You don’t need to limit your real estate investments to your local area. You can choose to invest in other cities based on the exceptional real estate opportunities available in those markets. You can even invest in property out-of-state to maximize your returns. But what are the best cities to invest in real estate in 2022?
Choosing a city to invest in is just as much about your unique investment goals as it is about local housing market conditions. Ranking the best cities to invest in is difficult because each city has its own strengths. Ranking cities only by rent growth or only by affordability would be easy. But we want to see which cities offer the best total package for real estate investors in 2022. We’re considering several factors, including:
- Housing supply. Is there a level of scarcity driving prices up and creating opportunities for multi-family investors?
- Local demand. Do people actually want to live there?
- Property value growth. Can investors expect to see reasonable appreciation over the coming years?
- Rental rates compared to home prices. How soon will you be able to recoup your investment?
- Rental rate growth. Does the market support increasing rental rates to improve your ROI year-over-year?
- Employment opportunities. Are there enough jobs available to support the current population, plus some expansion?
We should note that choosing a city to invest in is also about your personal preferences. Perhaps you are more interested in cash flow from rental income than in long-term appreciation. In that case, your top 10 best cities would be different from those considered by an investor who wants to focus on appreciation.
With all of this in mind, let’s explore our top 10 best cities to invest in real estate!
Quick note: The data in this article is based on the most recent information available as of June 10, 2022, from the following sources: Statista, WalletHub, Redfin.com, Zumper.com, Inspection Support Network, and Macrotrends.
Houston, Texas ranks number one as the best city to invest in real estate for 2022. The home of the oil industry, Houston has consistently enjoyed exceptional job growth, which attracts new talent to the area. In fact, Houston is currently the fifth most populous metro area in the US.
With the lowest median home prices on our list and strong rental rate growth, Houston has a lot to offer real estate investors looking for affordable rental properties.
Houston Real Estate Fast Facts:
Metro population: 7.2 million
Median home price: $328,500
Year-over-year home price growth: 11.4%
Median rent for a two-bedroom: $1,620
Year-over-year rent change for a two-bedroom: 20.9%
2. Los Angeles
Los Angeles, California is a sizzling (but underappreciated) real estate investment market. Most lists of the best cities to invest in real estate overlook Californian cities because of the high home values. They think it’s too expensive for the average investor to buy property in California, so investors should look elsewhere. But this is a big mistake!
As we’ve seen from the Los Angeles real estate market trends, LA real estate investors enjoy substantial appreciation and exceptional rental growth. With the average two-bedroom rent nearing $3,200 per month, investors can afford the higher purchase prices.
Plus, because of the Southern California housing shortage, there is unique potential for investors to add value to existing properties through multi-family development and the addition of accessory dwelling units (ADUs) to existing single-family homes.
And you don’t have to fund or manage your investment project alone! With real estate syndication, you can pool your investment funds with like-minded investors to reap all the benefits of the LA market without excessive upfront investment amounts.
Los Angeles Real Estate Fast Facts:
Metro population: 13 million
Median home price: $1,025,000
Year-over-year home price growth: 12.6%
Median rent for a two-bedroom: $3,180
Year-over-year rent change for a two-bedroom: 19.1%
Florida has been growing at an incredible rate for years, particularly during the pandemic. With remote workers free to relocate, people have flocked to Florida with its warm winters, affordable homes, and complete lack of state income tax.
Orlando investors are seeing barely believable rent increases. According to data from Zumper, rent for a two-bedroom is up 35.4% compared to one year ago. One-bedroom rents are in line, with a 32.8% increase. This has created impressive cash flow potential for property owners. And, while rents can’t possibly continue to grow at this rate, this is a strong indication of the high demand for life in Orlando. Orlando is currently ranked as the fourth fastest-growing metro.
Orlando Real Estate Fast Facts:
Metro population: 2.7 million
Median home price: $361,000
Year-over-year home price growth: 23.3%
Median rent for a two-bedroom: $1,950
Year-over-year rent change for a two-bedroom: 35.4%
Just behind Orlando comes our second Florida city: Tampa. Just like Orlando, Tampa is ranked among the fastest-growing metro areas in the United States (currently sitting in tenth place). Also like in Orlando, investors in Tampa benefit from affordable prices, solid appreciation, and crazy rent increases.
Tampa Real Estate Fast Facts:
Metro population: 3.2 million
Median home price: $390,000
Year-over-year home price growth: 21.9%
Median rent for a two-bedroom: $1,950
Year-over-year rent change for a two-bedroom: 33.6%
Like Florida, Texas grew in popularity during the pandemic because of warm winters, affordable homes, and no state income tax. We’ve already seen Houston at number one…now comes Austin at number five.
