The Top 15 Best Cities to Buy Rental Properties in 2024

Learn about top locations offering profitable opportunities for real estate investment. Discover insights into rental market trends, potential returns, and factors that influence the desirability of certain cities for property investment.

By
Nichole Stohler
|
Last Updated
February 22, 2024
The Top 15 Best Cities to Buy Rental Properties in 2024

Buying a rental property can provide ongoing passive income and long-term equity growth. But not all markets are created equal when it comes to rental returns and appreciation potential. You need to choose the right location if you want to maximize your investment.

With that said, let's explore the top cities for buying rental property in 2024. These areas combine high demand from renters, strong population and job growth, and relatively affordable home prices. We focus on affordable, growing cities where investors will likely find good deals and make profitable real estate investments.

These rental hotspots offer the right mix of cash flow, tenant demand, and future upside. Discover the best places to invest in rental property this year!

Key factors for profitable rental investments

Saving up the down payment and getting approved for financing are big first steps toward buying rental property. You probably feel excited to start browsing listings and checking out open houses, but before you dive into the search, take a moment to get clear on what makes a good rental investment.

Not all markets or properties will pay off equally. Doing some research upfront into what drives returns in different areas will set you up to make wise decisions once you start seeing potential listings. Here are some factors to consider:

Affordability

The lower the buy-in cost, the easier it is to find cash-flowing rental properties in a given market. Markets with median home prices around $250,000 or less provide a much more affordable entry point than expensive coastal cities.

In affordable cities, you'll spend less upfront to acquire rental properties, making it easier to find homes that produce positive monthly cash flow after expenses. Rental yields also tend to be higher in more affordable markets.

With lower purchase prices, you can fetch higher rents as a percentage of the total property value. If you can, focus your search on cities where the median home price or condo cost is around $250,000 or less to maximize affordability.

Population and job growth

Look for cities experiencing above-average rates of population growth, as well as broad-based job growth across multiple industries. New jobs keep the economy strong, and residents will have the money to afford the rent prices of an apartment or house.

Seek out metro areas adding at least 1% in population annually, which is double the national average. Strong employment opportunities attract new residents from other cities or states, which causes the population to grow quickly.

More people moving to the area puts pressure on rental vacancy rates and increases rents over time, so target cities with diverse industry strengths and an expanding workforce to drive continued rental demand.

Low property taxes and landlord-friendly laws

Invest in markets with lower property tax rates and landlord-friendly laws to maximize your profit margins as a rental property owner. Cities with lower property tax rates allow you to keep more of your monthly income.

Landlord-friendly laws, such as faster eviction processes or minimal fee caps, also protect your profits. Narrow down your list of cities based on tax rates and local landlord laws to identify profitable markets.

High rental demand and occupancy rates

High demand and low vacancy rates define a strong rental market. Look for cities where rental demand is growing much faster than the supply of new rentals hitting the market.

Occupancy rates above 95% indicate a limited risk of vacancies. Research the vacancy rates for both single-family rentals and multi-family properties to assess demand.

Markets with rising populations and limited housing construction will likely have the tightest rental markets. Younger millennials especially favor renting over buying, further driving demand.

Focus on cities where demand appears to be outstripping supply to position yourself in high-growth rental markets.

Appreciation potential

In addition to cash flow, appreciation is the other major component that can provide excellent returns for buy-and-hold investors over the long run. Target markets that analysts forecast to experience at least a 5% annual increase in home values over the next five years.

While cash flow pays the bills each month, appreciation unlocks significant profits for investors when selling the property. Fast-growing cities with hot real estate markets usually provide the best of both worlds — strong monthly income combined with impressive appreciation over time.

Don't overlook this longer-term upside as you look at the top housing markets.

Our list of the 15 best cities to buy a rental property

Taking a look at major metro areas across the United States, some cities stand out as strong potential markets based on economic and demographic trends. Each of the cities on our list offers promising opportunities to real estate investors in 2024 in their own unique ways. So, in no particular order, we present to you our list of the best real estate markets to buy rental property this year:

1. Athens, Georgia

Known as a charming college town, Athens is home to the sprawling University of Georgia campus. This large student population sustains a high demand for affordable rental housing in neighborhoods surrounding the school.

