With 50 states to choose from, it can be overwhelming to decide where to invest in the U.S.A. Narrowing down your property search can also be challenging (in a good way) since there are so many promising residential properties in each state and city.
Having numerous options across the country has only encouraged more investors to look into residential properties in the United States to boost their income and create financial stability.
According to the Bureau of Economic Analysis (BEA), the cumulative level of investment in the U.S.A. from abroad increased from $158.6 billion to $5.96 trillion at the end of 2019, proving that there’s a strong return on investment in U.S.A. for foreign investors and that the market is only going to get hotter in the foreseeable future.
Why investing in the U.S.A. is a good idea
It’s understandable to feel apprehensive about investing in residential properties in the United States given that it’s half a world away from Australia. But this is easily remedied by hiring a dedicated, trustworthy team in the U.S.A. who can take care of your property so you don’t have to worry about the distance.
The investment is definitely worth it once you consider how much cheaper residential property in the U.S.A. can be. To compare, a down payment of $100,000 for a property in Australia is already an entire real estate investment in some states of the U.S.A.
Plus, the U.S. housing market is booming, with prices appreciating and the residential property trends pointing upwards. The uncertainties brought about by the COVID-19 pandemic has caused people to worry that this white-hot market will have a similar pattern to the housing bubble (and subsequent crash) in 2006, when lenders were more lax about background checks when approving loans for homebuyers and investors.
But the residential property market is unlikely to crash anytime soon, with stricter lending policies in place and hardset compliance enforced. Just keep in mind that it’s unrealistic for the market to maintain its upward trajectory forever, so it’s best to strike now while it’s hot.
7 states in the U.S.A. to consider investing in
Deciding where to invest in the U.S.A. requires careful consideration so that you get the most out of your investment. Fortunately, we’ve narrowed down the seven most ideal states and cities to investing in residential properties in terms of prices, taxes, and location.
Michigan is one of the best states in the Midwest to invest in because of its affordability. It’s one of the top ten states with the lowest cost of living and cheapest prices to purchase a house. It’s also a profitable location to invest in a residential property as the majority of people prefer to rent out a house than buy one themselves.
Recorded as the most populous city in Michigan, Detroit has been experiencing a skyrocketing demand for family rentals because the median price for a single family home is still below $100,000. This ensures that the rental market in the city leads to profit and positive cash flow for property owners.
The affordability of housing in Detroit allows you to purchase a great residential property for a low price in exchange for high returns and great market appreciation, especially if you rent it out.
We’ve seen this city’s potential firsthand as we’ve helped our clients find low-cost properties in the best Detroit neighbourhoods so that they can get significant return on investment.
Detroit had fallen back since the decline of the auto industry and the Great Recession in 2009, but the Motor City is definitely making a comeback now with new infrastructure, new electric vehicle plants opening, and even a large Amazon distribution centre!
Further, Ann Arbor, Grand Rapids, and even Lansing, with it’s ‘medical mile’ of medical equipment manufacturing market booming, are all excellent cities to look to invest in.
Investing in Texas real estate is a “no-brainer”, given that almost two million people in the country moved there since 2010 because of the affordable housing and the work opportunities it had to offer.
Because it has so many options, Texas has varying levels of growth in terms of the housing market. Dallas, Houston, San Antonio and Austin are all considered high-growth markets because of economic growth and demand for housing.
Dallas offers plenty of choices for residential properties, making the housing market accessible for investors and potential renters alike. It also has a diverse economy, allowing people from different income levels to thrive in the city. San Antonio and Austin are also booming, offering similar growth and possibly even lower costs than Dallas or Houston.
It has the lowest rate of home ownership in the country as it’s more cost-effective to rent than to buy. The rising demand for rental properties is another enticing reason for investors to consider San Antonio or Austin as their city of choice.
Nevada gained its moniker as the “Silver State” because of its silver rush days during the 1800s and, even now, mining is a crucial component to its economy. The state is the world’s fourth largest producer of gold and over 2,000 businesses are connected to mining in one way or another, which results in more work opportunities in mining companies and more people looking for housing.
