Real Estate Deal Analysis & Advice

The Best Places to Buy Rental Property in 2020

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When it comes to real estate, you're doing yourself a disservice by focusing on the big picture. Investing is all about granularity. That's why we focus on careful calculations (cash-on-cash return and cap rate and cash flow, oh my!)—even when it comes to picking the best real estate markets for you. Once you've settled on a city, your work isn't done. That's why the team at BPInsights combed through our proprietary datasets to find the best ZIP codes for real estate investing in every state.

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Some things to keep in mind:

  • For data accuracy, we limited our findings to markets with a minimum of 50 rent listings and 50 property sales per month.
  • Some markets lag behind in reporting, so we don’t have data for June or July yet. We omitted those markets from consideration.
  • We didn’t use one metric as the guiding light here. Instead, we looked at balance among three metrics:
    • Property appreciation
    • Rent appreciation
    • Rent-to-price ratio

Understand that the “top” or “best” ZIP code in any state is a subjective evaluation. This list is just BPInsight’s picks for the top ZIP code in each market. Your investing strategy might prioritize different criteria—creating a completely different list.

Here are some highlights.

Before diving into real estate investing, make sure you understand how to compare markets and properties. Whether you’re trying to decide between investing in Boise or Sacramento—or you’re just comparing two similar homes—this guide will walk you through all the numbers you need to know. From calculating cash-on-cash return to running a comparative market analysis, the experts at BiggerPockets demonstrate the steps you need to follow and the statistics you must know with The Beginner’s Guide to Real Estate Market Analysis.

Casa Grande, Arizona: 85122

This sleepy mid-sized town is less than an hour’s drive south of Phoenix—and a top real estate performer. Median sales have increased from $160,000 to $205,000 since 2017. That’s impressive—and doubly so when you look at rents. In the same time period, median rent has increased 22.7 percent, from $725 to $1,338. Overall, this Arizona town’s rent-to-price ratio is 0.65 percent.

Related: 7 Emerging Trends Shaping Real Estate Markets in 2020

Manhattan, Kansas: 66502

The college market can be a goldmine for savvy investors. Kansas’s “Little Apple” is home to Kansas State University, and while median sales prices may be slightly decreasing, the median rent has stayed relatively stable—which could make this a great opportunity for a fabulous deal in the Flint Hills. Expect a rent-to-price ratio of 0.45 percent.

Baltimore, Maryland: 21211

Clinging to I-83, this little sliver of northern Baltimore includes a chunk of historic Druid Hill Park and is right next to the Maryland Zoo. Its 1.2 percent price-to-rent ratio—driven by declining home prices and dramatically increasing rents—is the highest on our list. Your potential tenants will have no shortage of cafes and boutiques, and the local light rail station heads directly downtown.

Portage, Michigan: 49024

This suburban enclave is tucked between Kalamazoo, Michigan, and a large game preserve—making it ideal for outdoorsmen. Smart investors can find fantastic, cash-flowing deals here. While year-over-year property appreciation has hovered around 8 percent, year-over-year rent appreciation is a rock-solid 47 percent. That makes the rent-to-price ratio 0.75 percent. Not bad at all.

Related: The No. 1 Most Overlooked Real Estate Market

Chattanooga, Tennessee: 37343

If you’re interested in exploring more rural investments, check out this sprawling ZIP along the Tennessee River. Here, you’re not far from Chattanooga, but potential tenants can still enjoy a quieter life. Year-over-year rent appreciation is a startling 64 percent—with an average appreciation of 22.6 percent from 2017 to 2020—so you can feel confident in your potential cash flow for years down the line.

Portland, Oregon: 97220

Want to get in on the hot Portland market? This neighborhood in the city’s northeast might be a good entry. In 2020, median sales were a modest (for the area) $360,000, with 9 percent year-over-year property appreciation and 43 percent year-over-year rental appreciation. Easy-access natural areas—not to mention a short trip to the airport—can help attract buyers and renters.

Richmond, Virginia: 23224

Located across the James River from downtown Richmond, this ZIP includes gentrifying Old Town Manchester. Easy river, trail, and city access make 23224 a hot spot for rental-minded investors. Rents have increased an average of 8.9 percent annually, and the area sports an impressive 48 percent year-over-year property appreciation. The result? A whopping 0.87 percent rent-to-price ratio.

Essex, Vermont: 05452

Close to both Burlington and Lake Champlain, it’s no surprise that Essex, Vermont, should attract investor interest. Median rents have increased from $1,400 to $1,600 since 2017, and the area is seeing a modest year-over-year property appreciation rate of 1 percent. Despite a year-over-year rent appreciation dip and rental depreciation, it still sports a 0.53 percent rent-to-price ratio.

Find the Best ZIP Code in Your State

Want to see the full list of top investing ZIP codes by state? Become a BiggerPockets Pro Member today for full access to BPInsight’s expert analysis and unique datasets. BPInsights gives you the information you need to find your next great deal and maximize your current investments—including proprietary spreadsheets and our one-of-a-kind Rent Estimator tool.

