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10 Best Cities To Invest In The United States Real Estate In 2018

Real estate remains an appealing asset class for investors because of the opportunity to earn recurrent income from rentals. If the market dynamics are optimal, your monthly rental income can fully offset the expenses associated with servicing your mortgage. Interest rates remain low and so debt is still cheap. If you can access credit, or otherwise have money to invest, consider real estate and purchase a rental property. It is imperative that you do your research and choose the best cities to invest in real estate in 2018.

How To Choose Best Places To Invest In Real Estate In The World?

Best Cities To Invest In Real Estate

You may be located anywhere in the world, the basic principles of real estate business remain unchanged – you want to choose those places for your investment properties where the return-on-investment is high. To maximize the returns from your real estate investment you want to buy property in places with the following features:

  • High rental occupancy: Check how much of the available housing stock in an area is vacant;
  • High rentals relative to your mortgage repayments: The more of your mortgage you can cover from rentals, the better; and
  • A low tenant default rate: The last thing you want is to buy property in an area when tenants frequently miss rent payments.

Market timing also matters, some cities are exceptional rental prospects, but there are very few houses for sale.

10 Best Cities To Invest In Real Estate In 2018

Best Cities To Invest In Real Estate In 2018

We looked at data and examined trends from across the US to bring you this list of the 10 best cities to invest in real estate in 2018. The list is ordered from highest to lowest median monthly rent.

1. San Francisco, California

Median rental per month: $4,400

San Francisco, California comes first in our list of best cities to invest in real estate in 2018. Rentals in this city that is the tech capital of the world remain high with strong continued growth. There is more growth to come with technology companies not showing any signs of slowing down. Income levels in the city are higher than the national average given the work force is highly skilled.

According to a report, prices for single-family, re-sale homes and condos/townhomes reached new highs in 2017. The median prices for homes gained 9.1% compared to 2016. That’s the sixth year in a row the median price has been higher than the year before. The median price for condos/townhomes rose 8.7% from 2016.

2. Seattle, Washington

Median rental per month: $2,895

Seattle ranks second in the list of best cities to invest in real estate in 2018. Seattle offers strong economic prospects and a buoyant labor market. This means that rental occupancies are expected to remain high. The city’s population has grown consistently over the last few years with families drawn to the city’s lifestyle. The housing prices have doubled in the past five years, growing twice as fast as the national average since 2016.

3. San Diego, California

Median rental per month: $2,775

San Diego ranks third in the list of best cities to invest in real estate in 2018. San Diego rentals have continued to increase over the years driven by increasing economic prospects. House prices in the city were very badly affected by the subprime mortgage crisis of 2007/08.

While the market has since recovered from its lows, there are still bargains to be found. This is especially so given the high rentals.

4. Denver, Colorado

Median rental per month: $2,200

Denver ranks fourth in the list of best cities to invest in real estate in 2018. Rentals in this city have been gradually increasing over the years. This consistent growth has been driven by a buoyant economy creating jobs. Tourism is also high, driving strong returns in the holiday rental market.

5. Dallas, Texas

Median rental per month: $1,800

Dallas stands at the 5th position. Dallas is a buyer’s market, with over 3000 listings weekly. The strong availability of housing stock and high rental rates relative to the house price make it an accessible market to invest. The Dallas real estate market offers a wide range of investment properties; you just have to find your tenants to rent out the property. Hiring a local property management company can help in finding tenants for your rental property in Dallas.

You should think of investing in Dallas real estate because it has a very diverse economy so there is a niche for people of every income level. It is estimated that 340 people move to Dallas-Fort Worth every-day.

Dallas has the lowest home ownership rate in the country, with renting more affordable than buying. The demand for rental units has increased 14% over the last year, so it’s the perfect opportunity to invest in Dallas real estate. The Metro area is growing and its expected that at least 20000 new homes in this area and in Dallas a total of 50000 new single-family homes and 50000 apartments.

6. Orlando, Florida

Median rental per month: $1,599

Orlando is at the 6th position in the list of best cities to invest in real estate in 2018. Orlando is a tourism and entertainment favorite, because of this it remains a strong real estate investment destination. Investors have a choice of targeting the long term residential or holiday markets with their properties. Both offer strong returns.

7. Houston, Texas

Median rental per month: $1,550

Houston is the seventh best city to invest in real estate in 2018. This city is the home of the US oil and gas industry and offers perennial employment opportunities. These strong macroeconomic factors continue to the power the Houston housing market. The average home is valued at $412,000. The rental income of $1,550 is relatively low given the property valuations.

However, what makes Houston a strong investment destination is that it has a very active real estate market. Volumes of trade are high and housing stock moves fast. This means it is fairly easy to exit investments and find a buyer for your home. You may also take a look at – Top 6 Reasons To Invest in Houston Real Estate Market in 2018.

8. Atlanta, Georgia

Median rental per month: $1,500

Atlanta, GA is the 8th best city to invest in real estate in 2018. Atlanta, GA offers attractive buying prospects for the savvy rental property investor. The city’s population has grown by over 14 percent in the last decade. This increasing population is driving the housing demand.

Should you buy investment properties in the Atlanta Real Estate Market? Located in the state of Georgia, the city of Atlanta is a hotpot for any type of real estate investmentAtlanta has shown promising population growth and employment, which are two signs of a healthy real estate market.

Atlanta is Georgia’s capital and economic center. It is considered as one of the 10 most productive states that contribute to USA’s GDP annually. As the city continues to go through an economic boom, prices of properties in Atlanta are forecasted to increase in the following years. People will want to beat out the competition and purchase soon if they’re looking to develop a successful career, surrounded by a diverse community, especially for today’s youth.

