The question for the day is, what will 2021 hold for the US rental market? No matter what the economic outlook post-COVID-19, individuals will always need a place to call home. That said, investors can count on a large portion of those individuals being renters. However, while the pandemic’s effects are still playing out, the rental industry is seeing some significant changes sure to continue throughout 2021 and beyond. So, join us below as we review key rental market projections and the top cities for rental investors in 2021.
Trends and Rental Market Projections
The rental market sees some changes in early 2021 that are expected to continue throughout most of the year. Thus, experts see a more definitive split between the demand for urban rentals and everything else. So, let’s explore some of these rental market projections below.
- Increased Demand for Single Family Homes
- Work from Home Influences Choices
- Quarter 1 and 2 Rental Prices Flatline
- Demand Swells for Affordable Housing
- Rising Construction Costs Do Not Sway Demand
Increased Demand for Single Family Homes
Quarantining at home has increased the demand for roomier spaces and outdoor recreation opportunities. Thus, there is and will continue to be a surge in the suburbs. Furthermore, in many cities across the US, rent prices are falling. However, the demand for single-family homes and more open space is causing rent prices in this class to rise.
Work from Home Influences Choices
As a significant part of the workforce continues remote operations, renters no longer need to consider commute as a factor. Therefore, this rental market projection means less interest in densely populated urban areas where many amenities and businesses remain closed or heavily restricted. Instead, renters seek square footage and more open space for the money.
Quarter 1 and 2 Rental Prices Flatline
Many Americans still struggle after interruptions in income or complete job loss due to the COVID-19 pandemic. Additionally, states have already started taking measures to extend rent increase bans and eviction moratoriums further than the initial Federal declarations. That said, employment is recovering, and so experts reveal that rental market projections for the last half of 2021 show rent rates on the rebound. However, keep in mind; these slight increases will play out mainly in the newly desirable suburban areas.
Demand Swells for Affordable Housing
As restrictions continue to ease across much of the United States, tenants who refused to or could not pay rent will face eviction proceedings. In turn, this will drive the need for affordable housing, especially in urban areas. Additionally, individuals and families navigating construction delays will also be looking for short term affordable housing.
Rising Construction Costs Do Not Sway Demand
The COVID-19 pandemic stalled many new construction projects, and supply chain issues will continue to drive higher prices on materials. Furthermore, rental market projections show that demand for new construction will continue despite the rising costs. This is in part due to a shortage of homes on the market. Additionally, a short supply in the market affects an investor’s opportunity to build their portfolio. So, cosmetic flips are undervalued distressed properties are now much harder to come by.
2021 Rental Market Projections for the Best Places to Invest in the US
Across the United States, many rental markets still provide the opportunity investors need to cash in. Whether it is income growth, rental demand, or housing shortage driving the numbers, these cities are definitely worth looking at in 2021. So, check out the list below of rental market projections in America’s top investment friendly cities.
- Boise, Idaho
- Las Vegas, Nevada
- Spokane, Washington
- Austin, Texas
- Dallas, Texas
- Chicago, Illinois
- Birmingham, Alabama
- Colorado Springs, Colorado
- Atlanta, Georgia
- Raleigh, North Carolina
- Charlotte, North Carolina
- Tampa, Florida
Best Places for Rental Investment – Western United States
It may be a surprise to some, but Boise has a track record as one of the US’s top long term investment locations. However, like many locations, limited supply, and high demand is driving up prices. Additionally, prices have continued to climb despite the COVID-19 impact. Also, annual appreciation hovers around 10%, and if investors have the capital to make deals quickly, the rental market could provide healthy returns.
Why is Boise a Great Place to Invest in Real Estate
- Steady Population Growth
- Job Growth Above National Average
- Low Unemployment Rates
Las Vegas, Nevada
The bright lights of Vegas spell opportunity for investors looking to cash in on the stable real estate market instead of the slots. As new businesses boost the economy and create additional jobs and amenities, Las Vegas continues to grow. Furthermore, this city’s suburbs saw a 13% gain in home values in 2018. Therefore, as the COVID-19 pandemic plays out, the Las Vegas real estate market remains both strong and desirable.