Austin is currently ranked as the top metro in the US in terms of population growth. And it’s no wonder why. With a thriving music scene and world-class dining, Austin has developed a reputation as the most progressive city in Texas.
Austin is on the higher end of the price scale in Texas, with the current median purchase price over $656,000. But, as we saw with Los Angeles, these high-value homes are still accessible to everyday investors through real estate syndication.
Austin Real Estate Fast Facts:
Metro population: 2.4 million
Median home price: $656,000
Year-over-year home price growth: 12.7%
Median rent for a two-bedroom: $1,930
Year-over-year rent change for a two-bedroom: 24.5%
Atlanta, Georgia has been drawing residents from cold-weather climates for years. And the emergence of the film industry in Georgia has contributed to the draw by providing jobs for artists, actors, and producers. It’s not Hollywood, but it has carved out a niche in the entertainment industry.
The demand in the Atlanta housing market has created respectable growth in both home values and rental rates. Real estate investors can find solid rental income cash flows and appreciation in Atlanta.
Atlanta Real Estate Fast Facts:
Metro population: 6.1 million
Median home price: $426,250
Year-over-year home price growth: 13.7%
Median rent for a two-bedroom: $2,180
Year-over-year rent change for a two-bedroom: 12.4%
Home to more than 10 Fortune 1000 companies, Charlotte, North Carolina is the business hub of North Carolina. And with tech companies like UTC Aerospace headquartered in Charlotte, property values are skyrocketing. The median home price is up an incredible 22.1% since last year. But the current $400,000 median is still affordable for many of today’s investors.
Charlotte Real Estate Fast Facts:
Metro population: 2.7 million
Median home price: $400,000
Year-over-year home price growth: 22.1%
Median rent for a two-bedroom: $1,650
Year-over-year rent change for a two-bedroom: 14.6%
Phoenix, Arizona has grown by around a million residents in the past decade! Who knew so many people could handle average summer temperatures well over 100 degrees and humidity dipping under 20%?
Phoenix has long been considered a more affordable alternative to Southern California. As high-income Californians move into central Arizona, they drive up the home values, which creates exceptional appreciation for Phoenix property owners. Over the past year, the median home price has gone up by over 27%.
Phoenix Real Estate Fast Facts:
Metro population: 4.9 million
Median home price: $460,000
Year-over-year home price growth: 27.4%
Median rent for a two-bedroom: $1,580
Year-over-year rent change for a two-bedroom: 15.3%
The third Texas city on our list of the best cities to invest in real estate is Dallas. As with Houston and Austin, Dallas is in high demand, with impressive population growth over the last decade in general and the last few years in particular.
Dallas is a city of renters. Approximately 53% of Dallas residents rent (compared to a national average of around 33%). This means rentals are always in high demand, so real estate investors get to enjoy lower vacancy rates.
Dallas Real Estate Fast Facts:
Metro population: 7.8 million
Median home price: $440,000
Year-over-year home price growth: 13.1%
Median rent for a two-bedroom: $1,980
Year-over-year rent change for a two-bedroom: 14.5%
The smallest city on our list of the best cities to invest in real estate is Boise, Idaho. The low cost of doing business in Boise makes this an attractive destination for new businesses, which attracts new residents.
Boise might not have seen median home value growth as high as Orlando or rental rate growth as high as Los Angeles, but it’s seen stable growth in both areas over the long term. And with a much lower population than the other metro areas on our list, there’s lots of room for Boise to grow!
Boise Real Estate Fast Facts:
Metro population: 500,000
Median home price: $529,450
Year-over-year home price growth: 12.8%
Median rent for a two-bedroom: $1,510
Year-over-year rent change for a two-bedroom: 11.0%
Investing in Los Angeles with Gatsby Investment
If you want to take advantage of the many benefits of investing in the Los Angeles real estate market, but you also want to keep your initial investment amount lower than the cost of a down payment, Gatsby Investment can help!
We are a real estate syndication company, based here in Beverly Hills, and we specialize in making high-value LA residential real estate accessible to a wide range of investors. With our investment opportunities ranging from single-family flips to multi-family rentals (and even luxury estates), we have projects for both short-term and long-term investors. And because our team of experts professionally handles every detail of the project for you, you don’t need any prior experience, insider knowledge, or local connections to maximize your returns.
Building a real estate portfolio is easy with Gatsby Investment. Simply sign up for a free Gatsby account, confirm your status as an accredited investor, and choose your investment(s). Los Angeles is one of the best cities for investing in real estate, and Gatsby is your key to unlocking the potential of this exceptional market.