Despite experiencing financial turmoil brought about by COVID 19 crisis, people are still looking for the best places to invest in real estate in 2021. If you are one of them, this guide offers you the best tips.
Since the sector is booming now more than ever, it’s vital to find the best cities to invest in real estate in 2021 to make the best out of these incredible opportunities. Investing in real estate is a great way to make passive income and diversify your income.
I can’t emphasize enough that the success of your investment largely depends on the cities you target. There are plenty of cities in the US still developing, thus offering you new opportunities to invest in real estate. While there is no single best location, most have the potential of giving back excellent returns on investment.
But, just like with any other investment, you need to consider different factors before you dive in both feet. Some of these factors include the area’s rent as a percentage of income, home prices, vacancy rate, growth rates, industry and population growth.
Let’s look into how you can identify the best places to invest in real estate.
Table of Contents
Best Places to Invest in Real Estate in 2021
Buying Physical Properties
Buying physical property or leasing a part of an entire property is a perfect way to penetrate the real estate as an investor. And to make a reasonable margin of profits, it’s vital to know where to buy cheaper properties. Land century is one best app that can help you locate cheap lands and houses in different regions with ease.
Also, you can buy properties that have been foreclosed. Hud homes platform is a perfect platform for buying cheap homes that have been put under foreclosure. It sells residential homes that were bought with FHA loans, but the homeowners defaulted on their monthly mortgage payments. If you have the funds or you can get a loan, you can buy these homes and resell or rent out to make money.
Here are some of the best places to invest in real estate in 2021:
1. Orlando, Florida
According to Forbes, Orlando, Florida is one of the best places to buy rental property and has remained so for three years in a row. Orlando is a reasonably priced place with a plethora of benefits both socially and economically. In fact, the city’s median sales price is $231,000, and the median rent per month is around $1,486.
Orlando is also one of the fastest-growing cities in the country. According to figures by the US Census Bureau released in 2017, Orlando’s population was around 2.5 million, making it the 23rd largest metropolitan area. Today, the population has grown tremendously to over 2.6 million.
Orlandos’ job growth rate is also high given that there were over 45 000 new jobs created last year. The tourism, leisure, and hospitality sectors in Orlando experienced a significant high as the city has been one of the most-visited places in the US. Undeniably, Orlando, Florida, should be top on your list of best places to invest in real estate in the US.
2. Las Vegas, Nevada
Being the 25th most populous city in the US according to the US Census Bureau, Las Vegas is second on our list of the best places to invest in real estate. The city’s population is around 2.7 million, which is a 2.98% increase from last year.
The city is well known for its booming industries, from gaming, tourism, entertainment, high tech to financial industries. As businesses continue to thrive in Orlando, so does the real estate sector.
The new residents moving into this growing city are fueling the real estate market trends in the city. The median rent per month in Las Vegas is $1,107, and the median home price is $296,730.
3. Atlanta, Georgia
Known as the 3rd largest metropolitan region in the Southeast, Georgia has about 5.9 million people. This population has increased by 12.18% in the last eight years, a 111% faster than the national growth average of 5.76%.
Plenty of financial and tech-based companies, including Google, are expanding in Atlanta, Georgia. This has contributed to the creation of new job opportunities in the area. In fact, over the past year, 53,700 new jobs were created in this city, indicating an annual job growth rate of 2.15%.
Atlanta is top on the list of the best rental markets in the US. This city has the most affordable houses with an average median monthly rent of $1,434, and the median property sales price is $190,000 for a 3-bedroom single-family house. This is 15% lower compared to the national average of $222,000.
See related: 9 Best Paying Jobs in Real Estate Investment Trusts
4. Tampa, Florida
Tampa, Florida, is another famous city and one of the best markets to invest in real estate. With a population of 3.1 million and a population growth rate of 12.69% in eight years, Tampa continues to be a fertile ground for real estate investors.
Tampa, FL, is home to four Fortune 500 companies, among other successful organizations. Its economy is booming and is now worth over $130 billion, putting it on the list of the best performing cities in the US. The job growth rate in Tampa, FL, is 71% above the national average. For seven years, Tampa has had a 106% equity growth rate.
Two of the sectors that are booming in this beautiful city include the financial sector and tourism. The beautiful sunny weather of Tampa attracts tourists of all ages, including retired professionals.
These tourists make the real estate industry thrive as they have to look for apartments to rent. Tampa’s median rent per month is $1,485, and the sales price is $225,250.
Also, vacation rentals are in high demand in Tampa, FL. Therefore, this is the best place to buy a VRBO. You can mint good bucks, especially during summer when most people want to enjoy a home away from home.
Renting a part of one’s spare room has become another fantastic way to invest in real estate. With this Airbnb model, you take on short-term tenants looking for a place to stay for a while.
Airbnb screens potential renters and offers hosts a guarantee of protection against damages. This works if you own a home and have a spare room to rent out. To get into this investment, you need enough capital, as well as, ability to deal with household issues. One of the best cities to invest in Airbnb is San Angelo, Texas.
5. San Angelo, Texas
San Angelo, TX, sticks top on the list when searching for the best cities for Airbnb investment 2021. This city had a population density of 1,601 people/sq mi (618/km2) as of the 2010 census, and the area residents are a mix of multiple races.
The city is relatively affordable, with a median property price of $360,750. Last year the properties in this place appreciated by 6.7%.
