There are a lot of people today who would like to invest in real estate, but prices in the city they live in are too high, or the returns are too low.
The good news is that with long-distance real estate investing, you can find plenty of places to buy rental property where prices are low and cash flow is strong. Most of these places have the same things in common, including good job markets, rising rents, and increasing property values.
In this article, we’ll look at 30 places where rental property could be a great investment, and give you some important tips on long distance real estate investing.
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What makes a place favorable for rental property?
When you invest in rental property to hold over the long-term, it’s important to look at the big picture and take into account the growth and demand for rental property in different real estate markets in the U.S.
Here are some of the key criteria that many investors believe can make a place good for rental property:
- Home value and median price indexes published by the National Association of Realtors (NAR) and Zillow because higher housing prices can indicate a strong demand for rental property
- Growth in housing prices year-over-year and projected future price increases indicate how much property could appreciate.
- Historical annual growth in rents is a source used to help predict future increases or decreases.
- Rent index indicates whether rent increases are faster or slower than the rate of inflation, and also shows the supply and demand conditions for rental housing.
- Unemployment, job growth, and population growth rates indicate how strong the local economy is and the potential demand for housing.
- Cap rate (also known as rental yield) measures the rate of return you receive from income property in different markets, although markets with high returns may not always be the best if economic conditions are declining.
- Gross rent multiplier (GRM) compares gross rental income to property price, and the lower the GRM the quicker you will be able to pre-pay the mortgage own the property free and clear.
30 places to consider buying rental property
Based on those criteria, here are some attractive places to consider when you are thinking about buying rental property. The home value data comes from Zillow as of November 2021, rent statistics for a 3-bedroom home come from Zumper as of January 2022, the job and population growth statistics from DataUSA.io compare 2018 to 2019, and population and 10-year population growth (2010 vs 2020) is from the U.S. Census Bureau:
Albuquerque, New Mexico
- Home value: $277,530
- 1-year price growth: 18.9%
- Median rent: $1,690
- 1-year rent growth: 21%
- Job growth: 1.9%
- Population: 564,559
- Population growth 1-year: 0.05%
- 10-year population growth: 3.4%
Arlington, Texas
- Home value: $289,787
- 1-year price growth: 23.9%
- Median rent: $1,993
- 1-year rent growth: 18%
- Job growth: -5.5%
- Population: 394,266
- Population growth 1-year: 0.2%
- 10-year population growth: 7.9%
Atlanta, Georgia
- Home value: $359,314
- 1-year price growth: 17.4%
- Median rent: $2,274
- 1-year rent growth: 23%
- Job growth: 2.1%
- Population: 498,715
- Population growth 1-year: 1.8%
- 10-year population growth: 18.7%
>> Browse Atlanta rental properties
Birmingham, Alabama
- Home value: $95,589
- 1-year price growth: 23.5%
- Median rent: $1,153
- 1-year rent growth: 5%
- Job growth: 1.8%
- Population: 200,733
- Population growth 1-year: 0.1%
- 10-year population growth: -5.4%
>> Browse Birmingham rental properties
Boise, Idaho
- Home value: $519,081
- 1-year price growth: 35.6%
- Median rent: $1,995
- 1-year rent growth: 14%
- Job growth: 1.98%
- Population: 226,115
- Population growth 1-year: 0.81%
- 10-year population growth: 14.6%
Charlotte, North Carolina
- Home value: $343,760
- 1-year price growth: 25.0%
- Median rent: $1,770
- 1-year rent growth: 11%
- Job growth: 3.4%
- Population: 874,579
- Population growth 1-year: 1.5%
- 10-year population growth: 19.6%
>> Browse Charlotte rental properties
Cincinnati, Ohio
- Home value: $215,291
- 1-year price growth: 17.0%
- Median rent: $1,525
- 1-year rent growth: 8%
- Job growth: 1.4%
