Where Should Real Estate Investors Buy Rental Properties?
Ask a landlord in San Francisco or New York City how they feel about running their business in their city, and you might hear a long list of complaints. Rent control, tenants’ unions and plenty of regulations make those markets tough for landlords.
But of course, there are other cities that aren’t exactly ideal for landlords, for other reasons. These are the places where buying property and renting it out for a reasonable return on your investment is more challenging. Luckily, there are plenty of markets where it’s possible to buy a home for less than it costs to rent a typical home—so in theory, landlords can buy low and rent high. Of course, if it’s cheaper for landlords to buy, it’s also cheaper for homeowners to buy!
You’d be best off by analyzing your own financial situation and seeking investment advice from a professional before adding any properties to your portfolio.
Based on information from the real estate evaluation site Trulia, the following cities were rated as the “best” and “worst” places to be a landlord.
Best Places: Where it’s much cheaper to buy vs. renting:
City | Buying vs. Renting |
Detroit, MI | -70% |
Dayton, OH | -63% |
Gary, IN | -63% |
Cleveland, OH | -63% |
Warren-Troy, MI | -63% |
Toledo, OH | -62% |
Memphis, TN | -62% |
Kansas City, MO | -60% |
Birmingham, AL | -59% |
Indianapolis, IN | -58% |
Worst Places: Where it’s much cheaper to rent vs. buying:
City | Buying vs. Renting |
San Francisco, CA | -19% |
Honolulu, HI | -23% |
San Jose, CA | -24% |
New York, NY | -26% |
Albany, NY | -30% |
Orange County, CA | -32% |
San Diego, CA | -33% |
Los Angeles, CA | -35% |
Long Island, NY | -36% |
Ventura County, CA | -36% |
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