Though purchasing any property is exciting, finding the best investment property locations thrills even the most seasoned investor. The right location can net high rental revenue, provide a wealth of neighborhood amenities, and stay occupied more easily than a unit on the far side of town. But what makes a location “good,” and how can you find the best area to invest in? This article will answer these questions and more.
Understanding Property Location
Before diving into the key aspects of a perfect property locale, let’s provide some context: property location is the specific geographic area where a real estate asset is situated. There are three types of properties based on location: urban properties, suburban properties, and rural properties. Urban properties are located within cities; rural properties are out in the country.
Location types, climate, area demographics, scenery, and surrounding establishments are all factors that contribute to the value of your local real estate market. Every single detail is important.
Key Aspects to Consider When Choosing a Property Location
While there are countless factors to consider when carefully selecting your next property investment location, don’t worry. We’re going to break down the detailed considerations to guide you as you take a big step toward financial success.
Access to Amenities
Tenants ask about amenities all the time. Rental amenities can make or break your vacancy cycle. Plus, access to amenities gives your unit the upper hand when competing with other rentals in your area. So, which features should you prioritize when picking your property?
MultiFamilyDive gathered data from over 2,000 renters and found the following amenities were in high demand:
- In-unit laundry
- On-site pool
- High-speed broadband
- Private garage
- Additional storage
- On-site gym/exercise space
- Premium appliances
- Online resident portal
Amenity demands can be very location-specific – so make sure to research your market to determine what amenities you need to make accessible for your tenants.
Transportation and Accessibility
Nearby public transportation is a huge benefit for tenants, so be sure to keep that in mind when scoping potential properties. In a 2019 study, the American Public Transportation Association and the National Association of REALTORS® found that real estate markets with more accessible public transportation tend to boast higher property values.
Beyond public transportation, it is also important to consider the general accessibility of your property. Is it easy to access the highway? Is there developed infrastructure for your tenants to enjoy? Mitigate any issues impacting the ability to get to and from your property, especially since interested leads will inevitably run into these problems if they exist.
Safety and Security
Would your tenants feel safe living in this property? Would you feel safe living in this property? These are important questions to ask when researching an investment property.
When searching for a location for your rental, check the crime rates in nearby neighborhoods, and make sure that this is an area where you would feel safe living in yourself. The last thing you want is for your tenant to fear their surroundings. Not only is that a terrible feeling for them to experience, but it will also lead to a desire to move out sooner rather than later.
Regardless of the crime rate or general neighborhood activity, make sure your rental properties have security features. This is a basic need for all tenants, regardless of the property’s location, but your efforts may need to scale along with the perceived risk of the neighborhood.
- Am I going to install security cameras for this rental property?
- Will I hire an on-site security officer?
- Will there be restricted access to the building?
- What type of locks are installed on the units?
Your tenants will appreciate your efforts. As outlined in TurboTenant’s 2021 survey on home safety features:
- Just under 50% of Americans wish they had some sort of safety feature in their apartment, apartment complex, or home.
- ⅓ of Americans would be willing to pay an additional $100+ in rent per month to have better security features.
- Over 50% of those who want additional security features trust technology to do the job more than traditional methods.
Good market research plus a bit of forward thinking will set your rental property apart from others when it comes to the area’s future. Seek out any plans for new developments in the area, especially as these changes may increase your property value assessment. New highways, the expansion of public transportation, and any commercial developments can also attract more tenants in the future. The more growth and popular establishments near your rental, the better.
Future developments also serve as a sign of what an area’s economic growth could be. Improving infrastructure and an influx of commercial properties will contribute to the overall real estate market. This will ensure high demand for residential rental properties and increase property values along the way.
It’s no secret we all want to live somewhere beautiful. But it’s also becoming increasingly important for renters to live in climate-friendly and equitable communities.
To that end, be mindful of your potential property’s surroundings. Visually pleasing locations increase demand for your property. Scenic views, greenery, and bodies of water provide aesthetic appeal that attract renters. Plus, people who live in beautiful spaces with access to nature experienced increased mental and physical health.
Depending on what area of the country you’re looking to buy property, it can be beneficial to consider what recreational opportunities are in the area. For Colorado, it is important for a lot of renters to have access to parks, walking trails, and hiking. For any beach towns, easy access to the water is a huge added benefit for renters.
Sustainability is huge when it comes to maximizing your long-term property investment. Innovative and climate-friendly amenities are valuable for most tenants, and in a society where we face the effects of climate change daily, implementing them is a proactive move. Plus, you can protect your bottom line by implementing certain climate friendly measures in your rentals. Showcase your commitment to sustainability easily with this beginner’s guide to an environmentally friendly rental.