With cheaper housing stock, areas like Cobbham, Five Points, and Normaltown cater to renters. Despite rising home values, the median selling price in Athens remains reasonable at $339,185 as of January 2024.

Sales increased 30% year-over-year, with many homes selling above list price. This indicates a competitive housing market poised for future growth. Athens provides a vibrant cultural scene and southern hospitality that continues attracting new residents.

The city's diverse economy and job opportunities at the university also help support a stable rental market.

2. Austin, Texas

Austin has become one of the hottest rental markets in the country over the past few years. The city has seen explosive growth in the technology industry, with tech giants like Amazon, Apple, Google, Facebook, and Oracle all expanding there.

This stream of high-paying tech jobs has attracted thousands of educated young professionals across the U.S. looking for work. The population boom has completely outpaced new housing construction.

Austin adds approximately 150 new residents every single day, and builders can't keep up with demand. As a result, the city's rental vacancy rate sits below 5% — one of the lowest in the nation. Rents have skyrocketed as competition for limited units reaches a fever pitch.

The incredibly tight rental market and Austin's rapidly rising home prices make the city ideal for rental property investment. Median home prices now exceed $500,000 in Austin's urban core.

That prices many first-time buyers out of the market for purchasing, yet the city still draws young professionals eager to live near downtown. This makes central city multi-family properties quite appealing.

3. Birmingham, Alabama

Over the past decade, Birmingham has experienced a rebirth as an up-and-coming city in the Southeast. After years of decline, the city has invested heavily in revitalizing its downtown area.

This includes the development of new entertainment and restaurant districts, green spaces, and condos attracting young professionals. Major employers in fields like banking, education, and technology have also been expanding.

The University of Alabama-Birmingham and local medical centers provide a stable employment base. Mercedes-Benz, Honda, and Hyundai auto manufacturing plants in the region also offer high-paying jobs.

This job growth has attracted many new residents to the Birmingham metro area, driving demand for housing. Yet home prices remain very reasonable compared to other fast-growing Southern cities. The median home price is around $230,000, making Birmingham affordable for first-time buyers.

4. Charlotte, North Carolina

Charlotte has grown into one of the most vibrant real estate markets in the Southeast. As a major financial hub, the city is home to the headquarters of Bank of America, Truist Financial, and several other large banks. These major employers have been expanding operations, bringing high-paying jobs to the area.

Charlotte also attracts relocating workers from other industries like technology, manufacturing, and healthcare. Large companies, including Honeywell, Siemens, and Atrium Health, have a major presence. This steady corporate expansion has fueled population growth as young professionals move to the city.

The growth in new residents has pushed demand for housing. Surprisingly, home prices in Charlotte remain relatively affordable compared to other fast-growing metro areas.

The median price remains around $415,000, making it one of the more reasonably priced Southeast cities.

5. Columbus, Ohio

Columbus has emerged as one of the Midwest's top real estate markets, thanks to major anchors like Ohio State University and several Fortune 500 corporate headquarters. As the largest college in the country, Ohio State employs tens of thousands and provides a pipeline of graduates each year.

Major corporations, including Cardinal Health, Nationwide Insurance, and L Brands, are also headquartered there. This concentration of large institutions creates a stable foundation for economic growth. Columbus enjoys steady population gains each year as graduates stay and employers expand.

That growth drives demand for both owner-occupied and rental housing units. Unlike many fast-growing cities, home prices in Columbus remain fairly affordable.

The median price is around $275,000, which is below the national average. This allows first-time homebuyers to enter the market and makes Columbus extremely investor-friendly.

6. Dallas, Texas

Dallas is a premier hub for companies and talent. Several Fortune 500 firms, including Toyota, Liberty Mutual, and JP Morgan Chase relocated their headquarters here, citing Dallas's business-friendly climate and skilled labor pool across diverse industries as their motivation for the move.

