Real estate investment is a great way to earn passive income and build wealth. While it’s a great opportunity to diversify your portfolio and experience numerous benefits, such as annual tax breaks and property appreciation, the market has been tough. Stiff competition, low inventory, and high interest rates have many sitting on the sidelines until the market changes, but who knows when that will be?
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If you’re looking to invest in rental properties, here are the 10 hottest cities, according to The Zebra, which based its findings on the average annual cost of homeowners insurance, rent increase for 2-bedroom units, and percent of homes with price drops.
10. Boston
With its beautiful architecture, rich history and great food scene, Boston has long been a favorite place to visit and live. According to The Zebra, it’s also a city to consider investing.
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Average annual homeowners insurance cost: $916
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Percent of homes with price drops: 22.5%
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Rent increase for 2-bedroom unit: 14.5%
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9. Buffalo
Known as the City of Light because of the Hydropower generated from Niagara Falls, Buffalo has a nice neighborly feel, a friendly communal vibe and plenty to see and do. Plus, it’s affordable.
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Average annual homeowners insurance cost: $980
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Percent of homes with price drops: 28.5%
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Rent increase for 2-bedroom unit: 12.3%
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8. Minneapolis
Famous for it’s beautiful lakes, endless excursions and stunning landscape, Minneapolis offers locals and visitors outdoor fun and relaxation. The city also has abundant economic opportunities, a high quality of life and an affordable cost of living. Per The Zebra, “Minneapolis ties with Philadelphia, providing a competitive Midwest option for buying rental properties.”
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Average annual homeowners insurance cost: $1,411
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Percent of homes with price drops: 31.1%
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Rent increase for 2-bedroom unit: 17.6%
7. Philadelphia
Philadelphia is another great city to invest in for rentals. People love living in the city because of its sports culture and food history. Philly is also walkable, has a bike-friendly infrastructure and is budget-friendly for a big city.
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Average annual homeowners insurance cost: $1,004
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Percent of homes with price drops: 33.5%
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Rent increase for 2-bedroom unit: 6.4%
6. Portland
The Pacific Northwest has snowcapped mountains, meadowy valleys and striking diverse landscapes. The region is a beautiful place to live but the cost of housing typically runs higher than the national average, depending on location. However, housing prices in Portland are dropping, making it the ideal time to invest.
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Average annual homeowners insurance cost: $876
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Percent of homes with price drops: 43.4%
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Rent increase for 2-bedroom unit: 2.8%
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5. Seattle
Known as the Emerald City for its lush green forests, Seattle’s bustling waterfront, beautiful green spaces, cool art scene, access to nature and uniqueness sets the city apart from other major metropolises. Housing prices have been decreasing for the first time in over 10 years, making the city investor-friendly.
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Average annual homeowners insurance cost: $878
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Percent of homes with price drops: 31.7%
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Rent increase for 2-bedroom unit: 6.2%
4. Cleveland
Cleveland is home to many historical sites, award-winning restaurants, fun outdoor activities, and a vibrant art scene. In addition, the city has a growing job market and affordable housing. For investors, low home insurance costs and a steady increase in rentals make Cleveland another hot market to consider, according to The Zebra.
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Average annual homeowners insurance cost: $979
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Percent of homes with price drops: Not available
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Rent increase for 2-bedroom unit: 6.8%
3. San Diego
California is notoriously known for its high cost of living, but San Diego has made the list of the hottest cities to invest in for the rising rent prices.
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Average annual homeowners insurance cost: $791
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Percent of homes with price drops: 28.3%
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Rent increase for 2-bedroom unit: 13.4%
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2. Cincinnati
Cincinnati offers affordable, high-quality living where you can get more bang for your buck.
With an almost 15% increase in rentals, the market is booming and a good time for investors to buy.
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Average annual homeowners insurance cost: $979
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Percent of homes with price drops: 35.8%
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Rent increase for 2-bedroom unit: 14.6%
1. Salt Lake City
Gorgeous mountain views, lots of outdoor activities, a thriving job market and affordability are a few reasons people are drawn to living in Salt Lake City. According to The Zebra, this city is the top area in which to buy investment properties this summer.
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Average annual homeowners insurance cost: $740
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Percent of homes with price drops: 38.4%
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Rent increase for 2-bedroom unit: 7.9%
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This article originally appeared on GOBankingRates.com: 10 Hottest Cities for Buying Investment Properties This Summer