U.S. Markets closed
  • S&P 500

    4,471.37
    +33.11 (+0.75%)
     
  • Dow 30

    35,294.76
    +382.20 (+1.09%)
     
  • Nasdaq

    14,897.34
    +73.91 (+0.50%)
     
  • Russell 2000

    2,265.65
    -8.52 (-0.37%)
     
  • Gold

    1,768.10
    -29.80 (-1.66%)
     
  • EUR/USD

    1.1606
    +0.0005 (+0.0464%)
     
  • 10-Yr Bond

    1.5760
    +0.0570 (+3.75%)
     
  • Vix

    16.30
    -0.56 (-3.32%)
     
  • GBP/USD

    1.3751
    +0.0074 (+0.5418%)
     
  • USD/JPY

    114.2000
    +0.5230 (+0.4601%)
     
  • BTC-USD

    60,649.40
    -669.79 (-1.09%)
     
  • CMC Crypto 200

    1,464.06
    +57.32 (+4.07%)
     
  • FTSE 100

    7,234.03
    +26.32 (+0.37%)
     
  • Nikkei 225

    29,068.63
    +517.70 (+1.81%)
     
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

20 Best Places to Invest in Rental Property in 2021

·12 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

In this article we will take a look at the 20 best places to invest in rental property in 2021. You can skip our detailed analysis of the rental property industry’s outlook for 2021 and, go directly to the 5 Best Places to Invest in Rental Property in 2021.

Purchasing homes has become one of the toughest personal endeavors for youth around the world because of cut throat competition in the market which leaves a lot of young people with underpaying jobs and even more, unemployed. Approximately 4.2 million youth experience homelessness at one point or another each year. Various factors play a role in this, the most important ones being the student loans debt and more labor supply than demand in the market.

Apart from that, urbanization and immigration also end up being factors for a competitive market where you either settle for a low paying job or end up being unemployed. Then there are student loans which young people acquire to further their education. All these factors come together to make it very hard for young people to be able to buy their own homes. Among millennials, this has led to increased popularity in rental residential property over privately owned property.

The demand for rental property increase has led to lucrative returns on investment in rental properties and has made it a thriving industry within the larger real estate sector. The empirical prerequisites that lead to a thriving rental property industry include big populous cities with high population growth rate and rising real estate prices because competitive market, high expenses, and expensive real estate lead to more people choosing rental properties for residence.

This then increases the price to rent ratio of the particular city which is a metric that shows whether it's more favorable for city residents to buy a home or rent it. A ratio of 16 and above shows that it’s generally more favorable for residents to rent a residence instead of buying it. The only downside to this is that investors will have to pour in quite a bit of money to buy houses to rent them as housing is expensive in these cities. However, if the real estate prices are continually rising, then an investor can expect a good return on their investment as demand for rental property increases.

As the economy comes back to normal and people begin to return to offices, real estate companies like Simon Property Group Inc (NYSE: SPG), AvalonBay Communities Inc (NYSE: AVB), American Tower Corp (NYSE: AMT) and Realty Income Corp (NYSE: O) are expected to gain in the future both on rental incomes and major deals.

Our Methodology

For this list, we’ve chosen cities with highest population growth, rising real estate prices and high price to rent ratio.

With that said, let's now discuss our list of the 20 best places to invest in rental property in 2021.

Best Places to Invest in Rental Property in 2021
Best Places to Invest in Rental Property in 2021

Photo by Erik Mclean on Unsplash

Best Places to Invest in Rental Property in 2021

20. Phuket, Thailand

Phuket is the largest island city in Thailand. The city has one of the fastest population growth rates in the world. While it’s price to rent ratio is minus 1.6 of the ideal ratio of 16 and stands at 14.4 for the average of both inside and outside of the city centre, the growing population and rising real estate prices are expected to increase the ratio two fold of its current value.

Phuket ranks 20th in our list of the best places to invest in rental property in 2021.