- Population: 309,317
- Population growth 1-year: 0.4%
- 10-year population growth: 4.2%
>> Browse Cincinnati rental properties
Cleveland, Ohio
- Home value: $97,865
- 1-year price growth: 23.7%
- Median rent: $1,050
- 1-year rent growth: 0%
- Job growth: 1.2%
- Population: 372,624
- Population growth 1-year: -0.7%
- 10-year population growth: -6.1%
>> Browse Cleveland rental properties
Colorado Springs, Colorado
- Home value: $451,498
- 1-year price growth: 27.8%
- Median rent: $1,995
- 1-year rent growth: 16%
- Job growth: 3.0%
- Population: 478,961
- Population growth 1-year: 1.2%
- 10-year population growth: 15.0%
Columbia, South Carolina
- Home value: $188,892
- 1-year price growth: 19.9%
- Median rent: $1,300
- 1-year rent growth: 8%
- Job growth: -0.5%
- Population: 136,632
- Population growth 1-year: -0.01%
- Population growth 10-year: 5.7%
>> Browse Columbia rental properties
Columbus, Ohio
- Home value: $219,064
- 1-year price growth: 17.5%
- Median rent: $1,650
- 1-year rent growth: 14%
- Job growth: 4.5%
- Population: 905,748
- Population growth 1-year: 1.6%
- 10-year population growth: 15.1%
>> Browse Columbus rental properties
Dallas, Texas
- Home value: $290,564
- 1-year price growth: 20.0%
- Median rent: $2,325
- 1-year rent growth: 16%
- Job growth: 0. 01%
- Population: 1,304,379
- Population growth 1-year: -0.1%
- 10-year population growth: 8.9%
>> Browse Dallas rental properties
Des Moines, Iowa
- Home value: $176,730
- 1-year price growth: 13.9%
- Median rent: $1,295
- 1-year rent growth: 6%
- Job growth: 0.9%
- Population: 214,133
- Population growth 1-year: -0.1%
- 10-year population growth: 5.3%
Detroit, Michigan
- Home value: $63,449
- 1-year price growth: 37.6%
- Median rent: $1,100
- 1-year rent growth: 12%
- Job growth: 4.7%
- Population: 639,111
- Population growth 1-year: -0.4%
- 10-year population growth: -10.5%
>> Browse Detroit rental properties
Grand Rapids, Michigan
- Home value: $235,544
- 1-year price growth: 16.8%
- Median rent: $1,500
- 1-year rent growth: 7%
- Job growth: 2.4%
- Population: 198,917
- Population growth 1-year: 0.7%
- 10-year population growth: 5.8%
Greenville, South Carolina
- Home value: $259,184
- 1-year price growth: 15.5%
- Median rent: $1,660
- 1-year rent growth: 19%
- Job growth: 1.93%
- Population: 920,477
- Population growth 1-year: 1.53%
- 10-year population growth: 16.5%
>> Browse Greenville rental properties
Houston, Texas
- Home value: $241,052
- 1-year price growth: 17.6%
- Median rent: $1,925
- 1-year rent growth: 17%
- Job growth: -0.9%
- Population: 2,304,580
- Population growth 1-year: -0.4%
- 10-year population growth: 9.8%
>> Browse Houston rental properties
Huntsville, Alabama
- Home value: $253,036
- 1-year price growth: 23.6%
- Median rent: $1,495
- 1-year rent growth: 17%
- Job growth: 1.3%
- Population: 215,006
- Population growth 1-year: 3.1%
- 10-year population growth: 19.4%
>> Browse Huntsville rental properties
Indianapolis, Indiana
- Home value: $199,900
- 1-year price growth: 18.3%
- Median rent: $1,425
- 1-year rent growth: 12%
- Job growth: 0.1%
- Population: 887,642
- Population growth 1-year: 0.7%
- Population growth 10-year: 8.2%
>> Browse Indianapolis rental properties
Jacksonville, Florida
- Home value: $264,271
- 1-year price growth: 25.2%
- Median rent: $1,800
- 1-year rent growth: 19%
- Job growth: 1.6%
- Population: 949,611
- Population growth 1-year: 0.8%
- 10-year population growth: 15.6%
>> Browse Jacksonville rental properties
Kansas City, Missouri
- Home value: $209,238
- 1-year price growth: 17.8%
- Median rent: $1,495
- 1-year rent growth: 20%
- Population: 508,090
- Job growth: 2.4%
- Population growth 1-year: 0.7%
- 10-year population growth: 10.5%
>> Browse Kansas City rental properties
Memphis, Tennessee
- Home value: $134,721
- 1-year price growth: 20.7%
- Median rent: $1,545
- 1-year rent growth: 39%
- Job growth: 2.5%
- Population: 633,104
- Population growth 1-year: 0.1%
- 10-year population growth: -2.1%
>> Browse Memphis rental properties
Orlando, Florida
- Home value: $325,415
- 1-year price growth: 21.3%
- Median rent: $2,168
- 1-year rent growth: 24%
- Job growth: 0.1%
- Population: 307,573
- Population growth 1-year: 0.6%
- Population growth 10-year: 29%
