Most Promising And Best Places To Invest In Real Estate In The U.S.

If key U.S. housing market data is a strong indicator, anyone looking for the best places to invest in American real estate should look south. A 2023 Rocket HomesSM survey found that 9 of the 10 best places to invest in real estate are in the Southeast states or Texas.

There are many determinants we can use in finding the 10 cities that are best for real estate investment. Not only is the property itself important, but where it’s located has a major impact on potential renters and investment revenue.

Metrics Used To Determine The Best Places To Buy Rental Property

The U.S. housing market is dynamic. Home prices and rents fluctuate quite a bit from market to market and year to year. Rocket Homes collected and analyzed recent key housing market indicators in cities across the U.S., including gross rental yield, housing price index data, vacancy rates, unemployment rates, population growth and percentage of renters to give us insight into the best places to invest in real estate.

• Population: A city with a growing population is likely one with a diverse, job-friendly economy, affordable cost of living, low unemployment and, perhaps most importantly for real estate investors, a higher demand for housing.
• Gross rental yield: In real estate, gross yield is expressed as the percentage of the cost of the property that is returned in rent every year (before expenses). It’s calculated by dividing the gross annual rent by the current market value. A gross rental yield of 7% or higher is considered ideal.
• Vacancy rate: A city’s vacancy rate is expressed as the percentage of its rentable housing units that are not occupied. A 5% to 10% vacancy rate is considered healthy because it means there are enough properties available to meet demand but not so many that there is an oversupply.
• Housing price index 5-year growth: S. National Home Price Index captures trends in the national housing market by using data from the Federal Housing Finance Agency (FHFA). The index measures changes in housing market prices given a constant level of quality. A higher percentage indicates a robust return on recent real estate investment.
• Median home sold price: The median home sold price in a given real estate market indicates the price where half of the listed homes are higher and half are lower. Real estate experts consider it a better indicator than average price because it identifies the typical home and is less affected by outliers.

The 10 Best Places To Be A Real Estate Investor In 2024

While there are many cities and towns where buying investment property can realize an excellent return on investment (ROI), here are 10 that offer the most promise in 2023.

1. Athens, Georgia

A good sign for real estate investors looking at Athens is that home values are rising while the average home sold price is still well below the U.S. average of $430,300. As of September 2023, the median home sold price in Athens, Georgia, was $328,265, up 9.3% from the previous year. Despite this past year being one of the toughest real estate environments in the last decade, home sales climbed 7.6% in Athens from August 2023 to September 2023, and 30% of sales were for over asking.

As home to the University of Georgia, Athens is known for its lively cultural and nightlife scene and a laid-back southern vibe. The large student population raises demand for affordable housing around the central campus, and thus the majority of Athens residents are renters. Top neighborhoods in Athens include Cobbham, Five Points and Normaltown.

• Population: 128,561
• Gross rental yield: 40%
• Vacancy rate: 48%
• Housing price index 5-year growth: 9
• Median home sold price: $328,265

2. Savannah, Georgia

Savannah’s economy is diverse and strong. Nearby beaches, a vibrant bar and dining scene and rich history dating to Colonial times drives a tourism economy that generates $4.4 billion a year in revenue. The deepwater Port of Savannah is the fourth largest in the United States.

The Historic District, rich in Southern architecture and featured in more than a few movies, is one of Savannah’s most iconic neighborhoods that attracts investors for its vacation rental properties. Ardsley Park is a family friendly neighborhood known as Savannah’s first suburb. Values and homes needing some restoration can still be found in downtown’s Victorian District.

• Population: 148,004
• Gross rental yield: 49%
• Vacancy rate: 14%
• Housing price index 5-year growth: 22
• Median home sold price: $327,125

3. Waco, Texas

Deep in the heart of Texas and home to Baylor University, Waco is in the midst of a real-estate boom while still having prices that are below those of most other major metropolitan areas. According to the Texas First National Bank, homes in Waco have appreciated in value by 96% in the last 5 years and 30% in the last year alone. Not surprising for Texas, which is one of the most economically dynamic and fastest growing states.

Waco’s development plan stresses mixed-use communities that create walkable neighborhoods of housing, retail and amenities. On the books is a $35 million Waco riverfront development. A large number of homes with sub-$100,000 value makes for an attractive rental property market, as does a healthy gross rental yield of 0.55%.

• Population: 143,984
• Gross rental yield: 55%
• Vacancy rate: 82%
• Housing price index 5-year growth: 79
• Median home sold price: $252,500

4. Jacksonville, Florida

For a city with 22 miles of oceanfront beaches in northeast Florida, Jacksonville has the vibe of an old south neighborhood community that’s different from the opulent retirement meccas further down the coast. Despite the struggling real estate market of 2023, the median home sold price in Jacksonville was still up 2.5% in September 2023 and the city remains a seller’s market.