Why Invest in Las Vegas Rental Property
- Population in the Metro Area is Increasing
- Economy Driven by Health-related, Tourism, and High-tech Interests
- Business and Individual Friendly Tax Laws
- Booming Construction
- Low Unemployment Rates Compared to National Average
- Average rent is around $1100, Which is Slowly Increasing
Spokane boasts a small but mighty real estate market compared to its pricier western neighbor, Seattle. Also, unlike Seattle, home prices here are relatively affordable. In turn, Spokane homes sell fast, and investors who are ready to pounce on the deals have the best chance of cashing in on one of the region’s hottest markets. Additionally, rental market projections indicate that tenants prefer neighborhoods like Perry District and areas north of Garland St.
Top Reasons to Invest in Spokane’s Rental Market
- Affordable Real Estate
- Area Rental Rates are Rising
- Good Returns on Rental Property and Single-Family Units
- Tons of Local Parks and Amenities
Best Places for Real Estate Investment – Middle America
Tons of tech companies have flocked to Austin, TX, over the past several years. Even as COVID has much of the workforce working remotely, rental demand remains consistent. The overall economy is young and varied, with many millennials looking to be close to amenities and all the city offers. However, the market has not been able to keep pace with the buyer demand. So, rental investors in Austin should maximize rental value by getting the best square footage possible without sacrificing proximity to amenities.
What Makes Austin a Great Place to Invest in Real Estate
- Low Unemployment Rates
- Steadily Growing Population
- Affordable Real Estate and Rising Rent
- Median Rent Around $1750 per Month
- Consistently One of the Best Long Term Investments Markets
According to rental market projections, Dallas remains a hotspot heading into 2021. Generally, there is a greater volume of suitable homes on the market compared to other locations on our list. That, combined with high rental rates, mean landlords can potentially see decent returns. Additionally, metrics show that Dallas has seen rental demand grow as high as 14% year over year, and an estimated over 300 people move there every day! Also, the diverse economy and mix of property classes present an opportunity for almost any investor.
Why Investors Should Consider Dallas
- Median Rental Rate of $1800
- Population Projected to Double in Next 15 Years
- Over 50% of Households are Renters
- City is a Leader for Growth and Employment
Chicago is a large city, including nearly 10 million people that live in the surrounding suburban area. Furthermore, over 50% of residents in Chicago rent their current home. While rental rates may rise at a slower pace, the volume of homes on the market allows investors with capital ample chances to score good deals.
Top Reasons Investors Need to Look Into Chicago
- Over 50% of the Population is Renters
- Renovated Single-family Homes Offer Great ROI
- High Employment and High Rents
- Strong Economic and Employment Growth
Birmingham may not rank high on an investor’s list, but maybe it should. Post COVID-19, the nation as a whole is seeing a shift from urban living to suburban oasis. That said, single-family homes make up nearly 60% of Birmingham’s housing units. Additionally, appreciation rates remained steady despite the pandemic, and the disproportionate number of buyers to sellers force many would-be homeowners to rent instead.
What Makes Birmingham a Great Place to Invest in Real Estate
- Home to Multiple Universities and Large Student Population
- Diversified and Growing Economy
- Rental Rates Increasing Year Over Year
- Property Prices Below National Average
Colorado Springs, Colorado
Denver’s huge housing price jumps continue to drive buyers and renters alike to the more affordable option, Colorado Springs. Actually, Colorado Springs prices are rising, just not as fast as other destinations throughout the Rockies. Investors can cash in on low mortgage rates and a less drastic supply and demand issue than we have seen in other locations. Typically, the average single-family home costs around $325,000, and the median rent hovers around $1,600.
Reasons to Invest in Colorado Springs Real Estate
- Property Values Steadily Rising
- Single-family Homes are the Most Common Property Type
- Rental Rates Climbing Year Over Year
- #5 Best US City to Find a Job (Wallethub.com)
Best Places to Invest – Eastern United States
Atlanta is arguably the south’s economic hub, and rental market projections expect it to continue to grow. Thus, making now a great time for investors to get in on the action. Additionally, Atlanta boasts growth in two key metrics that dictate any investment location’s health: population growth and employment growth. That said, the housing market is competitive and savvy investors must be ready to pounce on the best deals.
Top Reasons Why Atlanta is Great for Investors
- One of the Top Rental Markets in the U.S.
- Median Rental Rate of $1500
- Consistent Population Growth
- Economy is Ranked 8th in the Nation for GDP
- Great Annual Appreciation Rates
Raleigh, North Carolina
Raleigh’s rental market is a strong one, with nearly 43% of the population occupying rental housing. There are a lively student and art culture here that attracts young people. Typically, studios go for around $900 per month, with one-bedrooms fetching over $1000. Rentometer.com offers a great resource for investors to evaluate local market trends with the click of a button. Although COVID has closed or restricted much of the university and social culture, the downtown area remains desirable and vibrant.
