How to Choose the Best City to Invest in Even if You Have Never Been There

One of the most powerful strategies in real estate investing is learning how to invest in markets outside your local area. Whether you’re facing high prices in your hometown or looking for stronger cash flow elsewhere, expanding your search to new cities can unlock opportunities you’d never find in your own backyard.

But here’s the challenge: How do you evaluate a city you’ve never even visited?

It’s possible—and thousands of investors successfully build portfolios in unfamiliar markets every year. The key is understanding how to analyze a market using data, local insights, and a systematic process—not gut feelings or hearsay.

Here’s an in-depth guide on how smart investors pick a new city to invest in, even from a distance.

Before analyzing any market, it’s critical to get clear on your investment goals. A city that works for one strategy may not fit another.

Ask yourself:

  • Am I looking for cash flow (steady monthly income) or appreciation potential (long-term growth)?

  • What kind of properties am I focused on? Single-family homes, small multifamily, short-term rentals?

  • What level of risk tolerance do I have for market shifts or tenant turnover?

For example:

  • Cash flow investors may focus on stable, mid-size cities with strong rental demand but moderate appreciation (think Kansas City, Indianapolis, Birmingham).

  • Appreciation-focused investors may lean toward emerging markets with strong population growth and economic expansion (like parts of the Sunbelt).

  • Short-term rental investors might look at areas with high tourism, lenient regulations, and strong seasonal demand (like parts of Florida, Tennessee, or Arizona).

Your strategy will shape the data you prioritize.

Once you know your strategy, start analyzing macro-level data to identify promising cities. Here are the core metrics to review:

  • Look for consistent population growth over 5–10 years.

  • Evaluate the age distribution—younger populations may indicate strong rental demand, while older populations may align with different property types (e.g., retirement communities).

  • Data sources: U.S. Census Bureau, City-Data, local government websites.

  • Look for cities with diverse employment sectors—not just one major employer.

  • Check unemployment rates, median household incomes, and recent economic development projects.

  • Are new employers moving in? Are there major infrastructure projects underway?

  • Data sources: Bureau of Labor Statistics, local chambers of commerce, economic development councils.

  • Analyze vacancy rates—low vacancies indicate strong rental demand.

  • Review building permits—too much new construction can oversaturate a market.

  • Consider home price trends—steady, moderate appreciation is healthier than volatile spikes.

  • Data sources: Redfin Data Center, Census Building Permits Survey, Realtor.com Market Trends.

  • For cash flow, aim for 0.8–1% rent-to-price ratios (monthly rent divided by property price).

  • For example, a $200,000 property that rents for $1,800 per month has a 0.9% rent-to-price ratio.

  • Research state and city-level landlord-tenant laws.

  • Is the area rent-controlled or friendly to evictions and lease enforcement?

  • Data sources: Legal guides, real estate attorney consultations, BiggerPockets forums.

Once you’ve narrowed down a city, dive into the micro-level data—because neighborhoods make or break your deal.

Key factors to consider:

  • Crime rates: Look for areas with declining or stable crime rates.

  • School districts: Strong schools often attract stable, long-term tenants.

  • Amenities: Proximity to parks, shopping centers, and public transportation can boost rental demand.

  • Walkability and public services: Check walk scores, public transit access, and infrastructure.

  • Zoning and development trends: Are there new projects nearby that could impact property values?

Tools to use:

  • NeighborhoodScout

  • CrimeGrade.org

  • Google Maps (Street View and satellite)

  • Local city planning websites

  • Facebook neighborhood groups

A market is only as good as the team you have on the ground. Once you’ve identified a city, start interviewing:

  • Investor-friendly real estate agents who know the rental market and local investor trends.

  • Property managers who can tell you where demand is strongest and what rents realistically are.

  • Contractors and handymen who can assess properties and provide repair estimates.

  • Lenders who know the market’s nuances and lending requirements.

  • Insurance brokers who understand local risks (like flood zones or weather-specific issues).

Test their responsiveness, knowledge, and willingness to educate you as an out-of-area investor.

Once you’ve identified a city, a neighborhood, and a potential property, it’s time to run detailed financial projections.

Key factors to include:

  • Conservative rent estimates (based on verified comps, not listings alone)

  • Vacancy rate assumptions (5–8% for most markets)

  • Realistic expense estimates:

    • Property taxes (check county assessor websites)

    • Insurance premiums (get quotes)

    • Property management fees (typically 8–10% of rent)

    • Maintenance and CapEx reserves (5–10% of rent)

  • Financing terms (realistic interest rates and down payments)

Stress-test the deal by lowering projected rents by 5–10% and increasing expenses by the same amount. If it still cash flows, you’ve got a solid deal.

While visiting a market before investing is ideal, it’s not always necessary. Many investors successfully buy sight unseen by:

  • Relying on trusted boots-on-the-ground partners for property walkthroughs and due diligence.

  • Using video tours, detailed photos, and third-party inspections.

  • Building a system that minimizes emotion and maximizes data-driven decisions.

If you do visit, make the most of it—drive neighborhoods, meet your team in person, and verify your research with what you see.

Final Thoughts: The Process Over the Place

The truth is, you don’t need to physically live in a market or even visit it to invest successfully. What you need is a structured and repeatable process for evaluating cities, neighborhoods, teams, and deals.

Investing remotely is not about guessing or gambling. It’s about making informed decisions based on data, building strong local relationships, and sticking to your numbers.

Markets change, but smart systems and disciplined investors succeed anywhere.

Stephen Husted