Investing in real estate is a large decision that takes time and research. After all, you want the best returns possible, so knowing where to invest and what properties to buy is essential. A good starting point is to look at different cities and neighborhoods to determine competitive rental markets. Today, we’re reviewing the most competitive rental markets in the US to help you decide which areas are best for rental investments.
Contents of This Article:
- What Influences Rental Market Competition?
- Most Competitive Rental Markets in the US
- When Is a Good Time to Invest in Real Estate?
- Take Care of Your Investments With BMG
What Influences Rental Market Competition?
Knowing what drives rental competition is helpful if you’re considering investing in real estate. That way, you can make more informed decisions on where to invest and what types of properties will perform best. Property management companies in Northern Virginia do tons of research to determine which areas do best and why. Here are a few key factors that impact market competition.
- Supply and Demand- As you can imagine, supply and demand play a big part in rental competition. When there’s a limited supply of rentals and high demand from tenants, competition for housing increases.
- Population Growth– Major cities with larger populations tend to have more competitive rental markets due to higher demand for housing.
- Seasonality- Certain times of the year, like summer, can lead to higher competition as more people relocate for work or school.
- Housing Affordability- In markets where buying a home is too expensive, renting becomes a more affordable option, resulting in higher demand for properties.
- Amenities and Features- Rentals with modern amenities or appealing features usually attract more renters, which can increase competition in certain areas.
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Most Competitive Rental Markets in the US
A competitive rental market is good for investors. After all, if tenants are competing for your property, you don’t have to worry as much about vacancies or the loss of income that comes with them. With that, you also want to choose properties that have amenities and features that renters want. Here are a few of the hottest markets to look into this year.
- Suburban Chicago, IL
- Miami-Dade, FL
- Milwaukee, WI
- Bridgeport-New Haven, CT
- North Jersey, NJ
Suburban Chicago, IL
Properties in Suburban Chicago have become more competitive due to their proximity to the city, strong job market, and relatively affordable housing options. Smaller locations like Naperville or Skokie offer more space, are less congested, and are generally more affordable compared to the city’s center.
With approximately 16 renters competing for each available unit and a 69.5% lease renewal rate, this area shows high demand, which is great for investors.
Miami-Dade, FL
Miami-Dade has always been an attractive market for renters. If you’ve ever been here, you know that they have a strong economy, a booming tourism industry, and a desirable lifestyle. Rent prices have steadily increased due to population growth and limited inventory. However, although there is a relatively low supply of affordable housing, the market remains competitive with high demand for rentals.
Vacant rentals in Miami are generally filled within 32 days, with an average of 18 people competing for each available unit.
Milwaukee, WI
Milwaukee is one of the most competitive rental markets in the Midwest. It has gained popularity recently due to its growing job market in industries like healthcare and technology. Additionally, the cost of living here is generally affordable compared to other Midwestern cities.
Finding rentals in Milwaukee can be tough for new renters. After all, nearly 70% of existing renters renew their leases, resulting in an occupancy rate of 95.5%. Vacant apartments are leased quickly, with an average of 14 applicants competing for each unit.
Bridgeport-New Haven, CT
The Bridgeport-New Haven area has seen a surge in rental demand due to its proximity to New York City and lower cost of living compared to larger surrounding areas. Renters who want more affordable options often look here for housing.
However, there aren’t many apartments available here, as 61.8% of renters have decided to renew their leases, making the occupancy rate 95.6%. Additionally, around 16 renters compete for each vacant unit, which generally stays on the market for around 37 days.
North Jersey, NJ
North Jersey continues to be one of the hottest rental markets due to its proximity to New York City, accessible public transportation, and diverse employment opportunities. Renters in North Jersey appreciate a more suburban lifestyle while still having quick access to the big city.
Being such a popular area, less than 5% of rentals here are vacant, especially since nearly 70% of renters renewed their leases during peak season. Vacant rentals are filled fast, with an average of 13 renters competing for each one.
When Is a Good Time to Invest in Real Estate?
There’s no perfect time to invest in real estate. However, it’s important to consider market conditions, your personal finances, and your long-term investment goals. Certain factors, including the following, can help determine when it’s a good time to invest.
- Lower Interest Rates- When mortgage rates are low, borrowing money to buy homes becomes cheaper. In turn, having lower bills can significantly increase your cash flow and rental returns. So, you may want to try to invest when interest rates are down.
- High Rental Demand- Rental demand is an important factor because it can determine how long your property may sit vacant. Investing in areas with strong rental demand increases the chances of finding tenants and receiving consistent income.
- Financial Stability– It’s crucial to be financially prepared for a large investment. You should have a decent credit score, a down payment, and a cash reserve ready to maintenance or potential vacancies.
- Economic Stability– Buying rentals when the economy is going good or stable can reduce risks. After all, strong job markets and low unemployment rates generally correlate with healthy real estate markets, as more people can afford housing.
- Appreciation Potential– You’ll also want to look at long-term profits, like property appreciation. So, look for growing cities or neighborhoods that will likely appreciate in value over time.
Take Care of Your Investments With BMG
Buying real estate is a huge decision that requires careful research. Knowing what influences rental market competition, the best places to invest, and when to invest are all helpful for investors looking to purchase real estate this year. Now that we’ve gone over some of the most competitive rental markets in the US and factors to consider before investing, you can make a more informed decision before making such a large purchase.
If you’re looking for someone to manage your rental properties, look no further than Bay Property Management Group. Our team of experienced professionals can help you through every step of the process–from marketing your properties to screening applicants, maintenance, inspections, and more. Contact BMG today to learn more about our services throughout Baltimore, Philadelphia, Northern Virginia, and Washington, DC.