9. Spokane, Washington

Median rental per month: $1,250,

Spokane stands at the 9th position. With a population of only 213,000 people, Spokane is small, but it is a rising real estate hot spot. House prices are relatively cheap compared to much of the country at a median price of $199,900 that offers fantastic mortgage coverage.

According to neighborhoodscout.com, single-family detached homes are the single most common housing type in Spokane, accounting for 65.75% of the city’s housing units. Real estate appreciation rates in Spokane’s have tracked to near the national average over the last then years, with the annual appreciation rate averaging 0.23% during the period.

10. Columbus, Ohio

Median rental per month: $1,075

Columbus ranks tenth in the list of best cities to invest in real estate in 2018. is The average residential property in Columbus sells for $159,500. This means that the rental yield is high. Buyers should choose their neighborhoods carefully though as the $1,075 rental is not distributed evenly across the city.

Some neighborhoods remain economically depressed, and so will attract lower rental incomes and make poor investment choices.

Foreign Investment In US Real Estate 

Foreign individuals and corporations are free to purchase residential or commercial real estate in the United States. In 2013, foreign buyers made up about 7% ($92.2 billion) of transactions in the $1.2 trillion U.S. real estate market (Source: Wikipedia). The annual survey of the Association of Foreign Investors in Real Estate ranked San Francisco, which had been one of the top five global cities since 2011, at 11th place, and Washington, D.C., at 25th from 15th place last year.  Furthermore the survey revealed that New York City is no longer the only No. 1 city in the US that appeals to foreign investors; that title is now shared with Los Angeles, which tied with New York in this latest survey.

5 Best Cities For Foreign Investment In United States Real Estate 2018

According to the latest survey of the Association of Foreign Investors in Real Estate (AFIRE), the United States was deemed the number one country for planned real estate investment in 2018 and the 5 best cities for foreign investment in United States real estate (CRE) are:

  • Los Angeles (tied with New York, #2 last year)
  • New York (tied with Los Angeles, #1 last year)
  • Seattle (#4 last year)
  • Washington, DC (#6 last year)
  • San Francisco (#5 last year)

With 58% of respondents’ votes, the US remains the country considered the most stable for real
estate investment, and 86% said they plan to maintain or increase their investment in US real
estate in 2018.

Residential Properties Purchased by Foreign Buyers in United States

According to a recent report by NAR, Chinese buyers have been the top foreign buyers of U.S. residential property for three straight years, hitting a record high.

The below data has been taken from the report published by NAR (National Association of Realtors).

2017 Profile of International Activity in US Residential Real Estate

  • Foreign buyers purchased $153.0 billion of residential property from April 2016—March 2017,
    an increase from $102.6 billion during the previous 12-month period (April 2015—March 2016).
    The dollar volume of foreign buyer purchases accounted for 10 percent of the dollar volume of
    existing home sales, an increase from the eight percent share during the previous period.
  • Foreign buyers purchased 284,455 residential properties, an increase from 214,885 during the
    previous 12-month period. The number of units purchased made up five percent of existing
    home sales, an increase from the four percent share during the previous period.
  • Foreign buyers who primarily reside outside the United States (non-resident foreign buyers)
    accounted for 42 percent of all foreign buyers, while recent immigrants and foreign buyers who
    reside in the United States on work, student, or other visas (resident foreign buyers) accounted
    for 58 percent. This composition is about the same as that of the previous 12-month period.
  • The average price of properties purchased by foreign buyers was $536,852, more than the
    average price of $277,733 of all U.S. existing home sales.3 The median price of properties
    purchased by foreign buyers was $302,290, also more than the median price of $235,792 of all
    U.S. existing home sales.4
  • China remained as the top origin of foreign buyers ($31.7B), followed by Canada ($19.0B), the
    United Kingdom ($9.5B), Mexico ($9.3B), and India ($7.8B). The bulk of buyers from China,
    India, and Mexico were resident buyers, while most buyers from Canada and the United
    Kingdom were non-resident buyers.
  • Although foreigners purchased property nationwide, five states accounted for 54 percent of total
    residential property purchases: Florida (22 percent), Texas (12 percent), California (12 percent),
    New Jersey (four percent), and Arizona (four percent).
  • Nearly half of foreign buyers purchased the property as a primary residence.
  • Most non-resident foreign buyers made an all-cash purchase (72 percent), while a smaller
    fraction of resident foreign buyers paid all-cash (35 percent).

For the new foreign real estate investors, it is important to know that in the United States, real estate listing information is shared by agents using multiple listing services and consumers can access that same information using real estate sites such as Zillow. Each state in the US has its own set of rules regarding the purchase of real estate, including the type of purchase contract used, the method of closing the sale and even the duties and titles of the individuals involved.

Make the most of your investment dollars in 2018 by investing in real estate. Our analysis of the 10 best cities to invest in real estate is based on trends in rental occupancy, income, and tenant default rates. We also examined the availability of houses to buy in each city.

 

References:

https://www.realtor.com/news/trends/20-hottest-markets-real-estate-u-s-february-2018/
https://www.forbes.com/sites/samanthasharf/2018/01/03/housing-outlook-2018-six-predictions-from-the-experts/#4edb79e44066
https://www.cbre.us/research-and-reports/2018-U-S–Real-Estate-Market-Outlook
https://www.trulia.com/real_estate/San_Francisco-California/
https://fortress.wa.gov/esd/employmentdata/reports-publications/regional-reports/county-profiles/spokane-county-profile
https://www.zillow.com/san-diego-ca/                                                                                http://www.afire.org/


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