Starting a side hustle is a great way to generate passive income and boost your earning potential.
One lucrative way to earn money on the side is through a rental property – or two, or ten. But your potential for profit depends greatly on where you choose to buy property.
Real estate management firm HomeUnion ranked the best real estate investment opportunities for 2017 in its recently released National Single-Family Rental Research Report, which considered rental housing supply and demand, levels of new construction, and entry prices in 31 major metro areas across the US.
For the ranking, HomeUnion looked specifically at single-family residences, and measured each metro area’s cap rates, entry prices, and projected job growth, penalizing markets with high rates of new construction due to the elevated risk of competition. Read more about the methodology here.
Overall, it’s a good time to get into the rental property market.
"Strong job growth will encourage new household formation, particularly among millennials that have been living with their parents," Steve Hovland, director of research for HomeUnion and the lead author of the 2017 NSFR, explained. "As most of these new households are unlikely to enter the ownership pool, this will create demand for rental properties."
If you're considering investing in a rental property, read on for the best places to buy.
10. Memphis, Tennessee
Employment growth forecast for 2017: 1.3%
Rent growth forecast for 2017: 1.8%
Why it's a good investment: High yields and low entry prices
9. Dallas
Employment growth forecast for 2017: 2.9%
Rent growth forecast for 2017: 3.5%
Why it's a good investment: First-time buyers are getting priced out of homeownership, but stable job gains keep them renting in similar neighborhoods
8. Detroit
Employment growth forecast for 2017: 2.1%
Rent growth forecast for 2017: 2.7%
Why it's a good investment: Bolstered local economy and recovering manufacturing sector led by the automotive industry
7. Oakland, California
Employment growth forecast for 2017: 2.9%
Rent growth forecast for 2017: 4.4%
Why it's a good investment: Above-average rent growth, economic expansion, and high prices in neighboring San Francisco driving residents over to Oakland
6. San Diego
Employment growth forecast for 2017: 2.5%
Rent growth forecast for 2017: 3.5%
Why it's a good investment: Growing technology and biotech sectors bolstering job growth and economic expansion; leveraged investors expect to see properties appreciate in value
5. Chicago
Employment growth forecast for 2017: 1.2%
Rent growth forecast for 2017: 1.9%
Why it's a good investment: Strong occupancy rates and solid rent growth
4. Las Vegas
Employment growth forecast for 2017: 2.7%
Rent growth forecast for 2017: 3.1%
Why it's a good investment: Above-average presence of renters; projected job growth in 2017 and a resurgence of the gaming industry expected to spur renter demand
3. Seattle
Employment growth forecast for 2017: 3.3%
Rent growth forecast for 2017: 3.5%
Why it's a good investment: Strong job growth and strong price growth on single-family residencies
2. Orlando, Florida
Employment growth forecast for 2017: 3.2%
Rent growth forecast for 2017: 3.5%
Why it's a good investment: Single-family residencies and a strong tourism industry make Orlando a high-demand market
1. Atlanta
Employment growth forecast for 2017: 2.8%
Rent growth forecast for 2017: 3.5%
Why it's a good investment: Above-average job growth rates, declining vacancy rates, and manageable entry prices
