Adventures in Real Estate: The Best and Worst Places to Be a Landlord

Adventures in Real Estate: The Best and Worst Places to Be a Landlord

We searched the 100 largest U.S. metro areas using data from Trulia, an online real estate marketplace, to pinpoint where it pays to invest in rental properties.

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For the locales that made it into the top 10, it's more than 50% cheaper to buy a home than to rent one, which means that would-be landlords can purchase an inexpensive property and receive a good return when they rent it out.

RELATED: 3 Bad Landlords and How to Protect Yourself

Other findings: Aspiring landlords will find better deals in the middle of the country than on the coasts. No surprise, swanky cities like New York, San Francisco and Los Angeles pose a challenge for bargain hunters. But one popular metropolis did make the 10 best list: Memphis, TN.

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The Rankings

In each of the metro areas called out below, we list the percentage at which it is cheaper to buy a home than rent. For example, it's 70% cheaper to buy a home than rent in Detroit—our top city for landlords!

While plotting out our calculations, we assumed that the hypothetical landlords would get a 3.5% rate on a 30-year, fixed-rate mortgage, with a 20% down payment. These landlords would also fall into the 25% tax bracket, itemize on their taxes and own the property for at least seven years.

The Best Places to Be a Landlord

City Cost of Buying vs. Renting
Detroit, MI -70%
Dayton, OH -63%
Gary, IN -63%
Cleveland, OH -63%
Warren-Troy-Farmington Hills, MI -63%
Toledo, OH -62%
Memphis, TN -62%
Kansas City, MO -60%
Birmingham, AL -59%
Indianapolis, IN -58%

The Worst Places to Be a Landlord

City Cost of Buying vs. Renting
San Francisco, CA -19%
Honolulu, HI -23%
San Jose, CA -24%
New York, NY -26%
Albany, NY -30%
Orange County, CA -32%
San Diego, CA -33%
Los Angeles, CA -35%
Long Island, NY -36%
Ventura County, CA -36%

Source: Trulia

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