Best cities to invest in real estate in 2022

Looking to add real estate property to your investment portfolio? We crunched the numbers and found the best 25 U.S. cities for real estate investing in 2022.

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Smart investing often means diversification, and one way to balance out your portfolio is to invest in real estate. In fact, real estate has been the best long-run investment over the course of modern history, according to research by the Federal Reserve Bank of San Francisco.

But some cities are better bets for real estate investment than others: for property costs, for your chances of renting the home out and getting enough rent to cover your costs, and for house value appreciation. Using data from Zillow and the U.S. Census, we looked at the largest 600+ cities in the U.S. and crunched the numbers to find the best places for investing in real estate in 2022.

The top 25 cities for real estate investing in 2022

1. Youngstown, Ohio

Home value: $42,867 Home value appreciation: 77% Effective property tax rate: 1.54% Rent to home value ratio: 18.53% Rental vacancy rate: 3.20% Rent to income ratio: 28.50%

Topping the list is Youngstown, OH, the largest city in Mahoning County. It’s a relatively small city at just over 60,000 people, but it’s part of a larger metropolitan area that includes Warren and Boardman and has a population of just over 540,000, and is just an hour’s drive from both Cleveland and Pittsburgh. A former steel town, Youngstown has seen a rebirth in recent years, including the launch of the Youngstown Business Incubator. The city's super low home prices, high rate of appreciation, and low rental vacancy rate all mean that even first-time investors can get into this market quickly and easily and start earning back their outgoings. 

2. Detroit, Michigan

Home value: $58,213 Home value appreciation: 103% Effective property tax rate: 2.90% Rent to home value ratio: 16.99% Rental vacancy rate: 5.10% Rent to income ratio: 3.70%

Detroit, MI is number two on the list. The largest city in Michigan, Detroit has just under 640,000 inhabitants, though the metropolitan area is home to 4.3 million people. “Motor City” is still the center of the U.S. auto industry, though the city has famously contracted since its peak population in 1950. Detroit became the largest U.S. to file for bankruptcy in 2013, but it successfully exited in 2014 and in the years since has become famous for its revitalization. In addition to the “Big Three” American auto companies, Detroit is also home to Quicken Loans, Ally Financial, and DTE Energy, and in 2021, Apple announced it was opening its first Developer Academy there. Detroit's low home prices combined with its super-high home value appreciation rate make it a no-brainer for getting in on the ground floor of this exciting American success story. 

3. Spring Hill, Florida

Home value: $243,145 Home value appreciation: 85% Effective property tax rate: 0.82% Rent to home value ratio: 5.28% Rental vacancy rate: 3.10% Rent to income ratio: 30.50%

The number three best city for real estate investment is Spring Hill, FL, located in Hernando County, just 40 miles from Tampa. An unincorporated area that is part of the metropolitan area that includes Tampa, St. Petersburg, and Clearwater, Spring Hill is a bustling suburb with a population of just under 100,000  that attracts people for its affordability and central location. With home values clocking in at under $250,000 and home value appreciation at 85%, Spring Hill is a great place to get in the door as a real estate investor. 

4. Pueblo, Colorado

Home value: $263,343 Home value appreciation: 80% Effective property tax rate: 0.63% Rent to home value ratio: 3.64% Rental vacancy rate: 3.10% Rent to income ratio: 21.70%

Pueblo, CO is number four on our list of best cities for investing in real estate. The city population is nearly 112,000, making it the ninth-largest city in Colorado. One of the largest steel-manufacturing towns in America, Pueblo is home to the first steel mill to be powered largely by solar energy. The city has a thriving Riverwalk along the Arkansas River, and a Creative Corridor that is home to galleries, museums, and public spaces. Pueblo is also home to the annual Colorado State Fair. Its home value appreciation rate of 80% makes Pueblo especially attractive as a real estate investment. 