Which ZIP codes are the best in YOUR state? Why?

Let us know in the comments below.

Dave’s entire career has been spent as a part-time real estate investor and full-time data nerd -- so working at BiggerPockets is a perfect fit. Dave invests primarily in multi-family residences, a...
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    Ned Cavasian
    Replied about 1 month ago
    @Dave - Does BP insights also have rental vacancy rates? I find that to be a key piece of information but maybe you just figure that if rents are appreciating then vacancy rates must be favorable to investors?
    Isaac Agbolosoo Rental Property Investor from Grosse ile, MI
    Replied about 1 month ago
    Thanks for this data. I am suprise Michigan or Indiana is not on your list? :)
    Sara Hecklinski
    Replied about 1 month ago
    Portage, Michigan is on the list shown.
    Craig Browning
    Replied about 1 month ago
    "Want to see the full list of top investing ZIP codes by state? Become a BiggerPockets Pro Member today"
    John Murray from Portland, Oregon
    Replied about 1 month ago
    All of my SFH are in 97230 just one click to the east, Parkrose I chose years ago. Argay, Russel, Wilkes, Wilkes East and one in Rockwood. PDX metro has a housing shortest and the entire state is ranked #1 in the country for lack of housing. Prices keep rising despite Covid 19. There are 15% new less listing than this time frame last year.
    Justin Rezzuto
    Replied about 1 month ago
    Exactly, I am in phoenix and everything is selling at or above asking price. Very hard to find a "cheaper" property to buy and flip or buy and rent out. I've been outbidded by cash buyers everytime.
    David Avery Contractor from Phoenix Arizona
    Replied about 1 month ago
    Understand Justin, every skinning jean in Phoenix is out bidding those of us that would fix it up and sale/rent. They are paying more than after it is fixed up
    Farida Mostajabi Rental Property Investor from Cincinnati, OH
    Replied about 1 month ago
    How about cincinnsti OH?
    Amanda Gant from Washington, DC
    Replied about 1 month ago
    I love 20011, 20010, 20007 and 20016 in Washington, DC!! :-)
    Rebecca Jackson Rental Property Investor from Dallas, TX
    Replied about 1 month ago
    Have you considered rent to ownership ratio? Average churn rate on a lease? Population increases per zip code compared to the state average? Basically where are people going, and are they staying there as tenant or converting to ownership?
    Ted Simon
    Replied about 1 month ago
    With all the riots, destruction, arson, looting and violence in Portland, Oregon -- is anyone serious;y considering buying in that town?
    Ritchie Metzler from Portland, Oregon
    Replied about 1 month ago
    The problems in Portland you hear about on some news channels is not really having an impact on anything but a few blocks in downtown Portland and North Portland. It is isolated. The real estate market here is very hot and, yes we do continue to have people from out of town moving here. I'm not sure I would consider NE Portland a top 10 rental location in the US though. You'd be hard pressed to find many homes under $400,000.
    Chuck B. Investor from Louisville, Kentucky
    Replied about 1 month ago
    It's the exact same here in Louisville, KY. Isolated and minor... There is definitely an agenda out there to make it seem like our city has been "destroyed". Ridiculous politics!
    Ted Simon
    Replied about 1 month ago
    Good to hear; thanks for the reply.
    Katrina Cabral from Los Gatos, California
    Replied about 1 month ago
    Which zip in Hawaii?
    Nancy Roth Investor from Washington, Washington D.C.
    Replied about 1 month ago
    I don't see how this is useful, honestly. There is no "best" zip code. There are only good deals and bad deals, and they both exist in every zip code. Just because the data say that the median rent in this zip code has appreciated by x%, it doesn't mean the rent on YOUR property in that zip code is going to appreciate by x%. Same for value appreciation, which depends on the characteristics of the property and neighborhood, and whether the job market/population/income earned in the region is growing or shrinking. If housing is in demand due to people moving in, values will go up. If people are fleeing the area (as in Baltimore), housing demand will fall and appreciation will be negative. Really, it's so NOT about the zip code. Don't let this analysis guide your rental property acquisition decisions. Sheesh.
    Dave Meyer Rental Property Investor from Denver, CO
    Replied 18 days ago
    Thanks for your feedback, Nancy. The point of these articles is to help guide newer investors towards markets where there is a higher likelihood of good deals. By no means am I trying to tell people that these ZIP codes possess only great deal. What I am trying to show is locations where the 'average deal' is promising. It is still up to the individual investor to find a good deal within that market. The ZIPs here all have underlying metrics that point to a better likelihood of a good deal than other ZIP codes based on current data.
    Olga Gorokhovsky
    Replied about 1 month ago
    Completely agree. In Boston the “hottest” zip code last year is the stalest zip code this year, because everyone is trying to move to the suburbs or at least to neighborhoods that have more to offer than a zip code and 4 walls.
    Craig Lively Investor from SLC, UT
    Replied about 1 month ago
    Classic bait and switch! “Become a PRO today!”
    James McMillan Investor from Greensboro, North Carolina
    Replied about 1 month ago
