is affordable, especially when compared to national averages. The proximity to the Mexican border boosts the local economy, and neighbourhoods like Cielo Vista and Mesa Hills offer great rental opportunities.
- Population: 677,456
- Gross Rental Yield: 61%
- Vacancy Rate: 74%
- Housing Price Index 5-Year Growth: 3%
- Median Home Sold Price: $250,570
8. Tallahassee, Florida: Best Locations To Invest in Real Estate
As the state capital, Tallahassee offers a unique mix of government and university-driven economic stability. Florida State University alone ensures a steady stream of renters. The median home sold price is $310,000, with strong neighbourhood options like Betton Hills and Killearn Estates that appeal to both families and students.
- Population: 201,731
- Gross Rental Yield: 50%
- Vacancy Rate: 31%
- Housing Price Index 5-Year Growth: 65%
- Median Home Sold Price: $310,000
9. Durham, North Carolina: Best Locations To Invest in Real Estate
Durham, known as the “City of Medicine,” has a booming economy driven by healthcare and technology sectors. The Research Triangle Park nearby is a major draw for high-paying jobs and new residents. With a median home price of $404,940, the city has been identified as one of the hottest real estate markets in the country.
- Population: 291,928
- Gross Rental Yield: 36%
- Vacancy Rate: 42%
- Housing Price Index 5-Year Growth: 7%
- Median Home Sold Price: $404,940
10. Orlando, Florida: Best Locations To Invest in Real Estate
Orlando’s appeal goes beyond its theme parks; it’s a city of lakes, diverse neighbourhoods, and a strong economy. Over 60% of Orlando’s population rents, providing ample opportunity for investors. With steady population growth and a median home price of $374,387, the city’s rental market shows no signs of cooling.
- Population: 316,081
- Gross Rental Yield: 42%
- Vacancy Rate: 65%
- Housing Price Index 5-Year Growth: 14%
- Median Home Sold Price: $374,387
Conclusion: Best Areas to Invest in Real Estate
Investing in real estate is all about location, timing, and knowing where the market is headed. The cities on this list offer unique opportunities for investors looking to maximize their returns. Whether you’re drawn to the cultural allure of Savannah, the college-town buzz of Athens, or the booming tech scene in Durham, each city has its own distinct advantages. Ready to take the plunge? Now is the time to explore these thriving markets and make your next investment move.
Should You Invest in Warm Weather States?
Ever noticed that everyone seems to be moving south? You’re not imagining it. Warmer weather states in the South and West are attracting waves of new residents, and with them, new opportunities for investors. Why? A combination of lower living costs, job growth, and milder climates makes these regions appealing. From retirees seeking sunnier climates to young professionals chasing new job opportunities, the population shift is real and substantial.
Out of the Best Areas to Invest in Real Estate, nine out of ten are located in Southeastern states and Texas. This migration pattern is driving up demand for housing, particularly in smaller and mid-sized cities where affordability meets opportunity.
What Makes a City a Great Place for Real Estate Investment?
So, how do you know if a city is worth your investment? It’s not just about picking a place with pretty views or a bustling downtown. To identify a prime real estate market, you need to dive into the data. Look at key metrics like rental yields, housing price trends, vacancy rates, and local economic growth. In simpler terms, you want a place where demand outstrips supply and where growth potential is on the horizon.
