What are the Best Cities to Invest in Single-Family Rentals? Part 5

There is one more piece of data that I use to determine the best cities to invest in residential rental properties and it will help address how COVID-19 might affect the investment desirability of different cities.

First, here is a rehash of the other data points already discussed in previous blog posts.

  1. The July 30 Post covered the most important demographic data, including job growth, population growth and income growth.
  2. The August 3 Post covered data supporting well cared for neighborhoods and quality of life in a city.
  3. The August 6 Post covered data supporting my affordability index.
  4. The August 10 Post covered growth in home values.

Now, let’s jump into the final piece of information that I look at for each city still under consideration.

That information is the top industries providing jobs in this location. These are also listed on the City-Data website where we have obtained most of the other information. When you look at this data, you will see industries categorized in industries such as:

  • Health Care
  • Educational Services
  • Construction
  • Accommodation & Food Services
  • Finance & Insurance
  • Public Administration
  • Professional, scientific, technical services
  • Etc.

Here is how this can help address the impacts of COVID-19. We have all seen which types of jobs have been decimated by this horrible virus. Here are my thoughts based on what we have seen.

Accommodation & Food Services jobs have been hit extremely hard by COVID-19. First, these businesses were forced to shut down, then after a period of re-opening it appears that customers are not all that comfortable using these services as much as they did prior to 2020.

So, the housing markets in cities with a high concentration of these types of jobs could be impacted more negatively than other cities.

The Finance & Insurance industry and the Professional, Scientific, Technical Services industry have found that a significantly high percentage of their work can be done from home.

So, the housing markets in cities with higher concentrations of these types of jobs may be impacted differently.

If the city is a very dense city like New York or San Francisco, we might find that people will now move away from the city to either suburbs or to smaller cities, possibly even in other states.

If a city is moderately dense with a mix of downtown living and suburban living, we might find the people will stay in the area but move from the dense areas to the suburban areas. These could be cities like Los Angeles, Dallas, Houston or Atlanta.

If a city is medium sized and already have an environment that is primarily like suburban living, then these cities might experience more growth than in the past with people moving from very dense cities.

As investors open to investing in the cities that make the most sense, we should continually assess how COVID-19 impacts jobs in various industries and how people react over the next couple years.

Watch for my next blog posts. I will be discussing more impacts that I expect to see as a result of COVID-19.

Please comment below with your comments or email me to discuss. If you would prefer to talk on the phone or Zoom, please use this Calendly Link to Schedule a Call.