The 8 Best Housing Markets in The US For Low Prices and High Cash Flow

Dave:
Hey, everybody. Welcome to On the Market. I’m your host, Dave Meyer, joined by Kathy Fettke, Henry Washington, James Dainard, recent again from BPCON 2023.
Henry, what was your favourite reminiscence of the convention this 12 months?

Henry:
Oh wow. My favourite reminiscence of the convention? Man, I had a whole lot of favourite recollections. I feel probably the greatest moments was getting to satisfy so many followers of On the Market. So I had a few items of suggestions. One, tons of individuals stated, “Hey, that is the present. That is the one I take heed to. That is the one that offers me the knowledge I want,” which is nice suggestions. And the opposite factor I heard a number of instances was that there’s lots of people in my camp about investing within the unsexy markets, as a lot crap as y’all give me about it. They have been like, “No, we’re with you. We get it. We like these unsexy markets. There’s cashflow on the market.” And I’m like, “That’s what I’m making an attempt to inform individuals.”

Dave:
Effectively, if individuals agree with that suggestions, they’re going to actually like this episode as a result of we’re going to be speaking a couple of bunch of unsexy markets immediately.
Kathy, what about you? Any favourite recollections from the convention?

Kathy:
Dave, your keynote was fabulous. You simply regarded like a professional up there and also you simplified sophisticated subjects and put them in little cartoons. It was an enormous comparability from final 12 months the place it was very heady and large graphs that nobody understood. So simply beloved it. Cherished it.

Dave:
James the emcee did an ideal job emceeing the convention. Do you’ve gotten any highlights?

James:
Effectively, I agree with Kathy. Your keynote speech was unimaginable. You completely killed it.

Dave:
Oh, thanks.

James:
But it surely was laborious to compete in opposition to the Velociraptor and Common Studios.

Dave:
Dude, I can’t consider nobody else stated that but.

Kathy:
That was superb.

James:
I used to be speaking about it, watching all people scream, be terrified. Finest journey I’ve ever been on. Once I heard BiggerPockets rented out Common Studios, I used to be like, okay, this will probably be type of cool. I assumed it was going to be like a mellow type of meetup group factor. Method higher. No strains. We acquired to tear the curler coaster. I don’t know if my voice was blown out from speaking within the hallways an excessive amount of or screaming on the Velociraptor, however both means, it took a full day for me to get well from BPCON.

Dave:
When you guys didn’t see this on Instagram or something, BiggerPockets, for the convention this 12 months, actually rented out all of Common Studios. So I suppose, most likely usually, 50,000 or 100 thousand individuals are there in a day, and we had 2,500 individuals. The entire place was open. There was bars in every single place. Free meals, free video games. It was a lot enjoyable. And the entire On the Market crew, we have been obsessive about rollercoasters and we have been simply lapping rollercoasters for 4 straight hours. It was extraordinarily enjoyable.
Effectively, if y’all didn’t hear, BiggerPockets Convention was superior this 12 months. Subsequent 12 months, they’re doing it in Cancun. It’s going to be at an all-inclusive resort, and yearly, they only hold getting higher, so extremely advocate it in case you haven’t been but. And when you have suggestions just like Henry’s the place you suppose that On the Market is the most effective actual property podcast, greatest BiggerPockets podcast, greatest something, we actually admire critiques. So in case you love this present, please give us a evaluation on both Spotify or Apple.
Now immediately, we’re going to get into a extremely, I feel, useful subject for lots of people. We’re going to be speaking a couple of boring previous technique, long-term rental property investing, and we’re going to determine eight totally different markets the place you’ll be able to nonetheless discover cashflow. In addition they have actually robust fundamentals like inhabitants development and being underneath the median dwelling value for the US proper now. And so these are markets that, truthfully, most traders can get into. So hopefully, this data will provide help to in case you’re kind of caught making an attempt to determine spend money on 2024. We have now some markets and methods which can be going to be just right for you.
Earlier than we get into this, all of those markets, the eight markets that we pulled, need to be underneath the median dwelling value in the US as a result of, no less than in case you agree with me and a whole lot of us on this present, affordability kind of reigns proper now. I wish to quiz you all about what you suppose the median dwelling value within the nation is true now, in accordance with HUDD, the Housing and City Improvement Division.
James, so what do you suppose the median dwelling value is within the US proper now?

