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.

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.

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

  • CrankyFranky

    yeah – except a fellow Australian who went to Detroit, bought and managed blocks of apartments, and was generally well-liked by tenants for improving their homes, turned up one morning to talk to a tenant who was behind in the rent, and was met by the tenant’s drug-dealing son who pulled out a gun and shot him dead

    that sort of killed the appeal of Detroit for me …

  • AndyZ

    The suburbs of Atlanta are great place to be a landlord (you can still purchase a 3/2/2 built within the past 10 years for around $50-60K ) and rent the home out for $800-900 per month – 5 years or less to pay off the home – and then have a net income of $600+ after taxes (around 1.5%) and insurance

  • Jen H.

    I owned 8 units in Western PA, they cash flow great but no appreciation the properties will never go up in value because it’s a declining area. The author doesn’t seem to know much other than the cash flow because some areas like Cleveland are HORRIBLE because the city code enforcement is unreasonable and can cost a landlord a lot of money by making unreasonable demands. I started to sell off my PA properties for the same reason because city code enforcement is ridiculous. I thought that I would focus on rentals where I live in New England but I’m back to square one, because properties are hard to cash flow. My total investment in PA was 125k cash and my properties were cash flowing around 32k per year after all expenses which was great and I managed them myself. I still own 3 there and am only selling one more. I’m going to take the money and invest in else where. I’ve been thinking about the Charleston, SC area. I’m not sure about the landlord laws though, anyone have any feedback on the Charleston area?

  • SDGuy

    This article only looks at rent vs. acquisition cost; a small part of the pie. No mention of vacancy rates, whether local laws favor the landlord or the tenant, crime, the local economy, etc.