As Nevada’s world-famous city, Las Vegas is still one of the premier real estate investment locations in the U.S.A. Aside from its booming tourism and entertainment industry, the city is also home to a thriving industrial sector including technology and finance.
Locals and tourists alike reside and visit Las Vegas for a host of reasons: Work opportunities, housing market, incredible attractions, business conventions and trade shows. The pandemic hasn’t slowed this down one bit. Because it’s an international destination, Las Vegas has implemented safety measures against COVID-19.
People go to Las Vegas year-round, which is a good sign for investors who want to enter the renter’s market since people are consistently looking to rent in the city for short-term or long-term stays.
According to a recent report by the U.S. News and World Report, Georgia ranks as one of the best states to live and work in and it received high ratings for its infrastructure, fiscal stability, and steadily growing economy. U.S. News also ranked Georgia as the 18th most affordable state for housing in the country, contributing to the upward trend of the local real estate market.
In fact, Atlanta is one of the fastest growing cities in the country, ranking fourth with the most residents in 2019. It’s also home to headquarters of Fortune 500 companies like Coca-Cola, The Home Depot, and UPS. The cost of living in Georgia’s capital is less than half as in cities like Manhattan, proving now is the best time to invest in Atlanta.
There’s also a growth of capital as homes in Atlanta have increased in value by 5% while maintaining low interest rates for investors.
Florida is a renowned tourist destination with year-round sunshine, diverse and dynamic economy, and a thriving global business sector. It’s unsurprising that people continue to flock to the Sunshine State and its population is expected to grow beyond 22 million by 2022 giving a serious housing shortage.
Orlando is a great city to invest in Florida as its economy is booming because of its international tourism attractions like Walt Disney World, Universal Studios, and countless others. Investors can choose to target either long-term residential or holiday markets with their properties as both offer great returns. The market is also diverse because every neighbourhood has something to offer to everyone, whether you’re a single, family or first-time investor.
The city is also on its way to recovering from the COVID-19 pandemic with safety precautions in place while vaccines continue to be easily accessible to residents, making it a smart city to invest in.
Further, if the Orlando market is a touch pricey for your budget, Tampa and Fort Myers, on the West Coast, are seeing an amazing influx of people, great booms in values, and certainly more affordable.
Idaho has a growing job market and it’s become the state with the largest employment gain in the country, making it an attractive location for both potential residents and investors. A large percentage of people moving to Idaho are young entrepreneurs and technology-focused employees, which has resulted in an increase of business startups and a tech-centred economy.
Boise in particular has experienced an increase in population of 2.9% from 2017 to 2018, with the majority of newcomers prefering to rent rather than buy. This makes it a great opportunity for investors to snap up a bargain.
Boise may seem unassuming but it’s been recognised as the best place to buy a home in 2019. It offers diverse neighbourhoods for different kinds of people including the trendy Boise Bench area for millennials, the community-oriented North End for young professionals, and the prestigious Harrison Boulevard for well-to-do residents.
Illinois is a geographically diverse state that’s home to agricultural regions, urban and industrial cities, and even natural resources like coal and lumber. More than 30 of the Fortune 500 companies call this state home including Boeing, Walgreens, McDonald’s, and Kraft Foods. It also has a diverse economy fueled by different industries like finance, livestock, manufacturing, agriculture, medicine, and biofuels.
This economic stability makes Illinois an attractive location to invest in. Although you’ll find different real estate options across the state, many of the best residential properties are found in Chicago.
Demand for housing in suburban and city neighbourhoods in Chicago are steadily rising, pushing home prices to rise exponentially in 2021. The Windy City is also known as the business and financial center of the Midwest, and its growing economy and overall affordability contribute to the great quality of life that residents experience.
It’s also home to a great arts and culture scene, with more than 400 theatres and art galleries and 552 parks.
Narrowing down your investment options isn’t easy when there are so many great locations to choose from, but reviewing these seven states and cities is a great place to start when it comes to investing in the U.S.A., given that they promise high returns to your potential residential property investment.
If you need help choosing which state (and city) to invest in, book a call with us.