294: 2019 Top 10 Markets for Real Estate Investors

SHOW NOTES FOR EPISODE 294: 2019 TOP 10 MARKETS FOR REAL ESTATE INVESTORS

We talk a lot about “emerging markets” on the Old Dawg’s REI Network, especially for those of you who are an out-of-state investors.  We are always looking at which markets are the best markets to invest for both the short and long term.  In today’s podcast, Bill shares ten of the top real estate investing markets for 2019 as well as how you can, and should, identify emerging markets for yourself.

The lists I share are not definitive.  They are only “snapshots” of areas that could have potential.  Today’s list, however, zeroes in on areas where population is growing above the national average.  They come right from the census numbers directly – and the numbers are current!

However, before we discuss our list, I want to talk about some of the key data that you need to research to create your own emerging markets list.

The first thing I always look at is population growth.  Population growth is important!  Very important!  But it is just an “overlay” of many factors and data information you need to consider

You also must consider

• Jobs
• Large businesses locating in the area
• Appealing lifestyle
• The rental market
• Vacancy rates
• Are there state capitals and universities nearby
• Big box retail, shopping hubs
• Location of an airport
• Infrastructure
• Path of progress
• Minimum population size

Fastest Growing Cities & States

But, without a growing population, it is not an emerging market.  Here are some of the top population growth cities in the US:

Urban Land Institute Report

Every year, the Urban Land Institute publishes its Emerging Trends in Real Estate® report, a widely read and highly regarded market forecast for what’s to come in the real estate and land use industry. The report (from ULI and PwC) covers real estate investment and development trends, regional market outlooks, property type outlooks, capital markets, and more issues related to real estate in the US and Canada. This year, the report celebrates its 40^th anniversary and was recently released with its outlook for 2019. You can read the full report here.

The report is mostly highlighted by its “Markets to Watch” list of the top cities to own an investment property nationwide. Notably, southern states have multiple cities that rank among the best places to invest in real estate. In addition, more 18-hour markets are on top this year as well. In this blog post, we break down the top 10 cities in the US housing market where you should consider owning an investment property in 2019. Moreover, we provide real estate data and analytics to help you better understand why these cities are the best of the best.

The issue with these top cities is can you find opportunity? I know investors are still buying in these cities, but can a new buyer come in and buy a quality deal?

#1 Dallas/Fort Worth, TX

The Dallas/Fort Worth real estate market climbed up from 5^th in 2018’s report all the way to the 1^st spot, and rightfully so. The metropolitan area shows a strong economy with big population growth due to the low cost of living, and strong labor market growth (4.3%) due to the low cost of doing business. These are the main indicators of the increasing demand for rental properties in the area.

In addition, the supply of new construction is another reason for the profitability of investment properties in the Dallas/Fort Worth housing market. This shows that the city has a strong absorption as supply is keeping up with demand. For more on why you need to own a rental property here, read: Dallas Real Estate Market: The Best Place to Invest for 2019.

• Median Property Price: $296,726
• Traditional Rental Income: $1,570
• Airbnb Rental Income: $2,750
• Days on the Market: 48
• Price-to-Rent Ratio: 15.75

#2 New York/Brooklyn, NY

Although getting into the real estate market in the Big Apple is rather costly, New York and Brooklyn are second on the list of best places to invest in real estate for 2019. New York is especially known as an international housing market for foreign property investors in the US. In fact, the Association of Foreign Investors in Real Estate (AFIRE) annual survey has ranked New York as the 2^nd global market, with London claiming the 1^st spot. So, if you’re a high stakes gambler, investing here might be more to your liking.

While New York/Brooklyn’s soaring costs hinder new construction, “the city government, the local real estate board, and the construction trade unions are finally working together to increase new supply” according to the Emerging Trends report.

Furthermore, the high occupancy rate and rental income in this gateway market make it a smart choice to own a multi-family investment property. However, New York still enforces strict regulations on property investors renting out on Airbnb! Make sure to keep that in mind before investing in short-term rentals here.

