The Best Places for Residential Real Estate Investments in 2019

Daniela Andreevska  |

Location is a key factor for the success of a real estate investment business. As 2019 is fast approaching, residential property investors are looking for the best places to invest in real estate in the new year. Here you will find a list of the top locations for traditional, long-term rentals and the top locations for vacation, short-term rentals in the US housing market in 2019. The data comes from Mashvisor, a real estate data analytics company.

The Best Places to Invest in Traditional Rentals in 2019

Traditional rental properties are those which investors rent out on monthly or annual basis. They are also known as long-term rentals. This rental strategy offers numerous advantages compared to vacation rentals including higher occupancy rates, less turnover, more stable rental income, and fewer legal and regulatory restrictions.

However, not all markets provide for a profitable traditional rental investment. Let’s take a look at the markets which are set to offer the highest return on investment in 2019, based on the capitalization rate, or cap rate for short.

1. Camden, NJ

At the moment the average cap rate for long-term rentals in Camden, NJ is 5.4%, the highest level nationwide for major cities and towns. While real estate experts might point that a cap rate below 8% is usually considered low, it is worth mentioning that the US housing market has become so competitive for residential investments that investors rarely see such a cap rate anymore. Moreover, this is just the city level, and individual properties can still offer double-digit profit.

The median property price in Camden is $101,600, which is less than half the national level, and the price per square foot is $75. Thus, another benefit of the Camden residential real estate market is that it is affordable for first-time investors and other investors on a budget. The average rental income is $1,240.

2. Santa Rosa, CA

If you are interested in investing in residential real estate further south, then you should take a look at Santa Rosa, CA, where the average cap rate for traditional rentals is 4.4%. Property prices here are less affordable than in Camden, NJ with a median value of $675,600 but still below the levels in other California cities. The average monthly rental income is also high at $4,180.

3. Waterloo, IA

Another affordable market for residential properties in 2019 which promises high return on investment is Waterloo, IA. The median property price there equals $132,100, while the average rental rate is $1,140. This results in a city-level cap rate of 4.1%.

4. Marion, IN

Another top location for buying an investment property in 2019 is Marion, IN, where the median property price is under $100,000, at $96,300. The price per square foot in this market is particularly low at $63, while the rental income averages $780. The average return on investment is 3.4%.

5. Jackson, MS

The last on this list of the best places to invest in residential real estate in the coming months is Jackson, MS. The median property price is $236,400, and the average monthly rent for traditional properties is $1,360. The city-level capitalization rate is 3.4%.

The Best Places to Invest in Short-Term Rentals in 2019

In recent years many real estate investors have been switching strategy in favor of vacation rentals as oftentimes these rental properties bring higher return on investment than traditional ones. However, short-term rental investors should be careful where they invest as many places have been issuing strict regulations or even bans on vacation rentals. While this rental strategy is generally legal in the locations below, restrictions and regulations might apply.

1. Lansing, MI

Mashvisor’s rental property calculator shows that the highest return on vacation rentals in the 2019 US real estate market can be expected in Lansing, MI, a cap rate of 10.5%. The median property price there is $106,000, while the average monthly rental income from short-term rentals equals $2,700. The city-level occupancy rate is 63.5%.

2. Abilene, TX

Another place to invest in a vacation home in 2019 is Abilene, TX, where the median property price is just about the nationwide level, at $233,800, and the price per square foot is $109. With an occupancy rate of 50.0%, short-term rentals bring a monthly income of $3,090 and a capitalization rate of 8.7%.

3. Jonesboro, AR

A vacation rental is set to succeed in Jonesboro, AR as well, with a city-level cap rate of 8.5% and an occupancy rate of 53.8%. The median property price there is $252,100. The rental income for short-term rentals is $2,370.

4. Akron, OH

2019 is looking promising for investing in Akron, OH for residential real estate investors interested in renting out on short-term basis. Although the average rental income in Akron is lower than in the other top locations, at $1,850, the cap rate is still excellent at 8.3%, due to the high occupancy rate of 52.7% and the low median property price, $119,100.

5. Key West, FL

For those investors you are looking for a top short-term rental investment destination and are not on a tight budget, Key West, FL offers the perfect opportunity. Properties are expensive with a median property price of $931,100 and a price per square foot of $709. Nevertheless, the occupancy rate and the monthly rental income are also high at 75.1% and $8,800, respectively. The cap rate is 7.2%.

Every successful real estate investment decision starts with choosing the right location to buy a property in. if you are planning to start a real estate investing business or to expand your already existing real estate investment portfolio in 2019, you know where to look for top-performing residential investment properties. The next steps are conducting comparative market analysis, searching for properties in various sources, and hiring a local agent with a proven record of deals.

DISCLOSURE: I have used data from Mashvisor, a US real estate data analytics company, where I work as Marketing Director.


The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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