Real estate investing can be an incredibly lucrative way to earn money, especially if you have an eye for up-and-coming markets that are on their way to exploding.
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While sometimes it’s hard to predict the next boom, real estate investors have learned how to track the signs.
Here are four housing markets real estate investors are watching for in 2025 and some tips on what to look for.
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Cleveland
For Holden Andrews, a real estate investor with Helpful Home Group, the Cleveland housing market has caught his eye for several reasons:
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Price: The price point is affordable in Cleveland. In fact, he’s noted deals that can be had for less than $100,000, which don’t tie up a lot of capital, making it easier to purchase multiple properties over a year.
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Larger percentage of rentals: There is a strong demand for rentals in Cleveland. Andrews said that around 50% of houses are renter occupied, suggesting growth potential for rental income.
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Rental income growth: The rental income market here is on an upward trajectory, meaning you should be able to see your rental income grow over time.
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St. Petersburg and Tampa, Florida
People don’t just flock to Florida to retire. According to Nyx Sherwin, a real estate investor, CEO and owner of WeBuy502, St. Petersburg and Tampa are both attracting real estate investors, as well due to economic stability and potential for further growth, to name a couple reasons.
“Homebuyers and retirees find [these cities] attractive because [they’re] cheaper than other major cities. The region is suited for the investment of detached houses which are in great demand owing to the trend of people moving to coastal regions,” Sherwin said.
One of his tricks for finding properties in a new area is knowing that “staying up to speed with the local authorities and tracking their transportation or amenity improvements helps with identifying the emerging growth zones before they become congested.”
Denver
If you can hack the altitude, Denver also stands out with its outdoor lifestyle and growth of the technology industry, Sherwin said.
“The robust economy of the city, particularly in technology, boosts the market for housing.”
He’s especially interested in “the townhome and condo market off hillside areas amongst tech office locations,” he said. He suggested that looking into community-oriented technology meetups and mixer events may provide clues to where tech workers are opting to live, which could open up investing opportunities.
Raleigh-Durham, North Carolina
Antwyne DeLonde, a real estate investor and founder of VisionX Finance, is keeping an eye on the Raleigh-Durham area of North Carolina because it’s a tech and education hub, which makes it appealing to young professionals and families. It’s also affordable compared to the national average and has a favorable tax climate, he said.
He tends to look for markets “where job growth outpaces national averages, coupled with infrastructure improvements like new highways, schools or hospitals.”
He also keeps tabs on where companies are relocating or expanding their operations. “For instance, I track announcements from major employers, as their presence can drive up demand for housing,” DeLonde said.
Lastly, he analyzes rental yield trends and housing supply versus demand. “Areas with tight inventory and increasing rental rates are typically worth exploring.”
What Sort of Investments Are Possible in These Areas?
DeLonde looks for the following types of properties to invest in in these areas:
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Single-family rentals: Perfect for steady cash flow as these properties are often in high demand among families moving to these growing areas.
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Multifamily properties: In areas with rapid population growth, multifamily housing offers scalability and higher ROI potential.
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Fix and flip: With rising prices, there’s an opportunity to add value through renovations and resell for a profit.
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Short-term rentals: Popular in markets like Tampa and Phoenix, where tourism thrives year-round.
How To Pick a Growing Market in General
For Andrews, picking a market that shows signs of growth starts by running an analysis on the following:
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Good weather: Good weather is a priority not only for the obvious reasons of enjoying the climate, Andrews said, but “that typically means the house gets beat up less, so big/expensive items like roofs, exterior paint, windows or HVAC systems need to be changed less, saving a lot in capital expenditures.”
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Favorable landlord laws: This is important, he said, “because if a tenant decides not to pay I do not want to be stuck going through eviction court for six (or more) months, and the property may be neglected/damaged.”
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Price point: After those two things, Andrews looks at the price point and rental rates to determine his cash on cash return. “I look at rental rates. Typically I want a 10% cash on cash return after mortgage, management, capital expenditure, maintenance and vacancy,” he said. Appreciation on these properties is also an important factor, but he finds that cash flowing properties are a good place to start.
How Do You Know an Investment Is Worth It?
Andrews said one way to determine if a rental property is going to be a good investment is to divide your annual pretax cash flow from the property by the money you invested to get into the deal.
So, for example, if you’re buying a $100,000 house and you’re required to put 20% down you need $20,000 in capital. If the rental projection will give you a free cash flow of $150 per month over the year, or $1,800 per year, your cash on cash return would be 9%.
“Most long-term rental investors want 10% or higher, but that can vary depending on the strategy,” Andrews said.
Andrews suggested, “It’s typically best to stick to one strategy and figure out how to make it work before going to something else.”
Don’t Rush In
DeLonde cautioned newer investors to practice patience and due diligence. “Don’t rush into a hot market without understanding its nuances,” he said. Partner with local experts like real estate agents, contractors and property managers to save you from costly mistakes.
Also, he recommended keeping an eye on interest rates, as they can impact borrowing costs and rental yields. “Finally, always run the numbers — factor in property taxes, insurance, maintenance and potential vacancies when calculating ROI (return on investment),” DeLonde said.
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This article originally appeared on GOBankingRates.com: Real Estate Investors: 4 Housing Markets We’re Watching Closely in 2025