The rental market is still going strong, which means real estate investors still have a prime opportunity to generate steady cash flow by buying property in the right places. But where should you buy if you're looking to break into the rental market? Millionacres recently did some research to see which cities lead the pack in terms of demand, and we found that Boise is quite possibly the best place to buy an investment property this year.
Should you buy in Boise?
There's a reason the Boise, Idaho, metro area tops Millionacres' list of rental markets with maximum demand. The area saw an uptick in population to the tune of 2.9% from 2017 to 2018, and the more people you have flooding a given city, the higher the demand for rent is apt to be.
Boise also saw a 20% uptick in employment over the five-year period leading up to 2018. That means people are having a relatively easy time coming in and finding jobs.
That said, rising home values in Boise are driving many newcomers to the city to rent rather than buy. Home prices increased 10.4% year over year as of November 2019, which is almost three times the U.S. growth rate on the whole.
In fact, the median home price in Boise is $303,100. For the state of Idaho, it's $263,900, and for the U.S., it's $231,200. It's no wonder, then, that so many Boise residents are priced out of owning.
What sort of rent might you command in Boise?
If you're going to invest in an income property, it helps to know what sort of income stream to expect from it. As of late 2019, monthly rent in Boise averaged $1,463 among single-family homes, representing a 5% increase. Among multifamily homes, monthly rent averaged $1,023.
By contrast, nationally, the average rent for a one-bedroom home in 2019 was $1,586.84, a 3% increase. For a two-bedroom home, it was $1,808.73, a 1.7% increase. And for a three-bedroom home, it was $1,951.14, a 1.2% increase. Meanwhile, the average multifamily home rent was $1,474 on a national level.
Meanwhile, Boise rents increased 23% in the course of the three-year period leading up to late 2019. And the vacancy rate for all rental properties in Boise is 1.55%, down from 2.63% just a year prior. By contrast, the national vacancy rate for rentals is estimated at 6.8%.
A solid job market
If you're going to buy an income property, you should choose a metro area where the local economy can support the rent you're hoping to charge. To this end, Boise has a lot going for it. The unemployment rate in Boise is 2.40%, which is well below the national average of 3.70%. And future job growth is estimated at 50.85%, which well exceeds the 33.51% projected rate for future U.S. job growth as a whole.
Boise's crime rate is also relatively low compared to the rest of the country, making it a draw for singles and families alike. And a low crime rate generally means affordable homeowners insurance, which, from an owner's perspective, is certainly a plus.
Should your next investment property be in Boise?
Clearly, Boise has a lot going for it from an investment standpoint. It pays to dig deeply into the area to see if it's the best place for you to buy a rental home.