• Median Property Price: $1,110,259
• Traditional Rental Income: $3,239
• Airbnb Rental Income: $3,564
• Days on the Market: 137
• Price-to-Rent Ratio: 28.56

#3 Raleigh/Durham, NC

Three cities in North Carolina made it on the list, with the Raleigh/Durham region in the top 3 best places to invest in real estate. Historically, the region has a balanced housing market which provided property investors with safety and stability for years. Raleigh/Durham is also expected to have strong employment growth in 2019 that is projected to be well above the national growth rate. One thing that the Raleigh/Durham real estate market is particularly benefiting from is the universities in the region.

With an influx of new residents and a higher percentage of the population under the age of 44, the housing makes it attractive for property investors looking to rent out to millennials. The area is delivering new construction to house this increasing population. Job opportunities, affordable housing, and a diverse economy also contribute to the success of this real estate market and make it especially profitable for multi-family homes and buy-and-hold real estate.

• Median Property Price: $433,433
• Traditional Rental Income: $1,553
• Airbnb Rental Income: $2,652
• Days on the Market: 82
• Price-to-Rent Ratio: 25

#4 Orlando, FL

For the third year in a row, Orlando is among the top five best places to invest in real estate. Owning an investment property in this housing market continues to be a profitable and wise decision. Due to its beautiful scenery, improving quality of life and ambient weather, Orlando is seeing a dramatic population growth at the rate of 7.2%. In addition, the city is slowly becoming a business hub for young professionals and has experienced an annual job growth of around 4.4%.

Owning an investment property in Orlando is profitable for property investors because Florida is one of the few states with no personal income tax. In addition, many experts claim the Orlando housing market is the best place for beginner investors due to its affordability. Affordability and increasing rental income mean positive cash flow. Here’s the data you need to know, as estimated by our Investment Property Calculator:

• Median Property Price: $323,826
• Traditional Rental Income: $1,588
• Airbnb Rental Income: $2,256
• Days on the Market: 74
• Price-to-Rent Ratio: 17

While the Nashville housing market is 5^th for overall real estate prospects, it takes the crown and #1 spot for homebuilding. Nashville is booming with high demand for both long-term and short-term rentals. The city claims the title of having the lowest unemployment rate of any metropolitan area with more than a million residents. Given its strong job market, more people are relocating to live permanently in Nashville for work and the job opportunities the city has to offer.

Moreover, Music City is known as a tourist attraction, making it one of the best places to invest in real estate short-term rentals. The city is currently trying to set regulations for Airbnb rentals for non-residents, but no restrictions are in place yet or for the foreseeable future. Another reason to own an investment property in Nashville is the fact that it’s an affordable, landlord-friendly housing market.

• Median Property Price: $413,592
• Traditional Rental Income: $1,753
• Airbnb Rental Income: $3,452
• Days on the Market: 79
• Price-to-Rent Ratio: 19.66

#6 Austin, TX

The Austin housing market isn’t the largest in Texas. However, there are a number of reasons to consider buying a rental property in this city. One of Austin’s strengths is its diverse, stable economy which offers tons of high paying tech jobs. In addition to its low cost of living and beautiful environment, it’s no wonder Austin’s population is starting to boom. This increasing population is mainly due to college students coming to the city for its above average education rates and then deciding to stay here due to its well-paying jobs.

These indicators also explain why both residential and commercial real estate is thriving in Austin. This housing market is also landlord-friendly just like the majority of cities in Texas. Not only that, but Airbnb Austin is also a profitable investment as Airbnb hosts made up to $19 million in revenue from June to August of last year! As you can imagine, future rental demand for both traditional and Airbnb rentals in Austin is expected to grow further in 2019, making it one of the best places to invest in real estate.