19. The Woodlands, Texas, US

The Woodlands is a planned community located in Houston, Texas. The population growth rate in this Census Designated Place (CDP) is staggering. As of 2021, the population in this metro area stands at 60,9000, with an average growth rate of 7.92% over a period of 4 years up till 2021.

Price to rent ratio in the city centre is relatively lower but is expected to catch up with a growing population and rising real estate value of 30.2% in 2021. Currently, it stands at 9.67.

18. Tbilisi, Georgia

Tbilisi is the capital city of the Republic of Georgia (not to be confused with the US state). The city has a population of 1 million as of 2021 and while the population growth rate is not impressive at 0.09%, the city makes up for more than it through other incentives. Georgia in general has been attracting investors and global citizens for quite some time and Tbilisi is the best it has to offer.

The city has a very friendly banking and financial sector, the immigration and citizenship through investment programs are also very lucrative designed to bring in foreign wealth and labor. Increased immigrant flocking and business activity is expected in the country in general and Tbilisi in particular so population increase in the city is inevitable as well as an increasing demand in the real estate sector. The average price to rent ratio for both inside and outside the city centre is 17.

Usually, real estate value is high wherever the price to rent ratio is high. However, Tbilisi is unique in that real estate value in the city, while growing, is still very affordable and yet the price to rent ratio is also generally favorable for the investor. So, it’s a more budget investment option on the list that still promises returns.

Tbilisi ranks 18th in our list of the best places to invest in rental property in 2021.

17. Madrid, Spain

Madrid is the capital city of Spain. It is also the most populous city in the country. Madrid has a population of 6.6 million, an increase by 0.77% from the previous year. The real estate value in the city has a growth rate of 7% year on year. On the other hand, the price to rent ratio in the city stands at 19. The ratio of 19 is moderately high which implies that people are generally inclined to rent a property in the country rather than buy it.

Madrid ranks 17th in our list of the best places to invest in rental property in 2021.

16. Miami, Florida, US

Miami is one of the largest cities in Florida and is located in the southern part of the state. The city is densely populated with a population of 6.1 million after an increase of 0.74% in 2021. Real estate value is high and consistently increasing in the city. Price to Rent ratio in the city is at 23 which makes it an attractive market for rental property investment.

Another incentive for real estate investment in the city is its status as a tourist spot with millions of tourists visiting the city to enjoy its beaches and nightlife.

As tech companies and other offices begin to open in Miami, the demand for real estate properties is going to surge, helping companies like Simon Property Group Inc (NYSE: SPG), AvalonBay Communities Inc (NYSE: AVB), American Tower Corp (NYSE: AMT) and Realty Income Corp (NYSE: O).

15. Dubai, UAE

If there’s a city famous for the number of expats, it’s Dubai. Located in the United Arab Emirates, Dubai boasts a truly international image due to its value as a tourist spot and a global business hub. The city has a population of 2.9 million after a 1.49% increase in 2021 compared to the previous year. Real Estate in the city is a thriving business but housing is expensive. Real estate value increased by 5.4% in 2021 in Dubai compared to previous year and is showing a consistent growth. The average Price to Rent Ratio in and outside the city centre however, is at 10 but is growing as housing becomes expensive.

Dubai ranks 15th in our list of the best places to invest in rental property in 2021.

14. San Francisco, California, US

San Francisco is one of the most populous cities in California. The 2021 population in the city is 0.8 million. Real estate value in the city is growing at a stable pace and housing is pretty expensive. However, the Price to Rent ratio is a whopping 50.

13. London, UK

London is the capital city of the United Kingdom. The metro city had a population of 9.4 million in 2020 and is annually increasing at the average rate of 1.4%. The real estate price rise in the city is the fastest compared to anytime in the past. With an average house costing around $692K in 2021. Annual growth stands at 3.7%. Price to rent ratio in the city has increased to 153%. Real Estate in the city is becoming beyond affordable and residents are flocking to rental properties instead.

London ranks 13th in our list of the best places to invest in rental property in 2021.

