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25 Best Markets For Rental Property Investment

But rentals aren't a slam-dunk either. Or you could find yourself over-paying in a boom market. First, and most important, the good increase in home prices in the last year means that demand for all housing is strong in these markets, both single-family and rentals. We calculate an "income" price for each market and compare this with the current average home price to see if prices are high or low compared to local income. It's not a precise measure - real estate isn't science - a 10 percent swing one way or the other doesn't mean much, but it shows that from our list only Orlando and Sacramento are close to over-priced territory, near 20 percent, while most of the markets are well below it. The importance of being within the normal range of the "income" price is that you don't have to worry about buying into a boom that can eventually bust. The chance that the average home price in a normal market will ever fall below today's price is almost zero. I've thrown in some stats about recent population growth and the current average home price because some markets have grown faster than others, and some are more expensive to invest in. In these markets you have a better chance investing in apartments, or by splitting single-family houses into several rental units. It's a good time to invest in rentals.