Top 5 Real Estate Investment Markets in Virginia

Affectionately known as the Mother of States, Virginia has deep roots in American culture. It was one of the original 13 colonies, is home to Colonial Williamsburg and the Jamestown Settlement, and has been an influential economic presence in the American economy for generations.

With the seller's market of recent years finally cooling off, it may be a good time to take advantage of this historic state and consider buying investment property in Virginia.

Virginia real estate market overview

Virginia has more than 8.5 million residents and has been gradually growing for decades. For a medium-sized state, it offers a surprising amount of diversity, both culturally and geographically.

There are over 100 institutions of higher learning in Virginia, and the U.S. News and World Report ranks it as the 12th best public school system in the country.

As a coastal state, Virginia offers great opportunities to enjoy nature at its scenic beaches, national parks, and mountain ranges. It also contains multiple famous wineries and historic sites.

» MORE: 8 Steps to Buying a House in Virginia

Economically, Virginia continues to be strong, with an unemployment rate of only 2.6%[1] and a projected job growth rate of over 10% between now and 2026.[2]

Overall, Virginia will be a good state to invest in real estate for the foreseeable future.

What are the 5 best markets in Virginia to invest in real estate?

Deciding which market is best to invest in depends on what your goals are. What makes a successful vacation rental is not necessarily the same as a good buy-and-hold home.

Some investors focus on appreciation to avoid paying capital gains every year, whereas others like the steady stream of income that comes with solid cashflow properties. We've identified some of the best investment markets for multiple strategies below, but you can also use our rental property calculator to evaluate individual properties.

To find the best real estate investment market in Virginia, we compiled data across the state. We evaluated the increase in property values, affordability relative to average incomes, and profitability based on the average rents versus the cost to buy a house. The markets below scored some of the highest totals in the state when considering all three of these metrics. Learn more about our methodology.

Lynchburg: Best overall

Located in the heart of Virginia, just east of the Blue Ridge Mountains, Lynchburg checks all the boxes of a profitable real estate market: it's affordable, appreciating, and a desirable place to live.

With a population of just over 80,000, Lynchburg isn't quite a big city, but it isn't tiny either. It's a Goldilocks market with a robust economy and a comfortable standard of living.

At $256,000, the median home value in Lynchburg is just a little below the state average, making it affordable to invest in without sacrificing quality of life for your tenants.

Lynchburg has five universities and some of the best public schools in the state. The consistent pool of incoming students means there will always be a demand for safe, affordable housing.

With its healthy rate of appreciation, balanced economy, and growing population, Lynchburg should be one of the best places to buy rental property in Virginia for years to come.

Need more help getting started with investing? Check out our real estate investing guide for beginners!

Richmond: Best value

As the state capital, Richmond is firmly established as one of the hottest real estate markets in Virginia. Its population of 229,000 makes it one of the largest cities in the state, and the total population of the Richmond metro area is closer to one million.

The good news for investors? Rents are expected to increase more than 15% in local markets during 2022 alone. Richmond is also affordable for your tenants, with a cost of living that is 4% below the national average and 6% below the state average.

Between the government offices, Virginia Museum of Fine Arts, 10 institutions of higher learning, and the HCA Virginia Health System, Richmond offers a diverse economy with many opportunities for jobs across all major employment sectors.

Also, almost a third of Richmond's residents are millennials. Since they are more likely to rent than own, there will continue to be a healthy demand for rentals moving forward.

Charlottesville: Best for cashflow

Known as a gateway to Shenandoah National Park, Charlottesville is a smaller city of 47,000 people in the north of Virginia.

Although the median home price is higher than the state average, Charlottesville remains at the top of the pack for rent-to-mortgage ratios in the state. The reason for that is simple: lots of people want to live there and are willing to pay good money to do so.

With an appreciation rate of 12%, Charlottesville isn't a market to buy in if you're hoping to sell within a few years and make enough to retire. But, if you want a quality rental — or a whole portfolio of them — that will hold its value and give you a reliable income, this is the market for you.

Unfortunately, the flip side to Charlottesville is the price point. If this market interests you, you'll need to have deep pockets or be willing to spend time and money on a fixer upper.

Blacksburg: Best for student housing

One of the best real estate markets to invest in student housing in Virginia is Blacksburg.