    Amen Nancy Roth! I am a real estate investor who happens to also be academically trained in epidemiology and statistical testing. It is truly amazing how untrained people create bizarre data models and think they are predictive of something. I have been watching the talking heads do it with COVID-19 data for months and now this silly Investing scheme appears on an otherwise great site. I’ll follow your method Nancy. jam
    Dave Meyer Rental Property Investor from Denver, CO
    Replied 18 days ago
    Thanks for your feedback, James. I understand that you don't agree with the concept of this article, which is fine! The idea here is to help guide newer investors towards market with a high probability of a strong return. I stand by these ZIP codes having an above-average chance of a good return, given the most recent data on the market. As I said in the article, this is a subjective list! I looked at a few macro-level indicators and picked markets that are outperforming in their states. You may disagree with the purpose of this article, and not find it useful, which is good feedback that we'll consider going forward. However, I will push back on your assertion that I am not qualified. I have a M.S. in Business Analytics, have trained as a Data Scientist, and have 10+ years of experience data modeling in real estate.
    Mike S. from Madison, WI
    Replied 28 days ago
    So true. Couldn't agree more. I think the issue is untrained people creating content that can easily dupe untrained people.
    Jonny R. Property Manager from Arlington VA
    Replied about 1 month ago
    You forgot that Richmond has one of the highest eviction rates in the US.
    David Avery Contractor from Phoenix Arizona
    Replied about 1 month ago
    Put my two grandsons (5,2,) now my son's in my truck and spent 4 hours in Casa Grande Saturday. Looked at several properties that were listed on MLS. Got familiar with the town and didn't know that it was such a hot Real Estate market. It was about 45 minuet drive from our home in San Tan Valley. Have to drive around some desert and hills to get there. Very interesting to see that it was number one. I really thought Southern Colorado or Denver or Gilbert Arizona would be in top 3. Be sure and Vote BP.
    John Murray from Portland, Oregon
    Replied about 1 month ago
    It is interesting to see the reactions to the BLM protests here in Portland. The protests are confined to a very small section of the city. There are more people street racing and drifting than protesting. Very little media coverage of that illegal activity, the police will not show up to thousands of young testosterone filled charged yahoos. The police are busy with political unrest and other matters of police problems of great importance to the metro area. Portland is the most affordable city on the west coast. Happy racing!
    Dale Miller New to Real Estate from Tonawanda, NY
    Replied about 1 month ago
    Which zip codes for Buffalo NY or Erie County, NY could't find any?
    Laura Holm
    Replied about 1 month ago
    Sour grapes! I appreciate learning about emerging markets. Nobody is destroying any west coast city. Be careful what you believe
    Shabreya Bangura Rental Property Investor from Winston Salem, NC
    Replied about 1 month ago
    #ClickBait
    Toney Jones
    Replied about 1 month ago
    While BP does give good real estare advice there main focus is there infomercial which is, BECOME A PRO MEMBER, seeing it enough will be embedded in your subconscious to make you become a pro member which is there main focus.
    Toney Jones
    Replied about 1 month ago
    Sorry , real estate, not real estare.
    Dan Rowley Rental Property Investor from Lafayette, CA
    Replied about 1 month ago
    You can hypothesize almost anything with a bunch of #s... ;)
    Jason Slater Investor from Dedham, Massachusetts
    Replied about 1 month ago
    While I appreciate the data share, something seems off with so.e of these numbers. In Chattanooga for example, YOY rent increase of 64% across an entire zipcode doesn't seem likely. If rents in an entire zip went from $1000 to $1640 in a year most people would be looking to leave because they can't afford it. This feels like a stat being pulled from far too small a data set or a decimal place got shifted. I think you need to rerun your calculations or share the data that is giving you that result, something is off. I could see if there were a handful of mom and pop rentals and then a 30 unit luxury building came on the market it might do that to the average, but that doesn't indicate I could expect that sort of rent growth or even want to compete there unless I'm building similar luxury units.
    Tommy Hopkins Rental Property Investor from Houston, TX
    Replied about 1 month ago
    Seem to have a math error with Casa Grande, Arizona: 85122 "In the same time period, median rent has increased 22.7 percent, from $725 to $1,338."
    Russell Brazil Real Estate Agent from Rockville, MD
    Replied 28 days ago
    Good, bad, best, worst.....theres no such thing when it comes to investments. This very concept that there is good or bad is what makes people bad investors. There is only different variances of risk, different probabilities and your risk tolerance. We need to completely divorce ourselves from the notions of good or bad and see the world in varying degrees of risk to properly understand investments and finance.
    Nate Miersma Rental Property Investor from Kalamazoo, MI
    Replied 12 days ago
    With two major employers in Portage, Michigan (Pfizer and Stryker), be aware you’re investing in an area that is highly dependent on both of their continued success. Any big changes at either will impact rentals in Portage in a big way.