Best Cities to Buy Rental Properties

Choosing to buy a rental property is often a bigger commitment than new investors are aware of. That being said, finding the right property in the right city can create regular, reliable streams of income. Choose the right one and you may also be able to build long-term equity in the home with the help of the rental money. Knowing the best place to buy rental property is about finding growing markets where costs are lower and quality tenants are expected to flock.

Once you find the right location, you can move the pieces into place to set up a steady stream of income. Owning and managing rental properties is not for everyone, but it can be a relatively solid investment with quick financial gains.

Best Cities to Buy Rental Properties: Ranked

1. Arlington, Texas

  • Population growth: 0.43%
  • Employment growth: 7.55%
  • Rental yield: 15.60%

With impressive growth stats and a median home price around $240,000, investors looking to get started with rental property management and ownership at an affordable price should consider Arlington, Texas. Just west of Dallas, the city is home to the University of Texas at Arlington and several sports stadiums, including where the Dallas Cowboys (NFL) and Texas Rangers (MLB) play home games. The abundance of sports and entertainment drives jobs and is attractive to new residents.

Now, if you’re looking for short-term rental properties, you will need to look elsewhere. Arlington, TX has banned Airbnb and short-term rentals across most of the city. However, with the growth in employment, population, and an impressive rent yield, Arlington, TX still grabs the top spot. 

2. Atlanta, Georgia

  • Population growth: 2.42%
  • Employment growth: 1.19%
  • Rental yield: 9.64%

Property taxes in Georgia average 0.914% of the assessed home value, below the current national average bringing savings to those looking to buy a rental property. 55% of occupied units in the city are rented, showing a majority of renters, which is always good for a rental market. What’s most attractive about Atlanta is the rental yield of 9.64% within the city center. If you move outside the city center, that yield increases to 12.46%. While growth numbers are lower, the city is still growing and the rental yields show a market returning steady percentages. 

3. Jacksonville, Florida

  • Population growth: 3.1%
  • Employment growth: 3.2%
  • Rental yield: 6.8%

The largest city in the country by landmass is also growing at a solid clip — people and job-wise. While the 3.1% population growth may seem the same as in many other cities on the list, you should note that the growth rate is based on a population of almost 900,000 people. What this means for investors is plenty of opportunities to find quality properties you can get filled with tenants.

Current home sale prices are averaging $207,000, up 8.9% since last year. While it’s good to see a growing market, it’s also good to see a market that hasn’t grown too much pricing out opportunity. Current occupancy of housing units is 89% in teh area. Those worried about filling a vacant rental property will like this statistic.

4. Colorado Springs, Colorado

  • Population growth: 4.1%
  • Employment growth: 3%
  • Rental yield: 5.6%

At 6,035 feet above sea level, Colorado Springs has a flourishing nightlife, beautiful natural views and a growing economy. What does this mean for you as an investor? Opportunity. Cost of living in the city is 6% below the national average, which is attractive to new residents considering a move or a job change. The median home price in the area is $341,101, which is a little higher than some of the options on the list, which means you will need a slightly larger amount of capital to get into the Colorado Springs market. 

What’s also great about Colorado Springs is there are no limitations on short-term rentals or the number of short term rentals you can operate. Whether you’re looking to invest in a short or long-term rental property, the city can accommodate.

5. Columbus, Ohio

  • Population growth: 2.3%
  • Employment growth: 1.2%
  • Rental yield: 7.9%

With a rental yield of almost 8%, investors should take notice of Columbus, Ohio as a potential option to pick up new investment. Growth rates are somewhat slower than other cities on the list, but the rental yield is attractive enough and shows a sustainable market. Median home prices in the area are $179,900, so investors may be able to get into a quality property for a smaller investment.

6. Boise, Idaho

  • Population growth: 3.08%
  • Employment growth: 2.61%
  • Rental yield: 8.55%

According to Forbes, Boise, Idaho was the fastest growing city in the country in 2018. And this is not a trend that has just started. From 2010 to 2018 the population has increased by 18.2%. Anytime you see a continued influx of people, you’re going to see opportunities and gains in the housing market. Much of this is spurred by tech companies moving to the city to escape the higher costs of other cities. Examples include Payocity, Clearwater Analytics, and Vynyl. According to Inc.com, Boise is poised to be the next Silicon Valley

If you’re looking to invest in property in Boise, the time to strike is here. Zillow calls the market very hot with a projected 5.6% 1-year growth. 

7. Phoenix, Arizona

  • Population growth: 4%
  • Employment growth: 3.1%
  • Rental yield: 5.4%

Across the board, Phoenix has great metrics that should be attractive to rental property investors. The capital of Arizona is home to a long list of amenities, including botanical gardens, hiking trails, zoos, cultural museums, and major manufacturing and tourism markets. These attractive amenities will continue to bring in new residents to fill rental properties.

8. Charlotte, North Carolina

  • Population growth: 3.7%
  • Employment growth: 2.7%
  • Rental yield: 5.5%

As the home to the headquarters for Bank of America, Charlotte is no stranger to being a source for making money. With a rental yield of 5.5%, population growth just under 4%, and employment growth of 2.7%, investors looking to capitalize on rental real estate should consider the area. Additionally, home values in the area recently grew by almost 12%, which was a nice boost for those already invested in the area.

9. Tampa, Florida

  • Population growth: 4.6%
  • Employment growth: 2.3%
  • Rental yield: 5.1%

Tampa is the fourth city from Florida to make the list of top cities to purchase investment rental properties. Close to the water, the city is home to professional sports teams, theme parks, major banks, and a nightlife scene that continues to flourish. All of these attractive amenities are helping to drive the 4.6% population growth in the area, which makes for a nice equation for real estate investors.

10. St. Petersburg, Florida

  • Population growth: 3.3%
  • Employment growth: 2.3%
  • Rental yield: 5.6%

Florida is not finished, rounding out the top 10 by taking 50% of the spots on the list of the best places to buy a rental property. Of all the cities on the list. St. Pete saw the largest increase in home values at an impressive 14.6%. Population growth is slightly lower than some of the other Florida cities, but still attractive enough to catch the eye of real estate investors.

11. Las Vegas, Nevada

  • Population growth: 3.3%
  • Employment growth: 2.8%
  • Rental yield: 5.3%

Back out west, Las Vegas, Nevada clocks in with impressive population growth, employment growth, and rental yields. The land of casinos, gambling, and nightlife tends to ebb and flow with the economy. As people gain more disposable income, they spend more on entertainment. This spells opportunities for long and short term rentals in the Vegas valley. 

12. San Antonio, Texas

  • Population growth: 3.3%
  • Employment growth: 2.2%
  • Rental yield: 6.4%

Solid metrics in population and employment growth creates opportunities for investors to cash in on the growing economy in San Antonio, Texas. Compared to the number 13 city on our list (also in Texas), San Antonio’s rental yield is much more attractive. If you’re looking for an area to buy that’s in the heart of histories like the Alamo, the Aztec Theater, and Mission San Jose, put San Antonio on your shortlist. 

13. Austin, Texas

  • Population growth: 3.7%
  • Employment growth: 3.3%
  • Rental yield: 5.3%

Continuing in the Lone Star state is our 13th ranked best city to buy a rental property — Austin, Texas. Edging out San Antonio in population growth and employment growth in the state of Texas, Austin is a booming city catching the eye of real estate investors. If growth continues, Austin, Texas will continue to be a solid choice for investors looking to get invested. 38% of the population was between the ages of 20 and 39 as of the last Census, making the area attractive to younger residents that may be more inclined to rent. 

14. Madison, Wisconsin

  • Population growth: 3.1%
  • Employment growth: 1.1%
  • Rental yield: 6%

With a median age of 30.5, Madison is one of the youngest cities on this list. 96% occupancy in all housing units means there could be significant demand for new properties. Additionally, filling your rental property in Madison does not seem to be much of a challenge. While employment growth is a little low, population growth is over 3% and rental yield is at a great 6%. 

15. Durham, North Carolina

  • Population growth: 4.2%
  • Employment growth: 1.4%
  • Rental yield: 5.6%

The last city on our list of the best cities to buy a rental property is Durham, North Carolina. The median home value in the area is $232,600, which offers affordable opportunities for real estate investors to get involved. Of all the cities on our list, Durham has one of the fastest-growing populations. More people means more people looking for somewhere to live. Investors may be able to get in front of the growth and capitalize on new resident opportunities. 

What to consider before investing in rental properties

The potential profits and dreams of passive income that come with rental properties can be attractive. However, before you dive in headfirst, you may want to consider a few things.

First, unless you’re ready to give up a chunk of your profits to a property management company, you’re going to be the landlord. This means you’ll be responsible for fixing issues, collecting rent and handling any tenant disputes.

It might seem like it’s easy because you’ve always been a good tenant when you rented, but remember, not everyone is as easy to work with or reliable as you might be. If you are considering the property management route, know it may cost you upwards of 8% to 12% of the monthly rent.

One of the reasons many people choose to rent is they’re unsure how long they plan to stay in a particular area. By renting, they’re limited in the commitment they have to the area. While this is good for them, it may create issues for you as the property owner. When your unit is occupied with a good tenant, things are great, but what happens when they move out? The risk of having a vacant unit is real and something you need to consider. If you do find yourself in this situation, don’t forget to look into short-term rental options like AirBnB to fill the gaps between longer rentals.

The final word

For those with the disposable income looking for a unique investment, buying a rental property may be a good fit. If you can buy in a great area, find good tenants and keep the property occupied, you can earn monthly income and have someone else build equity for you. Just remember before you dive in to weigh all potential costs and commitments in good and bad scenarios. The worst thing you can do is make a several hundred thousand dollar investment you’re not fully prepared for.

Jason Wesley

Personal Finance Contributor

Jason Wesley is a seasoned copywriter with a passion for writing about banking, tech, personal growth, and personal finance. As a business owner, relationship strategist, and officer in the U.S. military, Jason enjoys sharing his unique knowledge base and skill set with the rest of the world.