At just over 44,000 residents — plus more than 30,000 students at Virginia Tech — it's easy to see why this is a college town. The university dominates the area economically and culturally and is the primary reason people visit.

The median cost of a home in Blacksburg is just under the state average, and the appreciation rate is a respectable 11.5%, but it's not an exploding market. As such, investors here should be looking for solid returns through rental income rather than appreciation.

The rent-to-mortgage ratio is pretty good at 70% — that is, median rents are around 70% of the median mortgage cost. This ratio means cheaper homes tend to get better cash flow.

This area has affordable real estate with reasonable appreciation, but the best returns are likely to come from renting cheaper-than-average homes to the thousands of students looking for medium-term housing.

Bristol: Hidden gem

Bristol may not be on many people's radar as a great real estate market in Virginia because half of it isn't actually in Virginia. Bristol straddles the state line between Tennessee and Virginia.

Nevertheless, Bristol maintains a solid market for real estate investors looking to get away from the coastal market and find some good value at a great price. There's only 17,000 residents on the Virginia side of the border, but another 27,000 people are just across the street.

Bristol also shows solid signs of growth, with year-over-year appreciation of over 16%. The average rent is only about 17% of the median household income, so there shouldn't be too much difficulty finding tenants who are capable and qualified to rent from you.

The low price point for a home in Bristol makes it an attractive market for new investors. Add in the relatively small size and lack of attention this market receives, and you're likely to find great properties with much less competition.

How to find undervalued properties in Virginia

Whether you're buying a condo in Lynchburg, a duplex in Richmond, or a single-family ranch in Charlottesville, buying the property at a good price is key to maximizing returns on your investment. Below are some suggestions for ways to find better deals and get the most out of your investments.

1. Use investment software

As an investor, it's important to use every tool in your arsenal to get the best deals. You also need a consistent strategy for locating great deals if you intend to buy more than one house — which most investors do.

Using software like DealMachine can help you get an edge over the average homebuyer.

DealMachine's real estate software helps Virginia investors find and research distressed homes, and get in touch with owners fast via batch skip tracing and direct mail campaigns.

Download the DealMachine app for a 7-day free trial and a $15 credit for marketing costs.

Other technology that could be useful to real estate investors includes:

• Flipperforce: The Flipperforce app helps BRRRR method investors analyze home values to calculate the maximum purchase price to offer on a property before making a purchase.
• Stessa: Stessa's software allows you to easily track the performance and financial status of all your properties in one easy-to-use app. It provides regular reports on how profitable your properties are and can be linked to your financial accounts for automatic updates.
• Neighborhood Scout: This website is one of the leading market analysis tools in the nation, providing in-depth analysis of crime statistics, employment data, and appreciation rates at the neighborhood level.

2. Invest in foreclosures, auctions, and off-market properties

Appreciation is a double-edged sword for investors. Rising home values are great if you're already holding investments, but if you're looking to buy, it can be hard to find an affordable property.

That's why it's often a good idea to think outside the box when looking for great investment properties. Consider foreclosures, auctions, and off-market properties as areas for hidden opportunities. The best way to get deals is to look where others don't.

If you don't have the skills or time to repair a distressed home, HomeAdvisor can connect you with top local contractors to do the work in a timely manner at a fair price.

3. Partner with an investor-friendly agent

Working with a top agent who is an expert in the local market is a tried-and-true way to consistently find good deals and negotiate like a pro — because that's what they are.

Besides understanding local trends in real estate and knowing which areas to target and avoid, great agents also know how to locate deals before other buyers get to them. They can also alert you to laws and regulations that may impact your decision on which properties to invest in.

Working with a Clever agent means you'll have a top, local professional on your side, and you may also be eligible for cash back on your purchase after closing!

Methodology

Using data from the U.S. Census Bureau and Zillow, we've compiled median home values, average household incomes, median homeownership cost, and median rents to evaluate the real estate market trends for cities all over the nation. We then scored each city on appreciation, rent-to-income ratio, and rent-to-mortgage ratio to determine which cities were most profitable and affordable for real estate investors.

The cities with the highest total scores were then evaluated on less quantifiable information like economic diversity, quality of life, and desirability of destination to determine the top five markets in each state. We broke these markets down into five distinct categories to account for the various goals and approaches to real estate investment our readers may identify with.

Frequently asked questions

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