12. Charlotte, North Carolina, US

Charlotte is the most populous city in the state of North Carolina in the United States. The city is growing at an annual rate of 1.47%. Charlotte already has a population of 0.9 million as of 2021. Real estate price rise is at 6.6% as of 2021. Price to rent ratio score for the city is 16.51.

11. Kuala Lumpur, Malaysia

Kuala Lumpur is the capital city of Malaysia. The city is famous for its iconic twin Petronas Towers. The city is one of the most densely populated in Malaysia. It’s current population is 8.2 million, a 2.68% increase from 2021. The average price to rent ratio for both inside and outside the city centre stands at 24 even though real estate value experienced a slight downward trend in 2021 due to anti-speculation measures by the government.

Kuala Lumpur ranks 11th in our list of the best places to invest in rental property in 2021. As the economy comes back to normal all over the world and people begin to return to offices and major cities, real estate companies like Simon Property Group Inc (NYSE: SPG), AvalonBay Communities Inc (NYSE: AVB), American Tower Corp (NYSE: AMT) and Realty Income Corp (NYSE: O) are expected to see an influx in demand of rental properties.

10. Singapore

Singapore is an island city state in east Asia. The city is known for inward immigration from around the world but especially the surrounding Asian countries. The population in the city state is 5.8 million as of 2021 with a 0.79% increase from the previous year.

The average price to rent ratio for both inside and outside of the city centre is a whopping 34.64. Such a high price to rent ratio has been as a result of increasing population, immigration and rising real estate value in the city. Real estate value in the city has an average growth rate of 4.1%.

9. Paris, France

Paris is the capital city of France. It’s also the most populated city in the country. As of 2021, it’s population stands at a staggering 11.07 million, increasing at an annual rate of 0.53%. The real estate price rise in the city is also higher than the national average and increased by 7.95% during the year 2020. The average price to rent ratio of both the inside and outside of the city centre is very high at 35.7. As the city is also huge and heavily urbanized, it fulfills all the criteria for a lucrative rental housing investment.

Paris ranks 9th in our list of the best places to invest in rental property in 2021. As the economy comes back to normal all over the world and people begin to return to offices, real estate companies like Simon Property Group Inc (NYSE: SPG), AvalonBay Communities Inc (NYSE: AVB), American Tower Corp (NYSE: AMT) and Realty Income Corp (NYSE: O) are expected to see an influx in demand of rental properties.

8. Berlin, Germany

Berlin is the capital city of Germany. The city has a population of 3.5 million as of 2021 and is growing at an average rate of 0.14%. The real estate value grew by 7.51% in 2021 compared to last year. The price to rent ratio in the city stands at 33.8.

7. Austin, Texas, US

Austin is the 4th largest city in the state of Texas in the United States. The city has a population of 1 million and is growing at a rate of 1.65% annually. Price to rent ratio in the city is 21.66 which causes more people to lean towards renting residential property than buying it. The average price for a residential property in Austin has risen to $465K with a rising rate of 32% and the prices are still rising.

6. Seattle, Washington, US

Seattle is the largest city in Washington state and is home to a booming tech industry. The city contains the headquarters of Microsoft and Amazon which makes it an attractive city to migrate to, and an increased labor inflow means an increased demand for residential properties. The city has a population of 3.4 million which represents a 0.82% increase from the year 2020.

Real estate prices grew by 5.5% in 2021 in the city with an average price for a house being $765K. Extremely expensive housing has driven up the price to rent ratio in the city which stands at a whopping 36.

Seattle ranks 6th in our list of the best places to invest in rental property in 2021.

As the economy comes back to normal all over the world and people begin to return to offices, real estate companies like Simon Property Group Inc (NYSE: SPG), AvalonBay Communities Inc (NYSE: AVB), American Tower Corp (NYSE: AMT) and Realty Income Corp (NYSE: O) are expected to see an influx in demand of rental properties.

Click to continue reading and see the 5 Best Places to Invest in Rental Property in 2021.

Suggested articles:

Disclosure: None. 20 Best Places to Invest in Rental Property in 2021 is originally published on Insider Monkey.