Why Raleigh is Ideal for Real Estate Investors
- Home Values Increasing
- Voted One of the Country’s Best Places to Live and Work
- Average Rental Rate is $1200-$1300 and Increasing Every Year
- Desirable Single-family Homes are the #1 Property Class
- Median Household Income is on the Rise
- Low Unemployment Rate
Charlotte, North Carolina
Residents of Charlotte have had to endure a seemingly endless seller’s market. In turn, prices are up, and the rental market remains viable, thanks to many qualified buyers being unable to find a home to purchase. That said, Charlotte presents a great opportunity for investors looking for single or multi-family housing investments. Additionally, appreciation remains high here. So, at least for the foreseeable future, rental market projections indicate that the resale market looks strong.
Reasons for Real Estate Investors to Consider Charlotte
- Affordable Real Estate and Growing Home Values
- Rising Rent with an Average Rate of $1250
- Offers Balance Between Urban Amenities and Charming Suburbs
- Population Ranks #23 in the US
- Employment Growth
Currently experiencing a seller’s market, Tampa is still a hot ticket for investors in 2021. Rental market projections show that while prices remain reasonable, the low inventory is causing prices to rise quickly. Alternatively, Tampa is also a hub for destination travel and short-term vacation rentals. So, for investors interesting in pursuing this potentially lucrative real estate venture, look no further than Tampa.
Top Reasons Why Tampa is the Place for Investors to Watch
- Affordable Property Costs Now but Quickly Rising
- Median Rent is $1600
- One of the Fastest Growing Cities in the US
- Cost of Living is Around 5% Lower than Other Large Cities
- Appealing Education, Transportation, and Healthcare Facilities
Tips for Landlords Navigating the Changing Rental Market
Now more than ever, the rental investment market has stiff competition. So, landlords need every advantage possible to give themselves an edge. Below we examine three simple tips to help investors be efficient and successful.
Work with Investment Friendly Realtors
Working with an experienced realtor helps investors quickly find and jump on available deals. Their knowledge of the local area can help investors navigate rental market projections and choose a property that will offer the best ROI. In addition to experience, realtors that work with investors need to have a few other important qualities. Let’s review some of those below –
- Speed and Efficiency – An investor-friendly real estate agent must be on top of everything, responding to communications quickly and efficiently handling paperwork. A good deal will not last for long!
- Confidence – Deals take persistence and a proactive approach. So, find a realtor comfortable with the art of negotiation.
- Commitment – Seek out an agent who specializes in their field and is up to date on all of the latest listings, numbers, laws, and opportunities.
- Honest Awareness – An honest investor-friendly real estate agent is willing to admit their strengths and weaknesses. Therefore, their ability to recognize what improvements are possible will ultimately help them better serve your needs.
- Unfazed by Rejection – The realtor you partner with needs to understand the investor’s overall goals. Let them know you plan to submit many different offers, and many of those will be low. Explain this may result in more rejections, but the agent must be ok with this approach.
Take Advantage of Digital Services
Managing rental properties while looking for more deals is a difficult task to complete. Unfortunately, both take an ample amount of time. So, how do landlords manage to get everything done while growing their business? Digital property management software is a great first step.
Dedicated rental software allows landlords to streamline processes like accounting, rent collection, maintenance requests, and tenant notices. Additionally, some of these sites offer limited free services to help landlords save time and money as they complete daily operations.
Hire a Property Management Firm
Even with specialized software, handling occupied rental properties takes investors’ attention away from investing. So, that is where a professional property management firm bridges the gap. A rental manager allows investors to step back and pass off all the time-consuming processes to a qualified professional. These professionals handle everything from marketing and tenant screening to lawful lease documents, maintenance coordination, tenant calls, compliance issues, and rent collection. Thus, freeing up time and energy to focus on growing their portfolio.
Rental market projections for 2021 still hold some questions as the pandemic continues to affect cities and towns across the nation. However, one thing is for sure; areas are bouncing back! Savvy investors willing to do the legwork and think outside the box can find opportunities in any region.
Once you have found investment properties to add to your portfolio, hiring a top-notch rental management company can take your business to the next level. Bay Property Management Group proudly serves rental owners in Maryland, Washington DC, Northern Virginia, Philadelphia, and Southern Pennsylvania. Our team takes the guesswork and stress out of owning an investment. Give us a call today to learn more!