Being a landlord is one of the most lucrative ways to make investment income — as long as the rental property sits in a thriving market. If you live in an economically healthy market and you’re interested in investing in real estate, you might want to consider buying a condominium and renting it out.
Click through to see the best places to buy a condo for investment income across the country.
20. Colorado Springs, Colo.
2018 condo home value: $163,600
Rent growth: 6.2%
Rental yield: 8.8%
A cost of living that’s 8 percent less than the rest of the state makes Colorado Springs an attractive place to live and one of the best places to invest in real estate if you’re buying a condo. And with a livability score of 70 — including an A+ score in amenities, according to AreaVibes — you can bet property values will hold in Colorado Springs
19. Richmond, Va.
2018 condo home value: $210,100
Rent growth: –4.2%
Rental yield: 13.1%
A seemingly unlimited array of attractions and amenities in Richmond make it a highly livable city, scoring 77, according to AreaVibes. In fact, it’s one of the best cities for aspiring millennial homeowners, found a separate GOBankingRates study. Although rent growths are down slightly in the last year, you’ll reap an admirable rental yield.
18. San Antonio
2018 condo home value: $126,600
Rent growth: 5.9%
Rental yield: 10.3%
Terrific amenities like the San Antonio Riverwalk aren’t the only reason that makes San Antonio one of the best places to buy rental property in the form of a condo. The city has a 5 percent lower cost of living overall than the rest of the state, along with modest job growth of 3.2 percent, according to the Bureau of Labor Statistics, making it a solid environment for finding renters.
17. Sacramento, Calif.
2018 condo home value: $271,400
Rent growth: 18.3%
Rental yield: 5.7%
Although Sacramento’s rental market took a dip during economic downturns in years past, it’s been on a steady increase since 2013. The vacancy rate in the city has declined more than twice as fast as rates in the state and country overall, and rent prices are on the increase.
Plus, renters don’t need to be high-earners to survive in this California city — Sacramento is one of the few cities where you can realistically live on minimum wage, found a separate study.
16. Glendale, Ariz.
2018 condo home value: $111,900
Rent growth: 4.2%
Rental yield: 9.9%
Nearly half of all residents of Glendale — 46 percent — rent instead of owning their residence, making it one of the best places to buy investment property in the form of condos in Arizona. It’s also one of the best places to live for under $1,000 a month.
15. Memphis, Tenn.
2018 condo home value: $129,800
Rent growth: 6.9%
Rental yield: 10.9%
Memphis has a young population with a median age of about 34, and 52 percent of citizens rent instead of own. Job growth in the city and strong rental yields make it one of the best cities to buy rental property if you’re buying a condo.
14. Marietta, Ga.
2018 condo home value: $138,300
Rent growth: 6.8%
Rental yield: 10.2%
The average condo home value in Marietta jumped from $123,800 in 2017 to nearly $15,000 more by the start of 2018. Job growth, A+ amenities and mild year-round weather make the city a can’t-miss for condo rental properties.
13. Charlotte, N.C.
2018 condo home value: $166,300
Rent growth: 7.3%
Rental yield: 10.1%
Charlotte’s rental market has seen steady growth since 2011. This metropolitan market is also experiencing an ever-decreasing vacancy rate combined with steady rent growth and a strong yield. Plus, 47 percent of residents rent rather than own.
2018 condo home value: $233,600
Rent growth: 12.5%
Rental yield: 9.2%
Atlanta’s median rent growth has outpaced both the state and the country over the last three years, helping make it one of the best cities to invest in rental properties if you’re buying a condo. Its booming economy boasts significant job growth, and its young population has a median age of 32.
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2018 condo home value: $126,000
Rent growth: 0%
Rental yield: 12.4%
Houston’s super-strong economy withstood even the ravages of 1,000-year-storm Hurricane Harvey. It’s not surprising that rents haven’t increased in the last year, but condo values have soared, rising from an average value of $109,000 in pre-Harvey 2017 to $126,000 by 2018.
2018 condo home value: $151,500
Rent growth: 12.4%
Rental yield: 9.5%
With more than 18 million visitors annually, Phoenix might seem like one of the best places to invest in a vacation home. It’s also among the best cities to buy a condo to rent.