5. Birmingham, Alabama

Home value: $90,047 Home value appreciation: 69% Effective property tax rate: 0.80% Rent to home value ratio: 11.15% Rental vacancy rate: 9.40% Rent to income ratio: 11.10%

Number five on our list of the best cities for real estate investing is Birmingham, AL The city’s population is just over 207,000, but the larger metropolitan area is home to 1.2 million people. Birmingham was once a manufacturing center in the South, and today is one of the largest banking centers in the U.S. Its downtown has undergone a revitalization in recent years as the city leans into its new tagline of “the diverse city.” Super low home prices, combined with its high rent-to-home value ratio, make Birmingham an attractive option for real estate investors. 

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6. Cleveland, Ohio

Home value: $96,455 Home value appreciation: 97% Effective property tax rate: 2.08% Rent to home value ratio: 8.95% Rental vacancy rate: 6.70% Rent to income ratio: 5.10%

Cleveland, OH comes in at number six on our list of best cities for real estate investing. It has a population of just over 370,000, but the larger metropolitan area is home to over 2 million people. Technology is a growing sector in the city, especially health technology: the state-funded Cleveland Innovation District was formed in 2021 to increase funding for health research jobs. A typical home value of under $100,000 and a home value appreciation of nearly 100% make Cleveland a great option for real estate investors. 

7. Colorado Springs, Colorado

Home value: $427,896 Home value appreciation: 77% Effective property tax rate: 0.45% Rent to home value ratio: 3.17% Rental vacancy rate: 3.50% Rent to income ratio: 7.50%

Number 7 on the list is Colorado Springs, CO, which is undergoing a housing boom as people move from Denver and other states to the city for its clean air, mild weather, and great quality of life. The city has just under 500,000 residents and a diverse economy that includes defense contractors and tech companies. While typical home values are high at nearly $428,000, a high rate of home value appreciation and low rental vacancy rate make Colorado Springs a great option for real estate investors. 

8. Lehigh Acres, Florida

Home value: $236,569 Home value appreciation: 66% Effective property tax rate: 0.75% Rent to home value ratio: 5.55% Rental vacancy rate: 3.50% Rent to income ratio: 38.60%

At number 8, Lehigh Acres, FL is a fast-growing suburb East of Fort Myers. With a super low rental vacancy rate and relatively typical low home prices for the area, Lehigh Acres is a great place for real estate investors.

9. Palm Bay, Florida

Home value: $242,535 Home value appreciation: 64% Effective property tax rate: 0.71% Rent to home value ratio: 5.24% Rental vacancy rate: 4.00% Rent to income ratio: 33.00%

Palm Bay, FL is number nine on our list of the best places to invest in real estate. The largest city in Brevard County, Palm Bay is home to just under 120,000 people. The city is part of the “Space Coast” and has a diversified economy that includes aerospace and defense industries. A low rental vacancy rate mates it especially attractive to real estate investors.

10. Phoenix, Arizona

Home value: $369,661 Home value appreciation: 81% Effective property tax rate: 0.61% Rent to home value ratio: 3.42% Rental vacancy rate: 5.40% Rent to income ratio: 2.20%

Number 10 on our list is Phoenix, AZ. As the fifth-largest city in the U.S., Phoenix has one of the fastest-growing economies in the country and a strong — and getting stronger —housing market, to boot. A home value appreciation rate of 81% makes it a great option for real estate investors.

11. Buffalo, New York

Home value: $195,767 Home value appreciation: 87% Effective property tax rate: 1.58% Rent to home value ratio: 4.76% Rental vacancy rate: 4.10% Rent to income ratio: 8.40%

Coming in at number 11 on our list of best cities for real estate investment is Buffalo, NY, the second-largest city in New York State. With relatively low home values, a high rate of appreciation, and strong pool of would-be renters, Buffalo is a great option for real estate investors. 

