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2019 Hot Spots: Where to Invest in a Second Property

6 min read
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picture of author, Hometap TeamBy Hometap Team on June 25, 2019

As Forbes recently pointed out, interest rates are likely to rise in the coming months. If you’ve been considering a second property, whether as a vacation home, rental property, or both, the time to invest is now.

Second (or third or fourth) properties offer significant income-generating opportunities with short-term rentals only gaining in popularity. Airbnb, just one of the short-term rental platforms, earned $2.7 billion since 2008. There’s also opportunity with long-term rentals in areas that are perhaps less enticing for vacation rentals but have, for example, a significant student population.

But while interest rates are likely to rise, not all property values are set to rise. Here are five areas where we think homeowners have the greatest chance of seeing a return on their investment.

Orlando, FL

Real Wealth Network has noticed an increased demand for single-family homes in Florida with Orlando, in particular, seeing an increase in its population from a mix of job seekers, retirees, and students. The area’s warmer temperatures, beaches, and no state income tax are sure to continue being a lure to diverse groups. In fact, over the last seven years, the area’s population has grown 227% faster than the national average.

Low housing prices (you can find many homes under $200,000), property taxes, and insurance allow you to claim a stake in the market today while increasing rental rates promise continued opportunity.

Raleigh, NC

WalletHub named Raleigh #3 on its list of best state capitals based on its high affordability, economic well-being, and quality of education. The area benefits from several factors, not the least of which is being part of the Research Triangle along with Durham and Chapel Hill. The area is home to some 200 companies, including high-tech startups, information technology, and biotechnology, helping it rank high on Glassdoor’s 25 best cities for jobs list. It’s also projected to be the fastest-growing metropolitan area over the next five years.

Home prices are expected to continue rising, so the time to purchase is sooner rather than later. For those looking to rent, the area universities of Duke, University of North Carolina at Chapel Hill, as well as several other private colleges provide a steady stream of students.

New York, NY

Purchasing real estate in one of the world’s busiest cities may not seem affordable at first, but the opportunity for gain is so great that it’s still worth considering if you’re looking for a lucrative investment. The median property price is just over $1.1 million, but rental income amounts to more than $3,000. Boroughs like Queens may prove to be just as attractive as Manhattan or Brooklyn.

The Association of Foreign Investors in Real Estate named New York #2 on its list of top global cities for real estate investment. But if you’re looking to list a property as a short-term rental on sites like Airbnb, you may want to weigh the risks. The city has tried to enact laws to make it illegal to rent an apartment for less than 30 days, creating an ongoing legal battle.

Sacramento, CA

The one West Coast city on our list, California’s capital is poised for both population and job growth. The average home price of $389,117 may seem high, but it’s less than half of that of Los Angeles (which is more than $900,000). Plus, increased job growth comes new renters and DoughRoller reports that home prices are expected to increase 33% over the next three years.

WalletHub lists Sacramento in the middle of its best state capitals list, but what it lacks in affordability, it makes up for in quality of life. Just over an hour from the Bay Area, Sacramento is becoming more attractive to those who want the proximity to the coast with more affordability.

Jacksonville, FL

Some of the best places to invest are beach towns, particularly for those looking to rent out the property via short-term vacation rentals. While Jacksonville offers beaches in droves, it also has a rotating market of renters thanks to the area’s 34,000 military-affiliated personnel. As HomeUnion reports, Mayport Naval Station is set to bring eight new ships in the coming years, potentially increasing the number of personnel looking for housing.

The city has one of the country’s fastest-growing populations due in part to both the naval station and other area businesses like Anheuser-Busch and Vistakon. Forbes even included the city on its best places for business and careers list. And, as noted with Orlando, there are no state income taxes.

No matter if one of these places piques your investment interests or if you have your sights set on another destination for a second property, Hometap can help. As a homeowner, you can tap into the equity you’ve built in your home in exchange for a share of the future value of your home. In fact, purchasing a second home is one of the top three reasons homeowners apply for a Hometap Investment. Many use the investment to put a down payment on a second property. Learn more about using Hometap to fund a second property.

The more you know about your home equity, the better decisions you can make about what to do with it. Do you know how much equity you have in your home? The Home Equity Dashboard makes it easy to find out.

You should know

We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

Hometap is made up of a collaborative team of underwriters, investment managers, financial analysts, and—most importantly—homeowners—in the home financing field that understand the challenges that come with owning a home.

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