In San Angelo, local tourism continues to thrive, which was the case even during the pandemic period. According to data by Mashvisor’s Airbnb, local hosts are still generating good cash to date. The vacation rentals and hotel businesses are still booming.
On average, the Airbnb daily rate is $125, Airbnb cash on cash return is 6.9%, and the monthly Airbnb rental income totals $3,000. The Airbnb occupancy rate is 72%, meaning your unit will be occupied 7 out of 10 times.
If you want to become an Airbnb investor, you need to apply for different local Airbnb permits in San Angelo. Also, it’s good to note that if you invest in a short-term rental property, it will be subjected to taxes and other regulations. In 2021, San Angelo is a perfect place to invest in Airbnb and even in long-term rentals.
REITs (Real Estate Investment Trusts)
If you want to invest in real estate without buying a physical property, then consider REITs. This involves investing in companies that own commercial properties, including retail spaces, office buildings, hotels, and malls. There are different types of REITS, including retail, residential, office, healthcare, and mortgage REITs.
90% of annual REITs earnings are distributed to investors in dividends. Therefore, when you buy REITs, you get paid in dividends, and you can reinvent the dividend to grow your investment further.
REITs are complex, and they vary. Some trade on public exchanges like stocks and others don’t. You can purchase REITs through brokerage firms or online brokers, 401(k), or IRA.
When buying through a broker, you must open a free brokerage account. Then, buy REITs that you can afford. But, there is a minimum investment that you should be ready to commit to.
The REIT type that you purchase determines the risk you’re taking on. That’s because the non-traded REITs are not resold easily and pose a challenge of valuing. So, if you’re a new investor, stick to the publicly-traded REITs.
Real Estate Crowdfunding
Before the passing of the JOBs (Jumpstart our business startups) Act, most investors could only either buy physical properties or REITs. Currently, crowdfunding has opened up opportunities for most people to get into real estate investments.
Real estate crowdfunding is a strategy that enables small and medium-sized enterprises to pool capital from a group of people. This is done via online platforms that offer a meeting place between the interested investors and real estate developers.
When you invest in crowdfunding, you own a share of the property. Therefore, you earn a portion of the profits generated by the investment.
You can either get into real estate crowdfunding through equity or debt investing. Real estate crowdfunding falls under accredited and non-accredited investors.
Real Estate Crowdfunding – Accredited Investors
Accredited investors are high-net-worth individuals with high experience who earn over $200 000, and their net worth exceeds $1 million. In the past, the accredited were the only ones allowed to invest in equity transactions.
However, the Securities and Exchange Commission (SEC) lifted that regulation and now, even non-accredited individuals are permitted to invest in them.
Some of the best platforms for accredited investors include:
This is an online commercial real estate investment crowdfunding platform that caters to accredited investors. The minimum you can invest is $25,000. Through CrowdStreet, you get opportunities that allow you to access individual commercial real estate investments directly. The platform lets you review, compare, and choose the deals that best suit you.
Another incredible debt real estate investing platform is PeerStreet. This lets you invest in real estate with as little as $1000.
In this case, investors lend money to the property owner or sponsor, and the property acts as the collateral. As an investor, you receive a fixed rate of return determined by the loans’ interest rates and how much you’ve invested.
Acretrader is a platform you can use to make passive farmland investments. It only takes minutes to invest through this online platform. The minimum investment you can make is $5000.
With the ever-growing global population and food demands, Acretrader farmland offers an ideal diversified investment opportunity with excellent long-term returns.
Real Estate Crowdfunding – Non- Accredited Investors
For non-accredited investors, there are no significant restrictions. Provided you can afford to purchase the minimum share required; you can take part in the investment.
An investor can start with as little as $10, for example, if they use a platform like Groundfloor. To get started, you only need to create an account based on your goals, create a portfolio strategy, let brokers diversify your money across different investment funds, browse and choose investments, and check their progress through an online dashboard.
According to the SEC, Non-accredited investors now have a right to invest in equity and real estate transactions. Though, there are limits also imposed for non-accredited investors.
For example, if you have either a net worth or annual income of $107,000, you should invest up to the greater of either $2,200 or 5% of the lesser of your net worth or annual income.
If during any 12 months both your net worth and annual income are equal to or more than $107,000, you can invest a maximum of 10% of the net worth or annual income, whichever is lesser but not anything above $107,000.
Some of the best non-accredited Investors crowdfunding platforms include:
With YieldStreet, you invest across multiple classes of assets, including real estate, art, aviation, marine, legal, consumer, commercial, and multi-asset funds. This wide range of asset classes has varying minimums, durations and yields.
Fundrise – $500
With as little as $500, you can invest in real estate markets through Fundrise. This platform allows investors to invest in a low-cost but diversified portfolio of institutional real-estates.
With Fundrise, you can as well diversify not just in public but in private real estate, thus reducing the risk and increasing the stability of your investment.
Diversify Fund – $ 500
DiversifyFund is yet another platform for real estate investors that you can begin with a minimum of $500. This platform supports REITs investors and diversified investments. With DiversifyFund, you can build your investment portfolio with physical private market assets.
- 5 Proven Ways to Invest in Real Estate with Little Money
- How to Start with Passive Real Estate Investing (With Success!)
- 9 Best Rental Income Trackers (Manage Real Estate Efficiently)