Beyond these marquee companies, innovative startups and expansions in technology, finance, professional services, and healthcare signal Dallas's economic strength. This steady growth of corporate investment has fueled demand amid a mounting migration wave as workers pursue new opportunities.

With more and more people settling in Dallas annually, the housing supply strains to keep pace. Despite this, prices remain accessible for buyers of investment properties, with a median purchase price of $438,000.

7. Denver, Colorado

Denver has established itself as one of the most popular destinations for young families looking for an active outdoor lifestyle. The city's location against the Rocky Mountains provides easy access to skiing, hiking, mountain biking, and other activities. The appeal of outdoor recreation draws new residents from across the country.

At the same time, Denver has cultivated thriving industries in technology and cannabis. The state's early marijuana legalization sparked the growth of cannabis companies offering new employment options. Tech giants like Oracle, Slack, and Dish Network have also expanded here.

Combined, these sectors have driven strong job and wage growth. Unemployment is low, and wages have increased steadily, providing real estate investors with prime opportunities in rental real estate.

8. Las Vegas, Nevada

After being hit hard by the housing crisis in 2008, Las Vegas has rebounded and found its footing as one of the fastest-growing real estate markets in the West. Tourism has come back in recent years as conventions, hotels, and casinos expanded to record levels. This provides a major boost to the local economy.

Nevada's low tax rates and business-friendly regulatory climate have attracted new companies across various industries. Major firms have opened large facilities in the Las Vegas metro area, diversifying the job market beyond just hospitality and tourism.

This business expansion has fueled rapid job and wage growth. Unemployment in Las Vegas is around 5.3%, while wages have risen over the past few years. This has supported strong housing demand, but investors can still find rentals priced under $300,000.

9. Nashville, Tennessee

Over the past decade, Nashville has proven to be one of the hottest real estate markets in the country, led by a major expansion in its renowned entertainment industry. Nashville's famed country music scene continues growing as music companies, studios, and startups generate high-paying jobs in the sector.

Vanderbilt University helps anchor Nashville's economy as well. As home to over 12,000 students and Vanderbilt University Medical Center, one of the nation's top hospitals, Vanderbilt has cultivated a sizable health and biomedical cluster. This provides another pipeline of stable employment opportunities. Additionally, corporate operations in fields like finance, education, and technology have been growing their footprints.

The diverse blend of music and entertainment, along with health, finance, tech, and other industries, has made Nashville a top destination for relocating workers. The population growth has completely transformed the housing market. Despite median prices exceeding $519,000 now, demand for affordable homes still outpaces supply, providing an opportunity for real estate investors.

10. Orlando, Florida

Orlando is world-renowned as a tourism epicenter, driven by massive theme parks like Walt Disney World and Universal Studios. These parks employ over 75,000 workers while drawing over 75 million visitors per year. All those tourism jobs and visitors create incredible housing demand across the metro area.

Downtown Orlando has seen substantial new developments, including luxury apartments and condos. Property investors can also look at the surrounding suburbs to buy investment property.

Given the number of tourism jobs across the massive theme park complexes, Orlando offers relatively stable cash flow potential. Though not the fastest-appreciating real estate market, reliable tenant demand from this huge employment base makes it quite investor-friendly.

11. Phoenix, Arizona

Over the past decade, Phoenix grew to one of the premier destinations in the Southwest for its company expansions and population growth. The metro area offers a warm climate and affordable cost of living that appeals to both businesses and residents.

Major corporations, including Intel, American Express, and Amazon, have opened large operations there, taking advantage of the business-friendly environment and lower taxes. This corporate expansion provides high-paying jobs across technology, finance, and other sectors.

At the same time, Phoenix draws tens of thousands of new residents each year seeking its open space and sunny weather. Retirees, families, and remote workers all find Phoenix appealing. With average home prices around $430,000, it remains affordable compared to other Western hubs.

12. Raleigh, North Carolina

Raleigh has emerged as one of the South's most dynamic real estate markets, driven by its presence in the high-tech Research Triangle region. As the home to North Carolina State University and major tech employers like Apple, Cisco, and Lenovo, Raleigh has cultivated a skilled workforce centered around science, engineering, and research.