• Median Property Price: $518,686
• Traditional Rental Income: $1,842
• Airbnb Rental Income: $2,918
• Days on the Market: 81
• Price-to-Rent Ratio: 23.46

#7 Boston, MA

The Emerging Trends report ranks Boston as one of the top 10 real estate markets in the country for the second year in a row. The Boston housing market has proven to be resilient in the past. In fact, it’s one of the 10 cities that survived the last housing crash. Despite Boston’s slow population growth rate, the city did enjoy a net migration rate over the past five years. In addition, due to the more expensive house prices, many of Boston’s residents opt to rent meaning rental demand and rental income are going up.

Furthermore, the city has countless touristic sites and natural attractions which make it one of the best places to invest in real estate short-term as well as long-term rental properties. The Emerging Trends report also predicts employment growth in Boston at a rate near the US national average and states that “investment opportunities are seen as being readily available in Boston for 2019.”

• Median Property Price: $855,693
• Traditional Rental Income: $2,533
• Airbnb Rental Income: $3,380
• Days on the Market: 44
• Price-to-Rent Ratio: 28.15

#8 Denver, CO

There are numerous reasons why Denver is ranked in the best places to invest in real estate (both traditional and Airbnb). Let’s discuss why Airbnb rentals in Denver are profitable investments. First of all, Airbnb short-term rentals have become legal in Denver since 2017. Airbnb is profitable in Denver as the city has collected over $3 million in taxes. Airbnb hosts also receive high rental income and return on investment from their rental properties.

Moving on to traditional investments in Denver- according to the Emerging Trends report, Denver’s population is projected to be well above the national average in 2019. Moreover, a large percentage of the city’s population is between the ages of 25 – 44, which is supporting labor market growth. Finally, the Denver real estate market is seeing strong development and investment activity in nearly all property types!

• Median Property Price: $467,937
• Traditional Rental Income: $2,043
• Airbnb Rental Income: $3,462
• Days on the Market: 57
• Price-to-Rent Ratio: 19.09 

#9 Charlotte, NC

Charlotte, the largest city in North Carolina and home to roughly 2.5 million people, is another hot real estate market for property investors in 2019. It is one of the fastest growing metro areas, and the second fastest growing in the southeastern US. Over the last two years, it has experienced a solid 3.7% population growth and a 2.7% employment growth. Charlotte ranks high among the best places to live as well as among the 30 hottest cities for new businesses.

Another reason to own a rental property in the Charlotte housing market is a new law that the city passed last summer. This law allows landlords and property investors to recover attorney’s fees and court costs from tenants if the eviction goes to court. As a result, a real estate investor in Charlotte won’t face the risk of owning a rental property where a tenant isn’t paying rent for months or rack up insane legal bills! With so much going for it, Charlotte has earned its spot as one of the best places to invest in real estate.

• Median Property Price: $386,923
• Traditional Rental Income: $1,473
• Airbnb Rental Income: $2,454
• Days on the Market: 83
• Price-to-Rent Ratio: 21.8

#10 Tampa/St. Petersburg, FL

For the first time since its publication of the Emerging Trends report, the Tampa/St. Petersburg area finally reached the top 10 real estate markets for property investors! What this area has in common with the other cities are population growth (by 4.6%), employment growth (by 2.3%), and continued economic prosperity. Another factor that helped Tampa/St. Petersburg this year is the market’s affordability. Buying a rental property in this housing market is a bargain when compared to other cities on the list like New York.

These factors have helped the housing market in Tampa/St. Petersburg to land a spot as one of the best places to invest in real estate. Furthermore, all these new residents pushed the area into the 2^nd spot for homebuilding, surpassed only by Nashville, indicating the real estate market’s strong absorption. Here is the data and analytics from Mashvisor’s investment property calculator:

• Median Property Price: $387,119
• Traditional Rental Income: $1,661
• Airbnb Rental Income: $2,036
• Days on the Market: 89
• Price-to-Rent Ratio: 42

Other Cites Not on the List but Well Worth Checking Out

• Jacksonville, FL
• Richmond, VA
• Las Vegas, NV
• Indianapolis, IN
• Columbus, OG
• Cincinatti, OH
• Louisville, KY
• Kansas City, KS & MO

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