12. Philadelphia, Pennsylvania

Home value: $225,336 Home value appreciation: 57% Effective property tax rate: 0.98% Rent to home value ratio: 5.55% Rental vacancy rate: 6.10% Rent to income ratio: 2.10%

Philadelphia, PA is the “City of brotherly love,” but it’s also a city a real estate investor could fall in love with, coming in 12 on our list of top cities to invest in real estate.  With low property taxes, attractive home values, and a good rate of appreciation, Philadelphia hits all the buttons for a great market to get into. 

13. Pine Hills, Florida

Home value: $222,782 Home value appreciation: 97% Effective property tax rate: 0.78% Rent to home value ratio: 5.59% Rental vacancy rate: 4.10% Rent to income ratio: 54.60%

Number 13 on the list of best cities for real estate investors, Pine Hills, FL is a suburb located in Orange County, west of Orlando. The area, home to 90,000 people in a larger metropolitan area of 1.1 million, is one of the most ethnically-diverse areas in the region, and is undergoing an exciting revitalization effort. A home value appreciation rate of nearly 100% and low property taxes make Pine Hills an attractive location for real estate investors. 

14. Columbus, Ohio

Home value: $213,755 Home value appreciation: 68% Effective property tax rate: 1.81% Rent to home value ratio: 5.39% Rental vacancy rate: 5.00% Rent to income ratio: 3.20%

Columbus, OH is the capital and largest city in Ohio and number 14 on our list of best cities for investing in real estate. With a relatively low cost of living and a diverse population, Columbus is an attractive destination for young families, and it’s home values and low rent-to-income ratio means it’s a great destination for real estate investors, too. 

15. Independence, Missouri

Home value: $165,893  Home value appreciation: 68% Effective property tax rate: 1.33% Rent to home value ratio: 6.25% Rental vacancy rate: 4.90% Rent to income ratio: 21.60%

Coming in at number 15 on our list of best cities for real estate investing is Independence, MO. Low home values, high home value appreciation, and a low rental vacancy rate make the city a great option for real estate investors. The largest suburb on the Missouri side of Kansas City, Independence has a population estimated at 123,000.

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16. Huntsville, Alabama

Home value: $235,633 Home value appreciation:  54% Effective property tax rate: 0.54% Rent to home value ratio: 4.21% Rental vacancy rate: 6.00% Rent to income ratio: 11.70%

Huntsville, AL is number 16 in our list of the best cities for investing in real estate. With a population just over 215,000, Huntsville is Alabama’s most-populous city; its larger metropolitan area is just under half-a-million people. The city is a hub for aerospace and military technology, and its home values click in at just over $235,000, with appreciation at 54%. 

17. Dayton, Ohio

Home value: $92,359 Home value appreciation: 90% Effective property tax rate: 2.13% Rent to home value ratio: 9.17% Rental vacancy rate: 6.70% Rent to income ratio: 14.70%

Dayton, OH comes in at number 17 on our list of the best cities for real estate investing. With low home value prices and high home value appreciation, Dayton is a great market to get in at a low price point.

18. Memphis, Tennessee

Home value: $126,889 Home value appreciation: 71% Effective property tax rate: 1.66% Rent to home value ratio: 8.52% Rental vacancy rate: 9.40% Rent to income ratio: 4.30%

Number 18 on our list of best places to invest in real estate is Memphis, TN. With typical home values at $126,889 and home value appreciation at 71%, Memphis is an attractive market for real estate investors. 

19. Lafayette, Indiana

Home value: $185,549 Home value appreciation: 53% Effective property tax rate: 0.77% Rent to home value ratio: 5.28% Rental vacancy rate: 4.40% Rent to income ratio: 31.10%

Lafayette, IN is 19 on our list of best cities for real estate investing. With home values under $200,000, home value appreciation at 53%, and super low property tax rates, Lafayette is a great place for real estate investors looking to get in the market. 

