Real estate investing has long been one of the most effective ways to build wealth, and location is the critical factor in your success, especially in today’s volatile market.
A good location is marked by strong population and job growth and high rental demand, which will all influence your profitability when choosing among the best cities to invest in real estate.
This guide highlights the top 10 U.S. cities to consider for real estate investment in 2025 based on key data, such as return on investment (ROI), rent-to-price ratios and long-term growth potential.
What Makes a City Great for Real Estate Investment?
The best cities to invest in real estate boast population growth, a strong and diverse job market, a high rent-to-price ratio, landlord-friendly laws and regulations, and potential appreciation. A combination of all these factors can create a favorable investing environment for rental income and appreciation.
Rental property markets are dynamic, so it’s crucial to analyze economic factors and conduct thorough research and due diligence. Consider speaking with real estate professionals and financial advisors before committing to any investment.
To get you started, below is a list of the top 10 cities for real estate investments based on the above criteria.
Top 10 Cities to Invest in Real Estate in 2025
Whether you’re a seasoned investor or new to investing in real estate, high interest rates, changing tenant preferences and economic development have altered the real estate market for everyone. This has provided opportunities in some obvious and not-so-obvious cities across the U.S.
While the best cities to invest in real estate depend on your investment goals, the following candidates top the list of metropolitan areas that serve up the best balance of what makes a city great.
Dallas, Texas
The Dallas metropolitan area has a diverse economy and is home to several Fortune 500 companies. The population is growing rapidly, with high renter demand and appreciation potential. This makes Dallas a top rental market for the foreseeable future.
- Population: 1.3 million
- Median home price: $402,900
- Housing price index 5-year growth: 53.7%
- Average rent: $1,590
- Type of investor the city suits: Long-term rental
Charlotte, North Carolina
A major U.S. financial center, the Queen City is witnessing explosive job and population growth. About 35% of single-family homes are occupied by renters. Major companies like Bank of America, Wells Fargo and Truist employ thousands of employees who need somewhere to live.
- Population: 911,307
- Median home price: $437,400
- Housing price index 5-year growth: 70.2%
- Average rent: $1,661
- Type of investor the city suits: Long-term rental, house flipping
Nashville, Tennessee
Jobs (led by healthcare) and the population are booming in Music City, while tourism remains core to Nashville’s economy. The metropolitan area is expected to grow by 7% in 2025. An expanding population and rising home prices are fueling rental demand.
- Population: 687,787 (Nashville-Davidson metro area)
- Median home price: $485,000
- Housing price index 5-year growth: 63.5%
- Average rent: $1,848
- Type of investor the city suits: Long-term and short-term rentals
Tampa-St. Petersburg, Florida
A thriving job market and high quality of life are attracting significant numbers of families and young professionals to the Tampa Bay area. Located in a landlord-friendly state, the area boasts a strong rental market and rising home prices.
- Population: 3.3 million (Tampa-St. Petersburg-Clearwater metro area)
- Median home price: $429,800
- Housing price index 5-year growth: 77.6%
- Average rent: $2,030
- Type of investor the city suits: Short-term and long-term rentals
Phoenix, Arizona
As one of the fastest-growing cities in the U.S., Phoenix also has a diverse economy and low property taxes. Affordability, strong rental demand and a favorable climate attract investors to the metropolitan area.
- Population: 1.65 million
- Median home price: $460,000
- Housing price index 5-year growth: 65%
- Average rent: $1,513
- Type of investor the city suits: Long-term rental
Detroit, Michigan
Detroit is undergoing revitalization and diversifying its economy. Low home prices are producing high rental yields, especially from multifamily housing. In June, the gross rental yield was just shy of 22%. You can buy a home for less than $100,000 and charge rent above $1,500.
- Population: 633,221
- Median home price: $105,000
- Housing price index 5-year growth: 52.4%
- Average rent: $1,327
- Type of investor the city suits: Buy-and-hold, long-term rental
Houma, Louisiana
Houma is close enough to benefit from larger cities but far enough away to have its own economy built on energy, healthcare and logistics. Just over an hour from New Orleans, it’s a hidden gem for investors.
- Population: 198,672 (Houma-Bayou Cane-Thibodaux metro area)
- Median home price: $185,000
- Housing price index 5-year growth: 22.7%
- Average rent: $1,306
- Type of investor the city suits: Long-term rental
Birmingham, Alabama
With low home prices, high yields and consistent demand, Birmingham has attracted investors for some time. Healthcare continues to supply plenty of tenants, and redevelopment could be good for appreciation.
- Population: 196,518
- Median home price: $266,000
- Housing price index 5-year growth: 47%
- Average rent: $1,350
- Type of investor the city suits: Buy-and-hold
Cleveland, Ohio
The home of the Rock & Roll Hall of Fame presents a steady pool of tenants from the Cleveland Clinic, universities and the industrial sector. With affordable homes and rising rents, investors are finding opportunities around the city amid urban redevelopment.
- Population: 362,670
- Median home price: $127,000
- Housing price index 5-year growth: 57%
- Average rent: $1,558
- Type of investor the city suits: Turnkey rental; Buy, Rehab, Rent, Refinance, and Repeat (BRRRR)
Toledo, Ohio
T-Town is landlord-friendly, with a renovated downtown and an economy driven by manufacturing. Homes are low-cost, and the market has a stable rental demand. Rent growth in Toledo continues to outpace inflation, and you won’t find much competition.
- Population: 265,306
- Median home price: $159,500
- Housing price index 5-year growth: 54%
- Average rent: $973
- Type of investor the city suits: Short-term and Long-term rentals
Frequently Asked Questions
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Conducting thorough research and due diligence is essential to determine whether a city is right for real estate investing. Characteristics to look for include a robust job market, a growing population, low housing availability coupled with high demand, a high rent-to-price ratio, public transportation, and good infrastructure.
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Small and big cities both have their appeal to real estate investors, presenting compelling advantages and disadvantages. While real estate trends show potential renters looking more to small cities and rural areas, the population area that works best for your real estate investment depends on your investment goals, risk tolerance, understanding of market dynamics and preference.
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A landlord-friendly state has rental laws and regulations that favor the owners, allowing you to better manage tenants and enforce rental agreements to maximize profits. Based on a property owner’s rights to evict problem tenants, charge market-rate rents and protect rental income, these are the most landlord-friendly states in the U.S.: Texas, Florida, Arizona, Georgia, Colorado and Michigan.