13 of the best places to buy a rental property in the US right now

It's all about location.

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It’s all about location.
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Mike Blake/Reuters

Rental properties give you, the investor, the power to determine your profits.

Let’s be clear: Buying a home doesn’t always give you the biggest return on your money.

From 1890 to 2012 the inflation-adjusted return on a house was 0.17% – a fraction of the 6.27% return for investments in the stock market over the same time period.

But there is a way to earn similar, or even greater, investment returns in real estate: owning a rental property.

In this case, you’re getting paid to own something, rather than paying to own it. The mortgage is often covered by rental income, and if you play your cards right you’ll profit after covering insurance, taxes, and maintenance costs.

That’s different from expecting a big return when it comes time to sell a home you’ve been living in long-term. Owning a rental property is also different than buying a fixer upper you hope to sell for a profit, which isn’t always the cash cow it’s chalked up to be.

But like anything in real estate – whether you’re buying or renting – it’s all about location. HomeUnion, an online residential real estate investment management firm, recently released a list of the top markets for single-family rentals based on how they’re expected to perform through 2017.

To compile the ranking, HomeUnion analyzed 30 rental markets to determine which have the best local economies, the highest annual investment returns after operating costs (including insurance, taxes, and maintenance), and the strongest real estate market conditions considering rent increases, rent-to-income ratios, turnover times, and supply of new construction.

Below are the 13 best places to buy a rental property right now. Based on the median investment home price, we’ve also included the average mortgage payment, assuming a 30-year fixed mortgage with a 20% down payment and a 5% interest rate.


13. Baltimore

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Jon Bilous/Shutterstock

Median investment home price: $145,000

Mortgage payment: $623

Median rent: $1,431

Annual return after operating costs: 6.7%


12. Nashville

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ESB Professional/Shutterstock

Median investment home price: $166,300

Mortgage payment: $714

Median rent: $1,437

Annual return after operating costs: 5.4%


11. Chicago

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marchello74/Shutterstock

Median investment home price: $235,000

Mortgage payment: $1,009

Median rent: $1,798

Annual return after operating costs: 5.2%


10. Minneapolis

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Scruggelgreen/Shutterstock

Median investment home price: $172,300

Mortgage payment: $740

Median rent: $1,513

Annual return after operating costs: 5.8%


9. Atlanta

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Shutterstock/Sean Pavone

Median investment home price: $131,000

Mortgage payment: $563

Median rent: $1,243

Annual return after operating costs: 6.4%


8. Seattle

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Roman Khomlyak/Shutterstock

Median investment home price: $450,000

Mortgage payment: $1,933

Median rent: $2,218

Annual return after operating costs: 3.3%


7. Detroit

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Shutterstock

Median investment home price: $167,500

Mortgage payment: $719

Median rent: $1,406

Annual return after operating costs: 5.7%


6. Phoenix

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welcomia/Shutterstock

Median investment home price: $180,000

Mortgage payment: $773

Median rent: $1,264

Annual return after operating costs: 4.7%


5. Boston

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f11photo/Shutterstock

Median investment home price: $333,800

Mortgage payment: $1,434

Median rent: $2,337

Annual return after operating costs: 4.7%


4. Buffalo

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REUTERS/Lindsay DeDario

Median investment home price: $105,000

Mortgage payment: $451

Median rent: $1,285

Annual return after operating costs: 8.5%


3. New York City

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Flickr / John Weiss

Median investment home price: $431,100

Mortgage payment: $1,851

Median rent: $2,148

Annual return after operating costs: 3.9%


2. Miami

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Richard Cavalleri/Shutterstock

Median investment home price: $209,900

Mortgage payment: $901

Median rent: $1,980

Annual return after operating costs: 6.3%


1. Dallas

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Shutterstock

Median investment home price: $199,300

Mortgage payment: $856

Median rent: $1,630

Annual return after operating costs: 5.6%