Most savvy investors include rental properties as part of their portfolios. The steadily increasing rents in some cities give investors a chance to quickly boost their income. As an investor, you might find cities where you can increase the rate of return on your investment to be the most attractive option for you. According to the Apartment Guide 2021 Annual Rent Report, here are the top 10 cities with the highest average increase in rent for a one-bedroom as of June 2021 (i.e., places where you can likely get the highest rate of return).
1. Las Vegas
Average one-bedroom rent: $1,730
Rental prices for a one-bedroom in Las Vegas rose by 42.1% in the last year. The dramatic increase in Las Vegas rental prices is no surprise, given that many Americans are returning to city life. With all the bright lights and incredible nightlife, who would not want to live in the City of Second Chances? It’s probably a safe bet to consider making your next rental investment here.
2. Jacksonville, Florida
Average one-bedroom rent: $1,479
Jacksonville is the largest city in the Sunshine State, and it's seen a dramatic bump in the price for a one-bedroom apartment, with a 35.5% increase in rent this year alone. With its beautiful beaches and incredible arts district, it is no wonder more people are migrating to Jacksonville -- and are willing to pay a bit more for the privilege.
3. Tucson, Arizona
Average one-bedroom rent: $1,073
Due to the growing demand for rental properties in Tucson, Arizona, the city saw one of the highest rental price increases in the country, at 32.5%. Home to the picturesque Sonoran Desert and glorious mountain trails, the desert oasis is attracting droves of new residents. With more and more people paying higher rents, this might be a smart location for your next investment.
4. Santa Ana, California
Average one-bedroom rent: $2,598
Trailing behind Tucson, Arizona, is Santa Ana, California, with rent rising an average of 27.3% in 2021. Like most cities experiencing population growth, rents are on the rise. Just a few short miles away from Disneyland and home to the Heritage Museum of Orange County, Santa Ana attracts a wide range of renters. It just may attract your investment funds as well.
Average one-bedroom rent: $1,543
The cost of rent in Houston is keeping pace with the rest of this list. Rent in Houston has increased by 24.3%. Even with rent steadily rising, though, the cost of living in Houston is 4.8% below the national average. It sounds like Houston could be a win-win for both landlords and tenants.
6. Henderson, Nevada
Average one-bedroom rent: $1,678
Henderson, Nevada, has held steady, ranking seventh place year over year. Just 16 miles outside bustling Las Vegas, Henderson is commanding an average of $1,678 for a one-bedroom -- an increase of more than 24%. Many renters are finding the location a great alternative to Las Vegas, and investors might be willing to gamble on the location too.
7. Winston-Salem, North Carolina
Average one-bedroom rent: $994
Winston-Salem, North Carolina, often referred to as Camel City (after the cigarette brand), is another site of steadily rising rent prices, with a 23.3% increase. Many people are drawn to the area because of its history and the world-renowned Wake Forest University. Winston-Salem is home to a variety of renters, from college students to families. The variety and scale of housing needs make this a city in demand for investors.
8. Irvine, California
Average one-bedroom rent: $2,785
Tying with No. 7 on our list is Irvine, California, with a 23.3% boost in rent. While the rate of increase here is the same as in Winston-Salem, the average rent in Irvine is much higher. The Orange County locale boasts an average one-bedroom rental rate of $2,785. That may seem pretty steep to some, but the cost of living in California is well above the national average. According to BestPlaces, the cost of living in Irvine rates a 187.1 compared to the national average of 100 (California’s state average is 149.9).
9. Reno, Nevada
Average one-bedroom rent: $1,618
When most people think of Nevada, their minds immediately go to Las Vegas, but Reno is also a bustling city. Known as the “Biggest Little City in the World,” Reno experienced a 20.4% increase in its price for a one-bedroom apartment. While many know Reno for its casinos and tourism, it was also named No. 1 in a nationwide ranking of the best small cities in the United States.
10. Aurora, Colorado
Average one-bedroom rent: $1,713
Rounding out our top 10 is Aurora, Colorado. Known as the “Gateway to the Rockies,” Colorado’s third-largest city has experienced a 19.8% average increase in the price for a one-bedroom apartment, with an average rent of $1,713. Since Aurora is adjacent to the Denver metropolitan area, it’s an attractive location for those intimidated by the capital city’s high cost of living.
The Millionacres bottom line
While the rental market differs from city to city, as an investor, you would be wise to keep your eyes on cities experiencing a population boom and increasing rents. This strategy could help you attract more long-term tenants, which could also lead to long-term capital gains.