In this article we are going to list the 20 Best Cities for Real Estate Investment. Click to skip ahead and jump to the 5 Best Cities for Real Estate Investment.
If you want to increase your net worth, or increase your disposable income, you need to invest, especially if you’re working a regular job. It is understandable that most people barely earn enough to cover their basic necessities, and thinking of investing is a just a far off thought for now. On the other hand, people who work higher up in positions that pay well generally tend to have extra income, which they invest. Now, many or in fact most people decide to invest in stocks and other securities, especially those who want an immediate return on their investment. However, for those with more savings and who are more risk averse, real estate is the best possible place to invest in.
There are several benefits to investing in real estate, starting with increased profits, even after paying mortgages and operating expenses. Depending on where you purchase real estate, you could be looking at double digit increase in prices annually which is an excellent return on your investment. Furthermore, you can also get major tax breaks including deductions of maintaining that property as well as deductions on the payment of mortgage. In addition, you can claim depreciation too. And of course, you can rent out your properties to tenants as well, which allows you to obtain passive income, which can be very valuable too. One more thing that you might be interested in is the fact that investing in real estate can be a hedge against inflation too. After all, there is a direct relationship between the GDP growth and real estate demand, as rents increases due to higher demand when economies improve, which results in higher real estate prices and greater returns for those who have invested in such.
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If you are looking to invest in real estate, but do not have enough capital to buy a property then you should look no further than publicly-traded Real Estate Investment Trusts (REIT). REITs allow investors to buy shares and they use their capital to acquire real estate, rent it out and pay very high dividends from profits to investors. In this way, the dividend yield from REITs are higher compared to other publicly-traded companies. The advantage of investing in REITs is that you can also get exposure from properties to which you otherwise might not get any access, including properties across best cities for real estate investment. Some examples of REITs that are worth looking into are Equinix Inc (NASDAQ:EQIX), American Tower Corporation (NYSE:AMT), Brookfield Asset Management (NYSE:BAM), Prologis Inc (NYSE:PLD), and MGM Growth Properties (NYSE:MGP).
Take for example, Equinix Inc (NASDAQ:EQIX), a REIT focused on data centers. Equinix Inc (NASDAQ:EQIX) has a huge portfolio of real estate that includes 210 data centers across 25 countries on five contintents. While its dividend yield of 1.55% is not very high,Equinix Inc (NASDAQ:EQIX) has been providing steady returns over the long-run and is likely to continue to do so as the demand for data centers grows.
Then there’s American Tower Corporation (NYSE:AMT), which invests in wireless and broadcast communications infrastructure around the world. American Tower Corporation (NYSE:AMT) has a portfolio of over 170,000 sites in the US, Europe, Asia, Middle East, Africa, and Latin America.
Other REITs acquire industrial properties and Prologis Inc (NYSE:PLD) is one of the largest industrial REITs. Prologis Inc (NYSE:PLD) owns around 4,700 buildings across the world with a total area of 984 million square feet. The REIT invests heavily in warehouses located near large urban areas, where land is scarce and demand for warehouses is big due to growth of eCommerce. Prologis Inc (NYSE:PLD) has a dividend yield of 2.10%.
MGM Growth Properties (NYSE:MGP) has the highest dividend yield among the companies we’ve listed above, amounting to 5.10%. MGM Growth Properties (NYSE:MGP) invests in large entertainment and leisure resorts and currently owns 15 properties, all of which are rented out to and operated by MGM Resorts International (NYSE:MGM). This allows MGM Growth Properties (NYSE:MGP) to collect more than $700 million in annual rent.
Last but not least, Brookfield Asset Management (NYSE:BAM) is a diversified REIT, but it’s also one of the largest, having more than $30 billion of invested capital and around 150,000 employees around the world. Brookfield Asset Management (NYSE:BAM) has a dividend of just 1.04%, but it invests in a whole range of industries including residential properties, renewable energy, as well as in private equity.
Before the 2008 housing bubble and the subsequent crash, the thought was that the housing market cannot fail. That it did so catastrophically in such an unprecedented manner may have damaged these claims, but even now, the real estate market tends to be one of the safest bets in investment. And this is especially true for the pandemic.
When the pandemic hit, the global economy was devastated, and this is also true for the United States, with stock markets suffering some of their worst crashes in history, leading to huge losses and erasure of tens of billions of dollars from the market due to the uncertainty that prevailed as people didn’t even know how to tackle the virus or avoid its spread. Similar expectations were reserved for the housing market, as people were losing jobs and their disposable income, which was expected to lead to reduced demand in real estate and the fall of the industry.
However, the opposite happened. Demand for housing has increased a lot over the past year, especially as work from home became the norm, and this boom in the housing market was one of the biggest surprises of the pandemic-driven 2020. This has led to home prices continuing to climb significantly over the past year, with these price increases expected to continue in 2021 as well. Currently, the focus of the market leaders is to ensure that this boom is sustained. According to the Census Bureau data, home sales in August 2020 were 43% more than in the same month in the previous year. The largest population segment in the United States, the millennials, have states their desire to purchase homes within the next year, which may just provide the impetus needed to sustain this number.
