The East Coast offers diverse real estate investment opportunities, from beachfront properties to cities rich in history and culture.
The high land value, strong demand, and potential for property appreciation also make this coast a strong draw for interested investors.
Let’s look at the best rental markets for cash flow on the East Coast, and how to determine which market is right for you.
Start your application with Park Place FinanceWhy should you invest in real estate on the East Coast?
The East Coast is home to powerhouse cities like New York City, Atlanta, and Washington, D.C.
The region attracts a diverse population due to the following dominating industries:
- Finance
- Technology
- Healthcare
- Education
Tourism also plays a significant role in coastal areas and historical cities like Savannah and Boston, fueling the consistent need for long-term and short-term rental properties.
East Coast data suggests that investors can expect solid appreciation rates, which supports a promising long-term investment.
Why is cash flow important to real estate investors?
Cash flow is an important indicator of the health of your real estate investments.
Positive cash flow—which means your rental income exceeds your expenses—provides a steady stream of income that covers your costs and ideally provides a profit.
It’s also a cushion against risks and unforeseen expenses and can be reinvested into the property to boost its value or used to purchase additional properties.
A property that consistently generates positive cash flow is likely:
- Well-managed
- In a good location
- Appealing to tenants
The East Coast offers plenty of opportunities for investors to tick off all of these cash-flow boxes.
How to evaluate East Coast rental markets for cash flow
Evaluating cash flow markets requires that investors conduct their due diligence on a property through proper research, analysis, and calculations.
Let’s look at the steps to evaluate the best rental markets for cash flow on the East Coast.
1. Understand the local market
Dig into the following indicators for your city of choice:
- Job growth
- Unemployment rates
- Economic drivers
- Population growth
- Supply and demand
- Vacancy rates
2. Analyze property types and locations
Carefully scope out your desired locations, such as areas close to tech hubs, public transportation, or entertainment and amenities.
Consider your ideal property type, whether single-family homes, vacation rentals, or multi-family properties.
Research current home prices and rental rates to estimate your potential income.
3. Estimate your operating expenses and financing costs
If you’re financing the purchase with a hard money loan, consider your monthly mortgage payments in addition to operating expenses such as:
- Property taxes and insurance
- Maintenance
- Repairs
- Property management fees
- Utilities
A general rule is to expect that 40-50% of your gross rental income will cover operating expenses, but this can vary significantly by location.
4. Evaluate your cash flow metrics
To determine cash flow, it’s helpful to calculate the following:
- Gross rental income: Includes all income from your property, including parking or laundry fees
- Net operating income (NOI): Subtract operating expenses from gross income
- Cash on cash return (CoC): Divide the annual pre-tax cash flow on the property by the total amount of cash invested
- Capitalization rate (cap rate): Divide the NOI by the property’s current market value
- Rent-to-price (RTP) ratio: Divide the annual or monthly rental income by the property’s purchase price or market value
These calculations can help give you a more complete picture of the potential cash flow for your property.
Top 5 best rental markets for cash flow on the East Coast
Now that we’ve covered the importance of cash flow and how to evaluate it in East Coast markets, let’s look at the top five markets in this region.
1. Atlanta, Georgia
Atlanta has been experiencing major population and job growth, which has created a sustained demand for rental properties.
Dominant industries include technology, entertainment, and healthcare.
The city also remains relatively affordable considering its growth, further increasing its housing demand.
Average rent: $1,559/month
2. Raleigh, North Carolina
Raleigh is located in the heart of Research Triangle Park, one of the largest and most prominent high-tech research and development parks in the U.S.
As a result, it attracts a highly skilled and educated workforce that creates a strong rental demand.
Additionally, Raleigh consistently ranks on lists of the best places to live and work in the U.S. Its continuously growing population supports a sustained demand for housing.
Average rent: $1,332/month
3. Baltimore, Maryland
Baltimore’s coastal location and proximity to Washington, D.C. helps the city maintain a steady rental demand.
The city is also experiencing ongoing revitalization efforts, attracting new businesses and residents and boosting property values.
Healthcare, education, and port-related industries offer stable employment sources for residents.
Average rent: $1,410/month
4. Philadelphia, Pennsylvania
Philadelphia is the sixth largest U.S. city, rich in historical and cultural significance, and yet still can offer a relatively affordable entry point into the real estate market vs. other major East Coast cities.
Its economy’s reliance on the education and healthcare sectors help it to remain stable even in downturns.
Average rent: $1,658/month
5. Boston, Massachusetts
Boston is home to Harvard University and a growing technology sector, which helps it to draw in a steady stream of students and young professionals.
The property prices are higher than in other cities on this list, which enhances an investor’s cash flow potential with premium rents and low vacancy rates.
Average rent: $3,331/month
The role of hard money lenders in East Coast real estate investments
Your property’s financing options play a large role in your budgeting and cash flow.
Hard money loans from private lenders are approved based on the value of the property being used as collateral, rather than the borrower’s personal finances.
The benefits of hard money loans include:
- Rapid approval and funding
- Flexible loan terms and repayment schedules
- Financing for rehab projects
- Ability to build a partnership with your lender
Hard money loans are structured to fit an investor’s unique needs, which provides maximum flexibility for a range of real estate projects and goals.
Apply now with Park Place Finance
Park Place Finance has funded over $1 billion in loans nationwide since 2006.
We are your trusted hard money lender for your next investment property.
Start here by completing our brief online form, or give us a call at (866) 407-1599 to speak with a dedicated account executive.