There are 198 neighborhoods in “The River City.” Named for the St. John’s River, the city features many canals that make it a boater’s paradise. Homes in exclusive Mandarin can exceed $600,000 while the most affordable part of town is Mid-Westside, where home values average $125,000. In 2022, citing its lower than average cost-of-living and mild weather, Yahoo Finance named Jacksonville the 5^th fastest-growing city in America with a 1.5% 1-year increase.

• Population: 971,319
• Gross rental yield: 44%
• Vacancy rate: 04%
• Housing price index 5-year growth: 99
• Median home sold price: $297,538

5. Lakeland, Florida

Located in booming central Florida between Tampa and Orlando, Lakeland strikes a balance between small town south desirable for families and resort amenities that appeal to retirees. Despite a rough year for American home sales, the median home sold price for Lakeland was up 5% to $314,800 in 2023. Investment in Lakeland real estate has brought robust returns, with a 5-year growth of 86% and a gross rental yield of 0.52%.

While Lakeland’s jobs outlook is fine for a smaller city, it also expands tremendously with having two of America’s fastest growing cities, Tampa and Orlando within commuting distance of an hour or less. Lakeland’s Historic District features tree and brick lined streets and the neighborhoods of Dixieland, Beacon Hill and Biltmore-Cumberland.

• Population: 120,071
• Gross rental yield: 52%
• Vacancy rate: 57%
• Housing price index 5-year growth: 7
• Median home sold price: $314,800

6. Oshkosh, Wisconsin

The only city in our ranking that is not in the south is Oshkosh, Wisconsin. Not a suburb, Oshkosh is an independent medium-sized city on massive Lake Winnebago, about 90 miles north of Milwaukee. It’s known for its strong economy, which is driven by industries like manufacturing, health care, and education. It's also home to the University of Wisconsin-Oshkosh, a 4-year public university with over 15,000 students, many of whom seek off-campus housing.

Some of the more popular neighborhoods to live in include downtown Oshkosh, the newly developed Town of Algoma, as well as near Lake Butte des Morts. In September 2023 the median home sold price in Oshkosh had risen more than 12% in the previous year to $222,366. Being adjacent to the lake bolsters Oshkosh’s real estate market as it draws investment in summer homes as well as year-round vacationers from Milwaukee and Chicago.

• Population: 65,948
• Gross rental yield: 43%
• Vacancy rate: 17%
• Housing price index 5-year growth: 71
• Median home sold price: $222,366

7. El Paso, Texas

Assumed by many to be a regional border town on the Rio Grande River, El Paso has actually become the 22^ndlargest city in the United States, with a population of 677,456. Over the past 5 years, El Paso’s population growth has outpaced the nation's overall growth. El Paso County is young and family-friendly, with a median age of 34 and close to 40% of the population under the age of 25. The population is majority Hispanic and the culture is a hodgepodge that celebrates Tex-Mex cuisine, mariachi bands and country western honkytonks.

El Paso can be considered affordable, with a cost of living 11% under the national average and cost of housing 30% less. The proximity to the Mexican border brings a lot of international trade to the local economy. Some of the more desirable neighborhoods for families and young professionals include Castner Heights, Cielo Vista and Mesa Hills.

• Population: 677,456
• Gross rental yield: 61%
• Vacancy rate: 74%
• Housing price index 5-year growth: 03
• Median home sold price: $250,570

8. Tallahassee, Florida

Like much of the rest of Florida, the state’s capital city is booming. Unlike the snowbird havens of the southern half of the peninsula, Tallahassee is a working town and the largest city in Florida’s northern panhandle, with great outdoor recreation and a lively arts and culture scene. Tallahassee requires a robust affordable housing supply to support the 70,000 students of Florida State University. With the two largest employers being the state government and FSU, the economic and employment climate in Tallahassee is strong and consistent.

Some of the best neighborhoods in or around Tallahassee are the upscale Betton Hills, the student housing around College Town and the master-planned communities of Killearn Lakes and Killearn Estates.

• Population: 201,731
• Gross rental yield: 50%
• Vacancy rate: 31%
• Housing price index 5-year growth: 65
• Median home sold price: $310,000

9. Durham, North Carolina

North Carolina’s low cost of living, diversifying economy and mild climate has been attracting new residents from across the U.S. and internationally for several years. Durham is one of the medium-sized cities that has absorbed much of this growth. Known as the “City of Medicine,” Durham has more than 300 health care companies. The nearby Research Triangle Park is the largest research park in the U.S., with dozens of high-tech and bio-tech companies providing more than 50,000 high-paying jobs.