With rents averaging $1,195 monthly, expect a gross operating income of $14,340 annually. Even after operating expenses of $5,000 to $11,500 — they’ll be on the high end if using it for an upscale vacation rental — there’s still a tidy profit to be made.
9. Orlando, Fla.
2018 condo home value: $115,300
Rent growth: 4.3%
Rental yield: 12.5%
A Disney vacation isn’t the only attraction in Orlando. It’s also one of the best places to buy a condo for investment. More than 64 percent of the city’s residents rent a place to live, rather than buy, and its strong economy includes job growth in the last year and a young population averaging 32 years old.
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8. Jacksonville, Fla.
2018 condo home value: $122,500
Rent growth: 5%
Rental yield: 11.3%
Jacksonville’s condo values have increased 17 percent in the last year — the biggest increase of all the cities on our list — rising from a median price of $104,700 to $122,500. Rents are on the rise, too, with a median monthly rent of $1,150.
7. Columbus, Ohio
2018 condo home value: $118,200
Rent growth: 5%
Rental yield: 11.7%
Columbus is the third-highest city on our list for most-increased property values for condos with an increase of 16.1 percent. Rents are on the rise in the economically stable city, and vacancy rates are decreasing quickly. The U.S. Department of Housing and Urban Development predicted a demand for 14,750 new rentals from 2016 to 2019.
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2018 condo home value: $100,900
Rent growth: –8.4%
Rental yield: 16.6%
More than 58 percent of people living in Milwaukee rent instead of own, making it one of the best places to invest in real estate. Look beyond the slight decrease in average rents: Condo property values increased by 13 percent in the last year, leaving landlords with a sizzling 16.6 percent yield.
5. Tucson, Ariz.
2018 condo home value: $124,800
Rent growth: 17.1%
Rental yield: 9.6%
Those longing to live in the midst of Arizona’s most stunning scenery can rejoice in the fact that Tucson is one of the cheapest places to rent in the state. This translates to happy news for investment landlords too, as rent growth topped 17 percent in the last year.
4. Providence, R.I.
2018 condo home value: $209,900
Rent growth: 18.8%
Rental yield: 10.9%
One of the best cities to invest in rental properties if you’re buying a condo, Providence rents have rocketed up nearly 19 percent in the last year. The $1,900 median monthly rent will give you a $22,800 gross operating income for the year.
2018 condo home value: $125,800
Rent growth: 4.6%
Rental yield: 16.2%
Philadelphia offers one of the best rental yields of any city on our list, and it’s one of the hottest places for investment real estate. Just under half of all residents rent their homes in the city, paying a median of $1,700 per month.
2. Oklahoma City
2018 condo home value: $82,900
Rent growth: 24.1%
Rental yield: 13%
Oklahoma City is one of the truly great places to retire where rent is under $1,000 a month, but it’s also a prime place to own rental real estate. Even though rent is less expensive than most places on our list, a booming rent growth of 24.1 percent and solid 13 percent yield on your investment make it a can’t-miss.
1. St. Petersburg, Fla.
2018 condo home value: $141,800
Rent growth: 12.5%
Rental yield: 15.2%
Whether you’re looking to retire in the warm Florida sun or pick up property for extra income, St. Petersburg tops our list as the best place to invest in rental property in the form of a condo. The city delivers top-notch rent growth and yield as well as condo property values that have increased 14.8 percent in the last year.
Click through to learn how to invest in real estate if you’re a beginner.
Methodology: GOBankingRates analyzed 100 of the most populous U.S. cities based on Census 2016 estimates and looked at the following factors: condo home value growth, rent growth and rental yield (sourced from Zillow). Each factor was given a score and weighted to produce a final ranking.
About the Author
Jodi O’Connell is a freelance wordsmith based in Sedona, Arizona, who writes about everything from vacation vagary and adventure sports to real estate and pets. She spent more than a decade in Arizona’s real estate industry advising first-time homebuyers and commercial investors before indulging her passion for the written word on a full-time basis. Her articles appear on websites as diverse as U.S. News and World Report, USA Today, Hipmunk, Roots Rated, and Travelocity.