20. Meridian, Idaho

Home value: $550,130 Home value appreciation: 118% Effective property tax rate: 0.67% Rent to home value ratio: 0.20% Rental vacancy rate: 0.70% Rent to income ratio: 3.00%

Meridian, ID is 20 on our list of the best cities for real estate investors, and if you can stomach the high home values — $550,130 — you could get in on a fast-growing real estate market. Home value appreciation over the last five years is 118%, rental vacancy is under 1%, and the rent to income ratio is at 3%, all making Meridian an attractive city for real estate investors.

21. Akron, Ohio

Home value: $96,742 Home value appreciation: 61% Effective property tax rate: 2.06% Rent to home value ratio: 9.41% Rental vacancy rate: 5.90% Rent to income ratio: 10.70%

Akron, OH is 21 on our list of best cities for real estate investors. Reasonable home values at just over $96,000 and home value appreciation over the last five years of 61% make Akron an attractive prospect for prospectors. 

22. North Las Vegas, Nevada

Home value: $346,295 Home value appreciation: 75% Effective property tax rate: 0.61% Rent to home value ratio: 4.18% Rental vacancy rate: 5.40% Rent to income ratio: 5.40%

At 22, North Las Vegas, NV is another desert destination on our list of top cities for real estate investing. Though home values clock in at $346,295, the appreciation rate over the last five years is 75%, and with relatively low rental vacancy and rent to income ratios, the rental income outlook is promising. 

23. Hammond, Indiana

Home value: $146,237 Home value appreciation: 81%  Effective property tax rate: 1.30% Rent to home value ratio: 7.21% Rental vacancy rate: 4.90% Rent to income ratio: 36.90%

Number 23 on our list of cities for real estate investing is Hammond, IN. With home values at $146,237 and the five-year rate of home value appreciation at 81%, Hammond looks like a good bet for would-be investors. 

24. Indianapolis, Indiana

Home value: $192,802  Home value appreciation: 62% Effective property tax rate: 5.55% Rent to home value ratio: 1.02% Rental vacancy rate: 7.70% Rent to income ratio: 3.20%

At 24, Indianapolis is another Indiana city that makes our list of best cities for real estate investors. At $192,802, home values are higher than other locations in Indiana, but with a low rent to income ratio and high appreciation rate (62%), Indianapolis is a great market for real estate investing. 

25. Fresno, California

Home value: $330,616 Home value appreciation: 61% Effective property tax rate: 0.82% Rent to home value ratio: 3.65% Rental vacancy rate: 3.70% Rent to income ratio: 7.20%

Number 25 on our list of the best cities for real estate investors is Fresno, CA. The only California city to make the top 25, Fresno has relatively-low home values for California and a healthy rate of appreciation at 61%. It also has a low rental vacancy rate and a low rent to home value ratio, meaning investors have good odds for getting good renters to cover their costs. 


