It is a widely known fact that investing in real estate is one of the most lucrative ways to accumulate wealth and establish financial stability. However, only some regions offer the same opportunity for real estate investors. Many factors impact that argument, and each state’s economic conditions determine the direction the investment will go.
According to a CNBC study, as of 2022, only 12% of Americans were brave enough to become real estate investors, even though 23% acknowledged that it is the best method to accumulate wealth. That being said, if you are thinking about becoming a real estate investor, you will need to know which regions of the USA are the best and most affordable, especially in 2024. Here is a list of five of them and the reasons why.
What Does Real Estate Investing Consist of?
Before jumping into the list, let’s look at what real estate investing is and what it consists of. To be a real estate investor, you would need to go after one of these options: buy real estate for renovation and resale (a process called flipping houses), buy properties to rent them, and secure yourself a steady passive monthly income from rent collection, or it could be option number three – investing in Real Estate Investment trusts (REITs) which are being exposed to real estate assets without having direct property ownership.
Several factors will determine how successful your real estate investment will be, whichever option you choose.
Factors Impacting Real Estate Investment
The most important factors that can make or break a real estate investment are the average home prices, household income, the cost of living, home appreciation rates, population and job growth, property tax rates, rental vacancy rates, and GDP (Gross Domestic Product). These factors hugely impact the actual investment process and determine the ROI.
List of 5 Best and Affordable States to Invest in 2024
Based on the factors mentioned above, the list starts with Kentucky. Let’s see why.
Kentucky
Key Metrics:
- Average Home Price: $196,000
- Median Household Income: $56,000
- Cost of Living: 93.80
- Home Appreciation: 6.1%
- Population Growth: 0.3%
- Job Growth: 2.4%
- Average Property Tax Rate: 0.89%
- Rental Vacancy Rate: 4.9%
- GDP: $244 billion
Kentucky is at the top of this list because of its affordable housing market. Its economic growth is steady while the taxes are convenient. It has a median household income that goes in sync with housing costs. All of this allows investors in real estate to expect an excellent demand and potential for appreciation.
South Carolina
Key Metrics:
- Average Home Price: $284,000
- Median Household Income: $62,000
- Cost of Living: 96.50
- Home Appreciation: 6.6%
- Population Growth: 1.7%
- Job Growth: 2.7%
- Average Property Tax Rate: 0.58%
- Rental Vacancy Rate: 3.46%
- GDP: N/A
South Carolina is right behind Kentucky as it offers a combination of affordability, excellent economic conditions, and a favorable tax environment. Real estate investors are attracted by these market conditions, primarily residential and commercial real estate, due to the quickly growing job opportunities and moderate housing costs.
Indiana
Key Metrics:
- Average Home Price: $228,000
- Median Household Income: $70,000
- Cost of Living: 91.50
- Home Appreciation: 6.08%
- Population Growth: 0.4%
- Job Growth: 1.9%
- Average Property Tax Rate: 0.83%
- Rental Vacancy Rate: 10%
- GDP: $438 billion
Third in line is Indiana, which has a strong economy, affordable housing, and low property tax rates. Despite the moderate rental vacancy rate, Indiana is a true gem for real estate investors. This is because of its growth potential and the solid regulations that promise long-term investments with favorable outcomes.
Georgia
Key Metrics:
- Average Home Price: $316,000
- Median Household Income: $68,000
- Cost of Living: 91.00
- Home Appreciation: 4.6%
- Population Growth: 1.1%
- Job Growth: 2.2%
- Average Property Tax Rate: 0.95%
- Rental Vacancy Rate: 8.2%
- GDP: $714 billion
Georgia comes fourth with its balanced economic metrics. Its housing and job growth potential is relatively stable, offering attractive options for real estate investors. On the other hand, the home prices are a bit higher. However, the steady economic growth and excellent tax environment make Georgia an appealing investment region.
Delaware
Key Metrics:
- Average Home Price: $373,000
- Median Household Income: $81,000
- Cost of Living: N/A
- Home Appreciation: N/A
- Population Growth: 1.2%
- Job Growth: N/A
- Average Property Tax Rate: 0.62%
- Rental Vacancy Rate: 3.1%
- GDP: $84 billion
Delaware is the last but not least favorable state in which to invest in real estate due to its steady population growth and low property taxes. It has a growing job market, which makes it an attractive option for real estate investors. The home prices can be higher than expected, but there are pleasant economic factors and low vacancy rates that unlock the full potential of the real estate investment industry.
Conclusion
2024 is an excellent year to become a real estate investor, especially in Kentucky, South Carolina, Indiana, Georgia, and Delaware, due to their stable economic growth and real estate investment potential. You would be right if you thought California would be on this list, or perhaps Florida as a good real estate investment region. However, many factors impact the real estate market’s stability that doesn’t put California and Florida among the top five. Still, there are favourable conditions for long-term success, so choosing where to invest should also be considered, apart from the economic conditions and personal preference.