This concentration of tech companies and talent has made Raleigh a magnet for new residents. Thousands relocate each year for the high-paying jobs this city has to offer. Others come for the area's mild climate, quality schools, and vibrant cultural scene.

Due to ongoing tech industry growth in the Research Triangle area and Raleigh's attractive lifestyle, experts predict the city will continue to see a strong growth in population. With housing supply lagging behind demand, conditions will remain very advantageous to landlords over the coming years.

13. Savannah, Georgia

Savannah's rich history and coastal location drive a bustling tourism scene, spurring demand for vacation rentals. Popular neighborhoods include the iconic Historic District, which showcases antebellum architecture and southern charm.

Growing families favor Ardsley Park, known as Savannah's first suburb. Investors can still find value in purchasing older homes needing renovations in the Victorian District downtown. Major employers include the busy deepwater Port of Savannah and Gulfstream Aerospace Corporation.

A diverse economy bringing billions in annual tourism revenue and continued port expansion promises ongoing stability and growth potential for Savannah real estate.

14. Tampa, Florida

Over the past decade, Tampa has emerged as one of the hottest real estate markets in Florida. The metro area enjoys a diverse and thriving economy anchored by healthcare, finance, technology, and logistics employers. Major companies like JPMorgan Chase, Citigroup, and Amazon have large regional hubs in Tampa.

This diverse mix of industries powers consistent job and wage growth. Unemployment is low, as tens of thousands of new positions are added annually across multiple sectors. This steady economic expansion encourages population growth.

With a supply and demand imbalance, Tampa has grown into a landlord's market; a real estate investor can achieve rent growth and appreciation here.

15. Waco, Texas

Fueled by Baylor University and a business-friendly climate, Waco real estate has appreciated rapidly in recent years while remaining affordable compared to other Texas metros. According to a Texas bank, home values continue to rise — Waco experienced an uptick of 12.4% just last year.

Waco competes for major employers by investing in livable communities that blend housing, retail, dining, and green space. One example is the upcoming $700 million riverfront development project. With median home prices still below $300,000, Waco offers high rental yields for investors.

As one of Texas’s fastest-growing economies, Waco presents opportunities to profit from rising property values and rental demand.

Determining the best city to buy a rental property for you

For those in real estate investing, choosing where to buy rental properties requires considering many factors. Even in strong markets, be sure to research specific neighborhoods and find properties priced right.

No single market is completely safe or guaranteed to keep performing well forever, but real estate investors can benefit from demographic and economic trends by focusing on affordable properties in high-growth cities. This can provide cash flow now and equity growth through appreciation over time.

Local conditions can change quickly, though, so conduct research and analyze potential deals while keeping an eye on market trends. Look at both rental income and property prices to find markets that can deliver stable returns long-term. Investing in fast-growing cities using research and sound property selection can help you achieve success.

Top 15 best cities for rental properties FAQs

Does purchasing a rental property in my own city make more financial sense than investing elsewhere?

Buying rental property in your city makes sense, since you know the area best. However, compare the numbers of your local market to others to be sure you're making the best possible real estate investment.

Is focusing on mid-sized metro areas too risky compared to primary cities?

Fast-growing mid-size metro areas can offer better returns than costly major cities in some cases. Just be sure to research thoroughly before buying a real estate investment property in secondary markets.

What common rental property investor mistakes should I avoid?

Don’t rely on emotions when buying rentals — a good gut feeling about a property is a good sign but shouldn't be your only determining factor. Avoid common errors like not budgeting operating costs accurately, having insufficient reserves, overpaying, or renting to bad tenants. Also, factor in expenses like property management fees if you plan to hire a property manager.

Nichole Stohler

Nichole co-founded Gateway Private Equity Group, with a history of investments in single-family and multi-family properties, and now a specialization in hotel real estate investments. She is also the creator of NicsGuide.com, a blog dedicated to real estate investing.

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