Directly related to future developments, understanding property appreciation is a must when researching your investment property research. Appreciation is the increase in value of a property over time, which could lead to more rental income or higher resale prices. Seasoned investors know their efforts will lead to a positive cash flow – or at minimum, property value growth. No one wants to be in a situation where their investment has no return!
Usually properties with historically strong appreciation are a safe bet when researching your next investment property location – but don’t count out up-and-coming areas that have potential to deliver a large return on investment. Use an online calculator to find the ROI on your next rental property.
Community and Neighborhood
Retaining respectful tenants is just as important as finding them in the first place. Renters across the country have expressed their desire for community and connection within their neighborhood – so if your property delivers, you’ll set yourself apart as a local landlord. Plus, a study conducted by Venn found that an active social community leads to renters feeling more inclined to renew their leases.
Use this information to your advantage and make sure there are opportunities for social connection in and around your property. On-site common areas are great amenities for social tenants. When researching a potential property, look at the neighborhood demographics and the presence of third spaces in the area. A friendly, diverse neighborhood benefits tenants of all demographics. Humans are inherently social, so it’s important that your property serves as a space for community to thrive.
Before signing their name on the deed to a new property, savvy investors evaluate the demand for rental properties in that area. In a neighborhood with high rental demand, your steady potential rental income will likely exceed the property’s expenses. Plus, high rental demand equals fewer vacancies.
So, what areas have a high rental demand? Universities and areas with high job growth or proximity to major employment centers will have a higher demand for rental properties. Although college towns have significant pools of renters, consider the potential for high turnover and significant wear and tear. Another great group of renters are seniors; not only are they likely to build a quiet community, but they usually produce less wear and tear on your units.
The Best Investment Property Locations
After thorough research based on criteria from the above categories, job markets, unemployment rates, property appreciation, and more, we have curated a list of the top five best property investment locations in real estate right now:
1. Tampa, Florida
Not only was Tampa on USAToday’s best places to live in the U.S. ranking for 2023, but The Big Guava consistently ranks as one of the best cities for real estate investment in industry polls.
Why? According to Smith and Associates, home values are up 2,472% since 2000 and more than 52% of Tampa’s residents are renters. High rental demand equals low vacancy rates.
2. Boise, Idaho
Boise, Idaho was listed as the number best place to invest in real estate on Norda Real Estate Investments – and for good reason. The City of Trees offers affordable housing, low property taxes, a growing population, and a strong job market.
As of Q1 2023, Boise is in the real estate appreciation top 10% nationally.
3. Austin, Texas
With Tesla, Samsung, and Apple all choosing Austin, Texas as their newest headquarters, and a large group of California’s Silicon Valley moving to the area, it’s no surprise that The Live Music Capital of the World’s real estate market is booming.
Additionally, Austin’s high-paying jobs and low unemployment rate have earned it the title of the third-most moved to U.S. city.
4) Las Vegas, Nevada
Las Vegas, Nevada is a hot property investment location, not only because of its reputation for one-of-a-kind entertainment and internationally popular tourist attractions, but also due to its high rental demand, affordable housing, and uniquely high property appreciation.
Norada Real Estate Investments reports that over the past decade, Las Vegas’ real estate market has appreciated by 245%. With that kind of growth, it’s understandable why investors bet on the Vegas real estate market.
5) Raleigh, North Carolina
Raleigh’s job market is thriving, thanks to employers like IBM, Cisco Systems, and North Carolina State University. The City of Oaks also boasts one of the lowest property tax rates in the country.
Additionally, Raleigh properties are affordable, yet there’s high rental demand. Landlord Studio reports the median rent price for a 1-bed unit as $1,421, which is a 17% year-over-year increase.
A great location can be the difference between a booming property investment and a vacant, undesirable cash sink. By doing your research and following our tips, choosing your next rental property could be more fruitful than ever before. We know location is always a hot topic in real estate, and we always want to hear from you, so sign up for our weekly newsletter and let us know what you think!
The Best Investment Property Locations FAQs
What Does Assessed Value Mean on Property Taxes?
The assessed value stated on your property taxes is the dollar value applied to your property, calculated by multiplying the actual value by the appropriate assessment rate. Assessed value is based on the property’s location, improvements, size, and other factors.
Are Property Taxes Based on Assessed Value?
Yes, property taxes are calculated based on the assessed value of a property. You can find this information on the website you use to pay your property taxes.
Why Does Location Matter for Rental Property?
Choosing the perfect location for your rental property can lead to a positive increase in your return on investment for that property. A location’s climate, amenities, community, and safety are all important factors that renters consider when deciding where to live.