The best cities for investing in real estate, summed up

RankCityHome valueHome value appreciationTax rateRent/home value ratioRental vacancy rateRent/income ratio
1Youngstown, Ohio$42,86777%1.54%18.53%3.20%28.50%
2Detroit, Michigan$58,213103%2.90%16.99%5.10%3.70%
3Spring Hill, Florida$243,14585%0.82%5.28%3.10%30.50%
4Pueblo, Colorado$263,34380%0.63%3.64%3.10%21.70%
5Birmingham, Alabama$90,04769%0.80%11.15%9.40%11.10%
6Cleveland, Ohio$96,45597%2.08%8.95%6.70%5.10%
7Colorado Springs, Colorado$427,89677%0.45%3.17%3.50%7.50%
8Lehigh Acres, Florida$236,56966%0.75%5.55%3.50%38.60%
9Palm Bay, Florida$242,53564%0.71%5.24%4.00%33.00%
10Phoenix, Arizona$369,66181%0.61%3.42%5.40%2.20%
11Buffalo, New York$195,76787%1.58%4.76%4.10%8.40%
12Philadelphia, Pennsylvania$225,33657%0.98%5.55%6.10%2.10%
13Pine Hills, Florida$222,78297%0.78%5.59%4.10%54.60%
14Columbus, Ohio$213,75568%1.81%5.39%5.00%3.20%
15Independence, Missouri$165,89368%1.33%6.25%4.90%21.60%
16Huntsville, Alabama$235,63354%0.54%4.21%6.00%11.70%
17Dayton, Ohio$92,35990%2.13%9.17%6.70%14.70%
18Memphis, Tennessee$126,88971%1.66%8.52%9.40%4.30%
19Lafayette, Indiana$185,54953%0.77%5.28%4.40%31.10%
20Meridian, Idaho$550,130118%0.67%0.20%0.70%3.00%
21Akron, Ohio$96,74261%2.06%9.41%5.90%10.70%
22North Las Vegas, Nevada$346,29575%0.61%4.18%5.40%19.70%
23Hammond, Indiana$146,23781%1.30%7.21%4.90%36.90%
24Indianapolis, Indiana$192,80262%1.02%5.55%7.70%3.20%
25Fresno, California$330,61661%0.82%3.65%3.70%7.20%

Pro tips if you want to invest in real estate

Expert advice on jumping in to the real estate market as an investor, from Policygenius experts and interviews: 

  1. Learn your market. Once you choose a market, connect with other local real estate investors to learn the local landscape. “Finding good deals in real estate is like a treasure hunt,” says Chad Carson, author of “Retire Early With Real Estate.” He recommends starting your hunt by talking to other people who have already searched in the areas that you’re interested in. 

  2. Don’t forget about insurance. Obviously you have to insure any house you buy, but there are special considerations if you’re buying a house to rent out, says Policygenius homeowners insurance expert Pat Howard. Before you get tenants in, you’ll need to get rental property insurance, also known as landlord insurance. 

  3. Don’t limit yourself to online listings. Once you have a neighborhood in mind, hit the pavement. Carson has knocked on doors and left notes for the current owners of properties he’s interested in. “I’ve had people call me seven years later,” he says. “It’s a long game.”

  4. Make a plan. Real estate investor Alex Allison always advises new investors to make a plan.  “Society has been trained to assume real estate is always a sure thing,” he says. “And yes, real estate investing has a return on investment, but there has to be a calculated, smart plan in place and an understanding that real estate moves in cycles."

  5. But also don’t be afraid to jump in. Real estate investor and writer Emma Pattee says that the number-one question she gets from people is, “How do I get started?” Her answer: “Give yourself a 90-day deadline and just do it. You can’t grow as an investor until you invest, and so you just have to get started. I see too many people stuck in spreadsheet paralysis.” 


Methodology

To find and rank the best cities to invest in real estate in 2022, we looked at the top 614 largest cities in the United States over six data points: 

  • Home value: Typical home value from Aug. 2021 (Zillow data)

  • Home value appreciation: Percentage increase in home value in the last five years, Aug. 2016 to Aug. 2021 (Zillow data) 

  • Effective property tax rate: Median annual property taxes divided by median annual home value (Census data) 

  • Rent to home value ratio: Median annual rent divided by home value (Zillow and Census data) 

  • Rental vacancy rate: Percentage of the city’s rental inventory that is vacant for rent (Census data) 

  • Rent to income ratio: Median annual rent divided by median household income (Census data)

Weighing each of the six data points equally, we ranked and scored cities based on these factors. Top rankings are based on low home values (you want to be able to afford property there); high home value appreciation (you want your house to go up in value, making your investment worth more both for future sale and future rental value); low effective property tax rate (lower taxes mean better margins); high rent to home value ratio (you’ll recoup your money sooner because rents are high compared to what you’ll spend on the house); low rental vacancy (so you can definitely find tenants at the price you want); and low rent to income ratio (because tenants who can better afford rent are probably less likely to default or miss payments). 

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