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The Best Cities To Invest in Rental Property

September 1, 2023

6 min Read

Written by Daria Uhlig

Edited by Elizabeth Constantineau

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Skyrocketing rents and a shortage of residential rental properties are tempting would-be real estate investors to join the mom-and-pop investors who own over 70% of small rental properties, according to the National Association of Realtors.

Read: 3 Things You Must Do When Your Savings Reach $50,000

Once they’ve made the decision to buy, the next consideration is where — just like with residential real estate, location is everything. Ideally, you’ll look for a property in a strong rental market where rents are high enough to generate positive cash flow — and where appreciating home values will provide additional returns on your investment.

The 11 Best Cities To Invest in Rental Property

The following cities are among the best places to invest, as identified by Norada Real Estate Investments. GOBankingRates has included data from Zillow Research and World Population Review to help you compare.

Boise, Idaho

A strong job market, a stable real estate market, growing population and low property taxes are just some of the reasons Norada selected Boise as a best city for real estate investments. Home values have more than doubled in the last 10 years, although appreciation varies significantly from one neighborhood to the next. The city’s affordability, reasonable housing costs and excellent quality of life make it an attractive place for tenants to call home.

Home value change year over year: -6.7%
Median sale price: $466,633
Market value rent: $1,744
Annual population change: +0.69%

Houston, Texas

Houston’s role as an oil and gas industry leader has created a strong job market, which has contributed to its population growth. In fact, Houston’s population is growing at a rate that’s nearly double the national average, Norada noted. The housing market is strong as a result. Another benefit — Texas has no state income tax.

Home value change year over year: -0.60%
Median sale price: $329,000
Market value rent: $1,626
Annual population change: -0.51%

Dallas, Texas

Dallas is another Texas powerhouse when it comes to jobs. Indeed ranked it the No. 3 city in the U.S. because of 6.5% job growth and a high average salary of more than $58,000, according to Indeed. Norada also likes the diversity within its real estate market, which has a large inventory of residential and commercial properties. Ongoing business development efforts that have brought several major corporations to the city, which could also increase the demand for housing.

Home value change year over year: -2.00%
Median sale price: $395,000
Market value rent: $1,787
Annual population change: -1.13%

Las Vegas, Nevada

One reason Norada selected Las Vegas as a best place to buy a rental is that the city’s real estate market showed excellent resilience during the pandemic — a welcome departure from its bust during the Great Recession. Las Vegas’ position as a major tourist destination with a relatively low cost of living and no personal income tax could help an investment here pay off.

Home value change year over year: -7.30%
Median sale price: $401,167
Market value rent: $1,785
Population change: +0.54%

Atlanta, Georgia

Atlanta has a thriving economy and a lower cost of living than many other major cities. A growing population of young professionals and excellent quality of life help drive the real estate market, which Norada says has produced good returns for investors. Because it has homes for sale in all price ranges, the market is accessible to a variety of investors. Also in its favor is the stability of the market, which is seeing adequate supply for buyer demand.

Home value change year over year: -1.20%
Median sale price: $377,333
Market value rent: $2,005
Population change: -0.63%

Orlando, Florida

Norada included Orlando on its list of best cities for investment properties because it’s a leader in a number of areas, from jobs to cost of living, business community and population growth. The unemployment rate here is just 2.5%, according to Indeed, and jobs are attracting highly educated, highly skilled workers — all of whom need somewhere to live.

Home value change year over year: +0.50%
Median sale price: $394,317
Market value rent: $2,045
Population change: +0.50%

Tampa, Florida

Tampa is both a major tourist destination and a city whose economic growth is fueled by the technology, healthcare and finance industries. Norada included it because new businesses are creating jobs and increasing demand for housing. The real estate market is stable, with a good balance of inventory and buyers. Single-family homes, townhomes and apartments all present investors with opportunities.

Home value change year over year: -0.90%
Median sale price: $371,650
Market value rent: $2,255
Population change: +0.80%

Spokane, Washington

Norada said it selected Spokane for several reasons, including an affordable housing market, high demand for rentals, a growing economy and a high quality of life thanks to abundant opportunities for outdoor recreation. Spokane’s arts and cultural scene, selection of colleges and universities and low cost of living all bode well for its potential as a city where you might invest in a rental property.

Home value change year over year: -2.40%
Median sale price: $400,667
Market value rent: $1,520
Population change: +0.10%

Chicago, Illinois

The nation’s third-largest city is also one of the best places to buy a rental property. Norada likes it because of its robust rental market, thriving downtown and blue-collar neighborhoods with high rents. Revitalizing neighborhoods present excellent investment opportunities. What’s more, over half of Chicagoans rent a home.

Home value change year over year: 0%
Median sale price: $314,000
Market value rent: $2,106
Population change: -1.65%

Austin, Texas

Austin is much smaller than Dallas or Houston, but the city is thriving thanks to a growing population and booming economy. While the technology industry has helped to fuel its growth over the last number of years, other major industries, such as healthcare, government, education and tourism also contribute to a stable job market, according to Norada. However, Austin has a shortage of homes available for purchase, making it one of the best cities to rent out a house.

Home value change year over year: -9.80%
Median sale price: $484,832
Market value rent: $1,912
Population change: +0.11%

Columbus, Ohio

Ohio has a lot going for it as a place to buy a house for rental income — one of the fastest-growing populations of any Midwest city, the presence of a number of Fortune 500 companies and affordable home prices. Opportunities here are especially strong for investors interested in the student rental market. As one of the nation’s largest universities, Ohio State has a population of over 60,000 students.