>> Browse Orlando rental properties
Pittsburgh, Pennsylvania
- Home value: $222,884
- 1-year price growth: 14.5%
- Median rent: $1,650
- 1-year rent growth: 6%
- Job growth: 3.2%
- Population: 302,971
- Population growth 1-year: -0.3%
- 10-year population growth: -0.9%
>> Browse Pittsburgh investment properties
Raleigh, North Carolina
- Home value: $396,232
- 1-year price growth: 28.8%
- Median rent: $1,761
- 1-year rent growth: 11%
- Job growth: -2.43%
- Population: 474,708
- Population growth 1-year: 0.89%
- 10-year population growth: 15.8%
>> Browse Raleigh rental properties
Salt Lake City
- Home value: $573,564
- 1-year price growth: 24.1%
- Median rent: $1,998
- 1-year rent growth: 18%
- Job growth: 3.0%
- Population: 1,232,696
- Population growth 1-year: 0.83%
- 10-year population growth: 15.1%
San Antonio, Texas
- Home value: $243,114
- 1-year price growth: 20.5%
- Median rent: $1,725
- 1-year rent growth: 15%
- Job growth: 4.1%
- Population: 1,434,625
- Population growth 1-year: 1.0%
- 10-year population growth: 8.1%
>> Browse San Antonio rental properties
Seattle, Washington
- Home value: $888,202
- 1-year price growth: 11.2%
- Median rent: $3,100
- 1-year rent growth: 15%
- Job growth: 1.79%
- Population: 3,979,845
- Population growth 1-year: 1.0%
- 10-year population growth: 17.5%
St. Petersburg, Florida
- Home value: $311,107
- 1-year price growth: 29.7%
- Median rent: $2,500
- 1-year rent growth: 28%
- Job growth: 1.6%
- Population: 258,308
- Population growth 1-year: 0.1%
- 10-year population growth: 2.3%
Tampa, Florida
- Home value: $354,100
- 1-year price growth: 29.3%
- Median rent: $2,325
- 1-year rent growth: 30%
- Job growth: 3.4%
- Population: 384,959
- Population growth 1-year: 1.7%
- Population growth 10-year: 14.7%
>> Browse Tampa rental properties
Why do rents keep rising?
Even during a recession, rent in many real estate markets across the U.S. keeps rising, although sometimes at a slower pace over the short-term.
According to Rentonomics, since 1960 rents have consistently increased in the U.S., even during periods when real median household incomes have declined. During the 60 year period between 1960 and today, there have been eight recessions. Yet, throughout those troubled times, rents still continued to rise.
Here are some of the reasons why residential rents keep going up year after year:
- Demand from tenants at lower rent prices and income segments, such as workforce housing rented to teachers, police, and service workers.
- Housing prices have become increasingly unaffordable, creating more demand for rental property.
- Recent multifamily construction over the past few years has focused on luxury living for high-income earners, instead of building badly needed rental property for the middle market.
But perhaps the biggest reason why rents in the U.S. keep rising is overall demand - many people are “planning to rent forever” due to the flexibility that renting offers and the hidden costs of homeownership.
Biggest challenges of owning rental property
Although the demand for rental property keeps growing - right along with rents - owning rental property as an investor isn’t always easy. While there are plenty of benefits to investing in income property, including cash flow and preferential tax treatment, there are some challenges to be aware of as well:
- Finding good rental property at affordable prices.
- Hiring a great local property management company.
- Maintaining positive cash flow with cost-effective repairs.
- Increasing ROI through strategic value add work that increases income.
- Knowing which real estate markets offer the highest potential returns.
- Locating turnkey single-family houses that are cash flow positive the day escrow closes.
Final thoughts
There are a lot of factors that go into making a place great to buy rental property in. Instead of focusing on only one or two metrics, it’s a good idea to compare and contrast different real estate markets to one another.
Other metrics to use when deciding which rental property markets to invest in include neighborhood ratings, school rankings, crime rates, vacancy rates, business-friendly government, and if landlord-tenant laws favor you or the renter.
