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Finding the Best US Neighborhoods for Buying a Rental Property

By: Elite Legacy Education, January 16, 2017

Finding the Best US Neighborhoods for Buying a Rental Property

How do you pick the right neighborhood to buy your rental property? With so many options, you will want to pick the area that best accommodates your goals as a landlord. When deciding on the best place to purchase a rental property you will want to consider the following factors:

Potential for High Rental Income. Of course, you will want to pick an area where you can charge a higher rental fee relative to the value of the property. Specifically, you will not want to end up in an area where the property values are high compared to the rent you can charge for them. Ideally, you want to find an area with low property values that warrant high rent fees. You can use websites such as Zillow to learn about average rent costs in different neighborhoods.

Potential for Property Value Appreciation. In addition to your monthly rental income, you will also benefit from the capital gains when your property appreciates. Knowing this, it could be a good idea to seek locations where housing prices are likely to rise. After all, it adds another source of income to your rental property. Again, you can turn to sites like Zillow to view pricing history and trends for various neighborhoods in the US.

Types of Renters in the Area. As a landlord, you will want to consider the people you are renting to. Are you looking to rent to families, couples or students? Take some time to consider who the average renter may be in a specific neighborhood and decide whether this aligns with your ideal tenant.

The Neighborhood Itself. It’s important to consider where the property is located and whether it accommodates your target renter. Consider who will be interested in living in this neighborhood.

Nearby Schools. Are there any schools nearby, whether it’s elementary schools, secondary schools or even colleges? Again, this will have an effect on those who are interested in renting the property. If you are looking to rent to families, then it would be good for elementary or secondary schools to be nearby if they have kids.

Crime Rates. Be sure to consider the crime rates of an area as that will have a direct impact on the amount you can charge for rent. The states with the lowest crime rates are Vermont, Maine and Wyoming.

Property Tax Rates. Property taxes aren’t the same in each state so be sure to check that out. Of course, you will want to look for states with lower property taxes since that is an expense you will be required to cover. The lowest rates can be found in states like Alabama, Louisiana, Delaware, South Carolina, West Virginia, Wyoming, Colorado, Arkansas and Utah.

Job Markets. It’s always a good idea to consider the job market in the area as that will have an impact on the stability of rental candidates as well as the prices you can charge. You will likely want to look for areas with promising or growing job markets. The states with the best job markets as of late include Texas, Wyoming, Utah, Indiana, North and South Dakota, Colorado and Virginia.

Future Development. Take a moment to consider the future development of the area. If lots of residential and retail properties are being built,thenthis is a good indicator of growth in the neighborhood. This means that you will eventually be able to charge higher rent and the property stands a better chance of appreciating in value.

Natural Disasters. If an area is prone to a particular type of natural disaster, then insurance rates will tend to be higher. Just like property taxes, these are out-of-pocket expenses for you as the property owner and will cut away from your profits.


All in all, there are lots of different factors to consider when choosing the right rental neighborhood for you. Take some time to define your ideal neighborhood using the factors discussed so you can have a clear direction as you conduct your research. Doing this process upfront can save you unexpected surprises and costs down the road, so be sure to do yourself a favor and prevent future hassle!

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