However, it is important to note how vast the United States is, and that this improvement in the real estate market is not uniform across the entire country. This is why we have noted the best cities for real estate investment in the country. Our rankings are based on the percentage increase in prices over the past year, with the data being taken from Kiplinger.
Without any further ado, let’s take a look at cities where the real estate market is on fire right now, starting with number 20:
20. Bakersfield, California
Current median home price in the city: $245,000
Year on year percentage of increase in the home price (in percentage terms): 12.4
In 2013, it was ranked second for the rental market, and even though the population growth rate has decreased, the housing market has experienced another boom in 2020.
19. Memphis, Tennessee
Current median home price in the city: $156,400
Year on year percentage of increase in the home price (in percentage terms): 12.7
Memphis is the second most populous city in Tennessee and is also home to the largest Africa American population in the state, with also a comparatively low median home price.
Pixabay/Public domain
18. Harrisburg, Pennsylvania
Current median home price in the city: $175,000
Year on year percentage of increase in the home price (in percentage terms): 12.7
Next on our list of best cities for real estate investment is Harrisburg. Pennsylvania-based Harrisburg is one of the cheapest cities in our list, and hence, a good opportunity for those who may not have vast amounts of liquid assets lying around to invest in.
17. Fresno, California
Current median home price in the city: $299,000
Year on year percentage of increase in the home price (in percentage terms): 12.7
Fresno was named for the vast abundant ash trees present in the city, and is called ‘The best little city in the U.S.A.”.
16. Cleveland, Ohio
Current median home price in the city: $146,000
Year on year percentage of increase in the home price (in percentage terms): 12.7
Cleveland has one of the lost median home prices in our list of best cities for real estate investment, at $146,000.
Pixabay/Public Domain
15. Seattle, Washington
Current median home price in the city: $525,000
Year on year percentage of increase in the home price (in percentage terms): 12.8
The largest city in Washington is also one of the highest populated cities in the United States, but is also said to be ‘bursting at the seams’, with more than 45,000 households having to spend 50% of their income on housing alone, while at least 2,800 people are homeless.
Pixabay/Public Domain
14. Stockton, California
Current median home price in the city: $400,000
Year on year percentage of increase in the home price (in percentage terms): 13.2
Stockton was one of the worst affected cities in the United States in the 2007 subprime mortgage financial crisis, with the highest percentage of foreclosures in the country. However, the city has recovered nicely in the following decade.
13. Riverside-San Bernardino, California
Current median home price in the city: $393,000
Year on year percentage of increase in the home price (in percentage terms): 13.4
This metropolitan area has close to 4.0 million people and is considered to be one of the most populated metro areas in the United States. The steady rise in demand for housing has led to a significant increase in single family homes.
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12. Bridgeport, Connecticut
Current median home price in the city: $460,000
Year on year percentage of increase in the home price (in percentage terms): 13.5
A seaport city in Connecticut, the median price of a home in Bridgeport can cost nearly half a million dollars, and investing in this market may only be limited to high flyers and the top 1%.
11. Lansing-East. Lansing, Michigan
Current median home price in the city: $138,000
Year on year percentage of increase in the home price (in percentage terms): 13.7
The capital of Michigan has the cheapest median home price in our list of best cities for real estate investment, at just $138,000 despite a major increase over the past year.
10. Columbus, Ohio
Current median home price in the city: $219,000
Year on year percentage of increase in the home price (in percentage terms): 13.8
The state capital of Ohio, Columbus has managed to remain an affordable city even though it has witnessed double digit growth in the past year, making it one of the best cities for real estate investment.
Pixabay/Public Domain
9. Greensboro, North Carolina
Current median home price in the city: $160,000
Year on year percentage of increase in the home price (in percentage terms): 14.2
The third most populous city in North Carolina is also one of the most affordable in the United States, with a median price of just $160,000. It is also unfortunately home to some controversial, and frankly despicable history, such as the Greensboro Massacre which resulted in the deaths of the Communist Workers Party.
8. Ogden, Utah
Current median home price in the city: $289,500
Year on year percentage of increase in the home price (in percentage terms): 14.5
Making it to our list of best cities for real estate investment is Ogden, Utah. In 2019, the median price of a house was $267,300 and how now jumped to nearly $290,000. The most expensive neighborhood has a cost of around $429,000.
7. Modesto, California
Current median home price in the city: $345,000
Year on year percentage of increase in the home price (in percentage terms): 14.7
Modesto has a population of more than 200,000 people and is one of the more affordable cities in California, even though the median price of housing is still $345,000.
6. Hartford, Connecticut
Current median home price in the city: $237,500
Year on year percentage of increase in the home price (in percentage terms): 15.2
On the sixth spot on our list of best cities for real estate investment is Hartford. The capital of Connecticut has also seen a boom in real estate price growth, providing a healthy return on those who invested before 2020.
Please continue to see the 5 Best Cities for Real Estate Investment.
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Disclosure: None. 20 Best Cities for Real Estate Investment is originally published at Insider Monkey.