An August 2023 report from U.S. News and World Report declared Durham the #2 hottest real estate market in the country, citing a spike in demand and low inventory. Based on all homes sold in the last 12 months, homes in Durham have sold for 1.2% more than they did a year ago. The median home sold price in Durham is a healthy $404,940. Some of the most desirable neighborhoods in Durham include the historic and walkable Trinity Park; Duke Park, with its large greenspace and modernist architecture; and one of the oldest neighborhoods, the hip and charming Old West Durham.

• Population: 291,928
• Gross rental yield: 36%
• Vacancy rate: 42%
• Housing price index 5-year growth: 07
• Median home sold price: $404,940

10. Orlando, Florida

While Orlando and surrounding Orange County is known as a tourist and convention city that attracts millions of visitors each year, the city of Orlando itself has a long history as an old central Florida town that long precedes the famous mouse. Orlando is a city of lakes and distinct neighborhoods. Baldwin Park is a former naval base turned into a lively residential enclave with 200 acres of parks. There are affordable homes in the quaint bungalow-lined streets of College Park. Downtown’s Thornton Park has cobblestoned streets lined with Craftsman homes and a relaxed, urban vibe.

But Orlando real estate is attractive to property investors due largely to the city's strong rental market. Over 60% of the population in Orlando rents, providing investors an opportunity to capitalize on long-term, mid-term, and short-term rentals. With the population growing at an almost-2% annual clip, the city’s rental market shows no signs of slowing down. Orlando has a strong and diverse economy that is home to more than 150 international companies based in approximately 20 countries.

• Population: 316,081
• Gross rental yield: 42%
• Vacancy rate: 65%
• Housing price index 5-year growth: 14
• Median home sold price: $374,387

Best Places To Invest In Real Estate At A Glance

Based on our metrics, including a strong rental yield and return on investment, here are ten of the top American cities for real estate investment in 2023.

Real Estate Investing FAQs

Real estate investing can be expensive, but lucrative if you do it right. That’s why it’s important to make sure all your questions are answered before diving in. It’s also recommended you speak with a financial or real estate professional if you’re just getting your feet wet.

Where is the best place to invest in real estate?

As a growing college town in the Southeastern United States, Athens, Georgia checks off the most boxes as a great place for real estate investment. The southeast U.S. in general is enjoying an influx of new residents coming from other parts of the country. A college town will always support a large supply of affordable rental housing. In 2023, a down year for many of the country’s housing markets, the median home sale price in Athens still jumped by 9.3%.

What makes a city a great place to buy real estate investments?

Of all the ways to invest your excess earnings to make more, one of the most common is investing in real estate. With the proper steps, you can grow your wealth, hedge against inflation and take advantage of a growing market. The best way to identify a place to invest in real estate is to understand local housing market trends and key data and find where there is demand and growth opportunity. We looked at recent data on gross rental yield, fluctuations in housing prices, vacancy rates, local economic growth and 5-year return on investment to give us insight into the best places to invest in real estate.

Should I buy investment property in a state with warm weather?

It’s hard to say that companies and industries are moving South because that’s where the people are, or people are going south for opportunity—it’s likely that both are true. But there’s no question that the United States population continues to migrate toward warmer weather states in the South and West. In fact, 9 of the 10 cities on our list of best places to invest in real estate are in the Southeast states and Texas.

The Bottom Line

In the third decade of the 21^st century, Americans continue to migrate from larger metropolitan areas of the Northeast, Midwest and even the West Coast. They are going in large numbers to smaller and midsize cities in the Southeast and Texas that offer affordability, a diverse and modern economy and, of course, affordable housing in great neighborhoods.

If you’re ready to go property shopping in some of the best places to invest in real estate in America, you can get the mortgage process started online with just a few clicks today.

Methodology

Rocket Homes collected and analyzed the most recent data on gross rental yield, housing price index data, vacancy rates, unemployment rates, population growth and percentage of renters to give us insight into the best places to invest in real estate.

Each city’s metrics were individually ranked, and then weights were applied to each metric depending on their individual importance. The final scores were then sorted to produce the final rankings. Population growth estimates are based on U.S. Census projections. Vacancy rate, gross rental yield, unemployment rate, percentage of renters, were all found using U.S. Census data. Housing price index 1-year & 5-year estimates were found from the Federal Housing Finance Agency.

Other metrics considered without weight: