The Best Real Estate Markets To Invest In

The best real estate markets to invest in

Real estate investing is notoriously one of the best ways to build generational wealth.

Investment properties are excellent long-term investments due to appreciation and are also a great source of passive income.

But how do you know the best real estate markets to invest in when the US offers so many options? Chicago, Cleveland, Memphis, and St. Louis are some of the most lucrative markets.

This article takes you through each of these markets and why investment properties in these markets are worth considering.

Chicago

The Windy City, as it's popularly known, is one of the most affordable gateway markets in the country.

Like other gateway markets, Chicago has a large economy and is popular beyond the US borders.

But, it's a better investment than other well-known Tier 1 markets because the properties are significantly less expensive.

Investment properties in Chicago have appreciated significantly over the years. The rising prices have locked many potential homebuyers out, thus increasing the demand for rental properties.

Experts expect rental prices to continue rising amid the increasing demand for rentals. There's no better time to start looking at rental properties for sale in Chicago than now.

There are many other reasons why Chicago is an excellent market. Here is a breakdown of a few.

Population Growth

Chicago is an excellent real estate investment market because of its rising population. Reports also present Chicago as a quickly diversifying market.

A significant part of Chicago's population is relocating from the city to the suburbs.

This represents a growing need for less crowded living environments. You can take advantage of this migration by looking for investment homes in Chicago's suburbs.

Here are some population growth statistics:

• Chicago has experienced a 2% population growth over the past ten years
• The current city population stands at 2.7 million
• The metropolitan area's population is roughly 9.4 million‍
• Chicago is the third-largest city in the US

Quality of life

Chicago's quality of life is higher and more affordable when compared to similarly-sized urban areas.

The city holds various events to showcase its culture. One of the most popular is the Taste of Chicago food festival.

On top of this, the city is one of the most inclusive in the country, as it holds an annual Pride Parade. These events make investment properties in Chicago quite lucrative as they attract more people into the city.

Here are some Quality of life statistics:

• Chicago's cost of living index is 120
• Chicago is 20% less expensive than Los Angeles
• The Windy City is 49% more affordable than San Francisco
• Chicago boasts over 200 neighborhoods, thus giving residents from different socio-economic backgrounds options
• It ranks #42 for cities offering the best outdoor activities in the US

Job Market

Chicago has one of the best job markets in the US.

Key industries in the region include hospitality, professional service, and transport industries.

In fact, Chicago's professional service industry is one of the best-paying in Illinois. Thus, more professionals are likely to move into the area.

Here are some job market statistics:

• The unemployment rate declined from 5.1% to 4.9% between January and February in the Chicago-Joliet-Naperville area
• There are over 3,634,000 employees in the area
• Psychologists are the highest paid in the area, with an annual salary of $118,500‍
• GDP of the Chicago-Naperville-Elgin area has grown by roughly 33% over the past decade
• The US government is one of the largest employers in the area

The Chicago real estate market

Bidding wars on properties in Chicago are a common occurrence.

The primary reason behind this is the ever-increasing home values. While this may present a problem for potential homebuyers, it's a potential goldmine for property investors.

Increasing home values increase the demand for rental properties. In turn, this raises your potential rental income. There's no better time to start looking for a rental property for sale than now.

Here are some statistics on the Chicago real estate market:

• Chicago home values have increased by 9.1% over the past year
• The typical middle price tier home goes for roughly $309,268
• Landlords charge approximately $2080 rent for their apartments
• About 46% of households in the area are renter-occupied
• Streeterville is the most expensive neighborhood in Chicago, charging roughly $2775 for rent
• Chatham, Burnside, and Calumet Heights are among the cheapest neighborhoods, charging approximately $782 per month

Cleveland

Home to one of the world's best orchestras, Cleveland is a well-known goldmine for real estate investors.

The metro area has international brand recognition as it's home to four professional sports teams.

Moreover, Cleveland is a perfect blend of various market segments. Its economy comprises white and blue-collar industries, thus attracting a diverse workforce.

More than half of the area's households are occupied by renters.

Because of this, Cleveland is a prime location for investors looking for investment properties for sale. You're sure to get tenants when you invest in rental property in this area.

Below are some reasons you should be looking for income properties for sale in Cleveland.

Population Growth

Cleveland is the second-largest city in Ohio. And it's the 54th largest city in the US.

It's also one of the most diverse cities in the US. Some of its significant ethnicities include German, English, Polish, Italian, and Polish.

Here are some population growth statistics:

• Cleveland's city population stands at 374,394‍
• Cleveland's general population is roughly 2.1 million
• Cleveland has invested over $3.5 billion in revitalizing its downtown area since the 1990s
• The downtown area receives approximately 125,000 people daily

Quality of life

Forbes ranks Cleveland as one of the best areas to live and work. It has transitioned from a manufacturing-based economy to a service-based economy.

It's famous for the Rock and Roll Hall of Fame and USS Cod, a former war submarine.

Further, Cleveland is home to University Circle, a cluster of institutions dedicated to promoting education.

Here are some quality of life statistics:

• ‍90.5% of its population have attained a high school diploma
• Roughly 30% of its population have college degrees
• Cleveland's cost of living is 11% below the national average
• The average commute takes approximately 25 minutes
• Cleveland's healthcare facilities offer some of the best healthcare services in the US

Job Market

Cleveland has a robust job market. The area's fastest-growing industries include professional services, construction, and hospitality.

Various large companies have their headquarters in Cleveland. These include Sherwin-Williams, the giant paint and coating manufacturer, and Applied Industrial Technologies, the global industrial supplies manufacturer.

It's also home to the Federal Reserve Bank of Cleveland. This is one of only twelve federal reserve banks in the US.

Here are some job market statistics:

• The Federal Reserve Bank of Cleveland estimates a 3.5% GDP growth for April 2022
• Cleveland's average household income is $46,137‍
• High-tech employees are relocating to Cleveland because of its growing technology and biotechnology industries
• There are over 32,000 firms in Cleveland
• Per capita income is $22,442 (as of 2020)

The Cleveland real estate market

Cleveland offers one of the most affordable real estate markets in the United States. It is an excellent market if you're new to real estate investing as it tends to perform well during recessions.

Furthermore, the region has a robust market as house prices are constantly rising. Thus, you can benefit from an investment property for sale or a rental property.

Moreover, real estate in Cleveland is driven by a strong renter market. A majority of the population can't afford to buy their own homes.

The demand for single-family rental properties is on the rise. This makes rental investment properties in Cleveland suitable for investors looking for low-risk investments.

Here are some statistics on the Cleveland real estate market:

• According to Zillow, the average price of middle price tier home is $101,227
• This represents an increase of 22.4% from 2021
• Rent for an 806 square feet apartment is $1238 per month
• Roughly 51% of Cleveland's households are renter-occupied
• Most housing units in Cleveland rent for less than $1700 per month

Memphis

Most investors are lured by real estate in Memphis for two main reasons. The first is the area's affordability.

Memphis offers some of the most pocket-friendly properties. In fact, investors compete with home buyers in this market as properties are very affordable.

The second reason is the high percentage of renters.

Memphis' real estate is low-risk for rental property investors because many Memphis residents choose to rent.

But, there's more to Memphis than competitive real estate prices. It has also garnered quite a name as its home to Holiday Inn, the world's first hotel chain.

Moreover, Memphis offers various outdoor activities and party scenes. It receives a lot of daily traffic, which means good business for real estate investors.

Here are other reasons to invest in Memphis:

Population

Memphis' population has increased over the past decade. The city is the second-largest in Tennessee and the 28th largest in the US.

Here are some population statistics:

• Memphis city population stands at 650,890
• This is a 0.63% increase from the 2010 census
• The city's population density is 2051 people per square mile
• The Memphis metropolitan area has a population of 1.33 million people

Quality of life

According to Forbes, Memphis is one of the best places to live. Thus, it's a good time to look for investment properties in Memphis.

Memphis is famous for its cultural heritage. It holds various events every May to celebrate its diverse culture. This makes it one of the most popular cities among people who value culture.

The cost of living in Memphis is also below the national average. Thus, it's affordable for people looking for budget-friendly cities.

Here are some Quality of life statistics:

• The cost of living is 5% below the national average
• It takes the average commuter 24 minutes to reach their destination
• The city's high school diploma attainment rate is 88.4%
• The city has many tourist attractions
• Residents enjoy nine months of patio-friendly weather

Job Market

Memphis has one of the strongest job markets in the country. It's home to some of the largest companies in the US.

These include AutoZone, FedEx, and International Paper company. These companies provide thousands of jobs in the city.

Moreover, the city's government and Shelby county schools provide many employment opportunities. And Ford is set to invest $5.6 billion into the city's regional site, thus creating additional opportunities.

Here are some job market statistics:

• The unemployment rate has reduced to roughly 3.9%
• Ford's new project will create an estimated 6000 jobs
• The city's average household income is $62,588‍
• Memphis' GDP has grown by roughly 30% over the past decade

The Memphis real estate market

There's a mismatch between housing demand and supply in the Memphis market. This has driven home values up over the years.

The mismatch also leaves a lucrative gap for investors looking to join the rental property market. Demand for rental properties in the Memphis area is at an all-time high.

You can take advantage of this by looking for real estate investment near me while in Memphis. You're sure to get tenants when you buy property, as most of the properties in Memphis are renter-occupied.

Here are some statistics on the Cleveland real estate market:

• Home values have increased by roughly 22% in Memphis over the last year
• A middle price tier home sells for approximately $142,725‍
• A 909 square feet apartment rents for approximately $1,005‍
• Cardova is the most popular neighborhood with an average rent of $1270
• Some areas charge rents of as low as $650/month, and others as high as $2,452/month

St. Louis

Real estate in Saint Louis is attractive to investors for various reasons. Firstly, there's a shortage of homes to buy in the area.

So, most residents choose to rent, creating passive income for rental property owners. Investment properties in Saint Louis are guaranteed to have a positive return on investment.

Further, real estate in St. Louis is also lucrative because of the area's high number of skilled workers.

Fortune 500 companies like Boeing leave residents with a lot of money to spend. This translates to a willingness to pay high rent prices for quality housing.

Here are other reasons St. Louis is an excellent market:

Population Growth

The increasing cost of living in bigger urban areas has promoted a population increase in St. Louis. That's because people are relocating from major urban areas to St. Louis.

This has created an excellent opportunity for real estate investors as housing demand increases.

Further, St. Louis is one of the most diverse cities, with near-equal African-American and White populations. This makes the city more attractive to residents in other metro areas.

Here are some population growth statistics:

• St. Louis city population is an estimated 292,047‍
• St. Louis metro area population is an estimated 2,221,000‍
• The metro area has seen a 0.23% population increase from last year
• The city's median age is 35.8

Quality of life

St. Louis is popular for its tight-knit communities. Most people who move away to study or travel eventually return to the city.

Thus, investment properties in St. Louis are pretty popular. Further, the area boasts a low cost of living, which attracts individuals and companies.

St. Louis also has a vibrant outdoor scene. The area hosts various tourist attractions and is home to professional sports teams.

Here are some Quality of life statistics:

• St. Louis ranks #22 in cheapest places to live
• It takes the average commuter 25 minutes to reach their destination
• The cost of living is 6% lower than the national average
• Roughly 87% of its population has graduated from high school

Job Market

St. Louis has a commendable employment rate. Last year the employment rate went up by 0.02 %.

Some of the fastest-growing industries include manufacturing, professional services, and hospitality. Large companies like Boeing and BJC HealthCare also continue to thrive and increase their workforce.

St. Louis is also home to three national research universities. Thus, its high education rate comes as no surprise.

As an investor, you can't afford to pass on the opportunity to buy real estate in St. Louis. Google real estate investing near me while in the area and view your options.

Here are some job market statistics:

• The Federal Reserve Bank of St. Louis estimates the city's GDP at roughly $171.5 million
• There are roughly 1.4 million employees in St. Louis
• Households have a mean income of $64,089‍
• The unemployment rate as of January 2022 was 4.3%, which is less than other metro areas' rates

The St. Louis real estate market

The St. Louis real estate market is booming. House values in the area have consistently risen over the years.

And the area also boasts a robust renter market.

Roughly half of its households are occupied by renters. So, investing in rental properties is relatively low risk in this area.

Here are some statistics on the St. Louis real estate market:

• The average middle price tier home is worth $167,671‍
• This is a 13.1% increase from last year
• The average rent for an 843 square feet apartment is $1,058
• Rent in the cheapest and most expensive neighborhoods goes for roughly $581/month and 1669/month, respectively

Tips for investing in real estate

Now that you know where to invest, the next step is learning how to invest.

You'll find the investment process relatively easy with the right investment tips. And, proper guidance will improve your chances of making a killing in this sector.

Here are the top tips to keep in mind:

Do your research

Start by googling "real estate investment near me" or "property investments near me." This will give you a list of the best properties in your proximity.

Afterward, research each option and assess its viability. Look at factors like population growth, state of the real estate market, and labor market. Luckily, this article has already analyzed the top real estate markets.

Assess market trends

Market trends give a clear picture of the state of each potential market. Pay particular attention to house values in your chosen area.

Are they increasing or decreasing? Are the fluctuations caused by a temporary factor or a seemingly permanent one?

Also, assess an area's employment rate. Is the employment rate increasing or decreasing? You may need to consider other options if your chosen market has a decreasing employment rate.

To make your work easier, look for property investors near me. Or, visit a real estate investment website that breaks down various markets and their projections.

Consider single family rentals

As an investor, your primary goals are maximizing gains and reducing risks. And single-family rentals allow you to do just that.

Single-family rentals have always appreciated and will continue to do the same in the foreseeable future. And most people prefer them over other types of rentals. Thus, investing in them guarantees a ready tenant market.

Pay attention to emerging neighborhoods

Emerging neighborhoods hold many benefits for investors. The first is that their real estate is affordable.

They are recommended for investors who may not be able to afford properties in higher priced neighborhoods.

The government also offers various tax incentives for investors. And the neighborhoods have huge growth potential.

Diversify your real estate portfolio

You'll undoubtedly come across various people telling you to invest in properties in your backyard. And, this isn't necessarily wrong.

After all, you know more about properties in your area than properties in other areas. But, this limits you to a single geographical area.

Fluctuations in house values in this area could jeopardize your whole portfolio. So, it's essential to diversify.

Look at properties beyond your immediate area. This way, disruptions in one location won't affect your income significantly.

Find a balance between debt and equity financing

Some real estate investors make the mistake of over-leveraging themselves. Ultimately, lenders foreclose on their properties when they can't make payments.

To avoid this, buy some properties mortgage-free. That way, you'll still be in control of your properties even when sudden market changes occur.

Chicago, Cleveland, Memphis, and St. Louis are some of the best property markets to invest in.

Investing in real estate can be lucrative if you know where to invest. Market trends show that these four cities offer some of the best real estate returns.

They are highly populated and rank high in quality of life assessments. Moreover, they have robust job and real estate markets. These factors translate to a higher number of willing renters.

But, knowing where to invest is only the first step. You also need to understand how to invest to maximize your income.

Do your research, diversify your investments, and don't rely solely on debt financing. Doing this will help you achieve higher returns on your investments.