10 Best Cities To Buy Rental Property In 2024

We spoke to Brian Davis, Co-founder of Spark Rental who shared his insight on what to keep in mind when deciding on the location

Tampa’s housing market continues to surge, outperforming national trends with a population growth rate significantly higher than the U.S. average. Recent data highlights a dynamic shift in the market, with the median sale price in Tampa rising by 19.7% from $380,000 in August 2022 to $455,000 in August 2023. This growth is underpinned by Tampa’s expanding economy, particularly in high-wage sectors such as professional and business services, attracting residents from across Florida and the country.

The current median sale price for homes in Tampa stands at $358,333 as of the end of December 2023, indicating a vibrant market that appeals to both homeowners and investors. With 51% of Tampa households opting to rent, the demand for rental properties remains robust, driven by the city’s economic opportunities and quality of life. This combination of factors, including a strong job market, population growth, and a significant portion of the population renting, positions Tampa as a prime location for real estate investment in 2023.

The Greater Cincinnati area, with its rich history and vibrant economy, continues to be a beacon for growth and opportunity in the Midwest. As of late 2023, the Cincinnati Metropolitan Statistical Area (MSA) showcases a robust housing market, reflecting the city’s economic resilience and appeal to both residents and investors. With a gross domestic product surpassing $170 billion, Cincinnati’s economy has seen a remarkable increase of 54.3% over the past decade, positioning it as the fifth-largest in the Midwest, trailing only behind major cities like Chicago and Minneapolis.

Recent data indicates a significant uptick in housing prices, with a notable 74.7% increase in the price of 1-bedroom homes as of February 2024, compared to the previous month. This surge underscores Cincinnati’s growing demand as a residential and investment hub. The city’s economic landscape is bolstered by the presence of Fortune 500 companies such as Procter & Gamble, The Kroger Company, and Macy’s, alongside General Electric’s Global Operations Center, enhancing its reputation as a fertile ground for job growth and investment.

The Indianapolis metropolitan area, recognized as the 32nd most populous in the United States, which draws attention for its vibrant urban life and economic vitality. With a population exceeding 2 million, Indianapolis is a key component of the Great Lakes Megalopolis, home to approximately 59 million people. The city’s downtown area, celebrated for its livability, hosts major league sports teams like the NBA Indiana Pacers at Conseco Fieldhouse and the NFL Indianapolis Colts at the RCA Dome, enhancing its appeal as a cultural and entertainment hub.

In 2023, the Indianapolis housing market witnessed significant developments, with the median sales price soaring by 40% to $305,000 by August. However, with mortgage rates climbing above 7%, the monthly payment on a median-priced home reached approximately $2,200, reflecting the market’s dynamic nature amidst economic fluctuations. Despite these changes, Indianapolis remains an attractive destination for out-of-state investors, drawn by its strong economy, job growth, strategic location, and affordability compared to other major U.S. cities.

The city’s real estate trends indicate a sustained interest in residential properties, with a median price of $237,604 for homes in the Indianapolis area as of February 2024, marking a 0.9% increase from the previous year.

As of late 2023, the Orlando housing market has shown signs of a healthy balance, making it an optimistic time for both buyers and sellers looking ahead to 2024. The city’s strategic location, coupled with its array of attractions including world-famous theme parks, has made it a magnet for both domestic and international visitors, contributing to its dynamic real estate landscape.

The median sale price for homes in the Orlando area reached $375,333 by the end of December 2023, reflecting the area’s ongoing demand and economic growth. This growth is supported by a diverse economy that extends beyond tourism to include strong sectors in technology, healthcare, and education. Orlando’s housing inventory saw a slight increase in early 2024, with a 2.6% rise in the inventory of 1-bedroom homes, indicating a gradual expansion in the market’s capacity to accommodate a growing population.

The Birmingham metropolitan area, including Hoover and Vestavia Hills, has a population of over 1.1 million, making it the largest metro area in Alabama and the 50th largest in the nation. Despite facing challenges such as suburbanization, racial tensions, and economic shifts that have impacted its population growth, Birmingham’s metropolitan area remains a significant and growing market in Alabama, only surpassed by Huntsville and Montgomery. This steady population, combined with the city’s economic resilience and diverse job market, positions Birmingham as a prime location for rental property investment, offering the potential for both cash flow and long-term appreciation.

The Greater Cleveland area, encompassing Cuyahoga and Lorain counties, has a diverse population nearing 2 million, making it one of the largest metropolitan areas in the United States. This demographic breadth offers a dynamic rental market, catering to a wide range of housing needs and preferences. In 2023, the Cleveland rental market has shown signs of vitality and diversity. The average rent for an apartment in Cleveland stands at approximately $1,338, reflecting the city’s affordability compared to other major urban centers. However, this affordability is also granted to landlords as property prices are some of the lowest of any major city in the nation.

Kansas City, often celebrated for its rich jazz heritage, vibrant sports scene, and mouthwatering barbecue, is also making headlines for its dynamic real estate market. Over the last eight years, the Kansas City metropolitan area has witnessed a remarkable surge in property values, with home prices soaring by almost 90%. This period has also seen rent prices climb by over 45%, reflecting a robust demand for housing in the area.

The city’s economic landscape is characterized by diversity and a government that actively supports business growth. These attributes position Kansas City as an attractive destination for startups and established companies considering relocation. The appeal is further enhanced by the city’s competitive business costs. Moody’s Analytics reports that operating a business in Kansas City is approximately 4% cheaper than the national average, thanks in part to aggressive tax incentives and favorable business structures. Such economic policies have been instrumental in attracting major employers like JPMorgan Chase and AMC Theaters, who benefit significantly from the city’s cost-saving measures.

Pittsburgh, Pennsylvania, presents a compelling case for real estate investment, particularly in the rental market. As of 2024, the average rent for apartments in Pittsburgh ranges between $920 for a studio to $1,797, with the overall average rent sitting at approximately $1,512. This diversity in rental prices underscores the city’s wide-ranging appeal to different demographics, from students to professionals. The rental market has shown resilience and growth, with the median rent currently at $1,302, marking a 1.6% increase from the previous month and a 0.4% year-over-year growth. Such statistics highlight Pittsburgh’s steady rental demand, making it an attractive location for investors looking for stable returns in a market with a robust economic foundation and a diverse tenant base.

Pittsburgh’s rental market benefits from its rich educational and cultural landscape, bolstered by renowned institutions and a vibrant arts scene. The city’s economy, historically rooted in steel, has diversified into technology, healthcare, and education, attracting a steady influx of young professionals and families.

San Antonio, Texas, continues to be a magnet for growth and investment, particularly in the rental market. With a metropolitan population exceeding 2.6 million, the city has been welcoming over 10,000 new residents annually, a trend that underscores its appeal and vitality. This influx is supported by San Antonio’s diverse economy, which spans military, higher education, business services, financial services, and healthcare sectors. The city’s rich cultural heritage, combined with its modern amenities, makes it a unique place to live, work, and visit.

Recent data and projections for San Antonio highlight its robust rental market, poised for further expansion in 2024. Despite a slowdown in home sales, partly due to rising mortgage rates, the demand for rentals remains strong. This coupled with San Antonio’s strategic location and economic diversity, positions it as a prime location for real estate investment.

When evaluating property management options, research local property management companies’ reputations, fees, and services. Look for reviews, ask for references from current clients, and compare their management fees and contract terms. Consider also the range of services they offer, such as tenant screening, maintenance, and rent collection, to ensure they align with your needs.

Owning rental property in another city can affect your taxes in several ways, including income tax on rental income, property tax variations by location, and potential deductions for expenses related to managing and maintaining the property. It’s advisable to consult with a tax professional familiar with real estate investments in both your home city and the city where you plan to buy property to understand the specific implications.

Financing rental property in another city may involve additional lender scrutiny, as lenders often consider out-of-area investments to be higher risk. You might need to provide a larger down payment, demonstrate a stronger financial portfolio, or pay a higher interest rate. It’s important to shop around for lenders familiar with investment properties and possibly those with experience in the city where you’re buying.

Yes, you may qualify for government incentives when purchasing rental property in a different city, depending on the location and the type of property. Many cities offer incentives to encourage investment in certain areas or property types, such as historic buildings or low-income housing. Research local government and housing authority websites, or consult with a local real estate agent or attorney to learn about available incentives.