James:
I feel, final time I checked, it was round $410,000. However that was just a few months in the past once I regarded, however $410k to $415, proper in there.

Dave:
Henry?

James:
$475,000.

Dave:
Kathy?

Kathy:
I’m simply going to go together with a clear $420k.

Dave:
Traditional California reply.

James:
Malibu life-style.

Dave:
Kathy, you gained although. It’s $430,000, in accordance with HUDD. And these estimates, simply so that you all know, they range a bit based mostly on the supply. So HUDD has one. Zillow has one. NAR has one other. However they’re all, from my statement, between about $400k and $440k proper now. And that’s up someplace between one and three% 12 months over 12 months. And so once we get into the eight markets we’re protecting immediately, all of them may have the median dwelling value, and I feel all of them are fairly properly underneath that mark, so that they’re comparatively inexpensive for individuals to get into.
We’re going to take a fast break, however then we’ll be again with our eight glorious markets for investing in 2024.
All proper, James, kick us off together with your first market. And once more, simply to remind everybody, these are markets that we predict work for many traders, even in a excessive rate of interest, considerably riskier setting like we’re in proper now, as a result of they’re extremely inexpensive, they’ve nice fundamentals, they usually supply cashflow. So, James, what’s your first one?

James:
All proper. So I’m excited to speak about this one as a result of I used to be simply there. I used to be on my conquest of the Carolinas and I used to be trying out North Carolina, South Carolina, all of the coastal communities. And my first market I wish to speak about is Myrtle Seaside, South Carolina. I used to be there with my daughter and my household. We had an absolute blast. She acquired henna tattoos, nice time. However extra importantly, it’s a really strong market to have a look at.
And what we’ve seen is we’ve seen a whole lot of these coastal neighborhood cities, the holiday cities, after the pandemic, individuals have simply been like, “Neglect it. I’m simply shifting to the place I wish to hang around and have enjoyable.” And that is a type of cities that folks have been shifting to. It’s a very, very robust investing market. The typical dwelling value is at $336k, so it’s beneath the median dwelling value. I really feel prefer it has development and it might simply get to the median dwelling value over the subsequent couple of years.
And the inhabitants is rising. It’s grown practically 4%, 3.87% 12 months over 12 months. And it’s that complete pandemic life-style. Persons are like, “I wish to dwell the place I need a trip, I feel,” and it’s rising. And I don’t blame them. After we have been there, the seashores have been superior. The climate was nice. It was excellent individuals watching on the strip, had fun. So I feel individuals have realized that they wish to dwell the place they wish to dwell and that’s why it’s rising a lot.
And so far as an investor goes, again to that 1% rule, everyone knows about that 1% protection rule and it’s been very laborious to realize the final couple of years with the pricing going up, after which rates of interest are serving to slightly bit. And it’s type of grew to become an outdated metrics, but it surely’s shut. It’s at 0.67%. It’s nearer than most market is to get you to that 1% rule. So it’s acquired excessive development. It’s acquired good earnings. And never solely that, it’s beneath the median dwelling value and it’s an ideal place to dwell. So based mostly on high quality residing, I feel it has so much additional development and we’re actually seeing this in these coastal neighborhood cities.

Dave:
Good. That’s an ideal one. I simply wish to present two factors of clarification for everybody. To begin with, inhabitants of development of 4% is insane. The nationwide common is about 1%, so 4 instances the nationwide common. And, James, I feel in your analysis, you stated that it was named the quickest rising metropolis over the past 12 months by US Information and World Report, so that’s clearly robust fundamentals.
Then I simply needed to comply with up on the 1% rule that James simply talked about. What he’s referring to, in case you haven’t heard, is one thing referred to as the hire to cost ratio. You divide one month of median hire by the median dwelling value for a given market, and what you get is normally someplace between 0.5% and 1.5%. And again in 2010, 2012, some traders got here up with this rule referred to as the 1% rule the place you needed to get it above 1%, which signified that you possibly can most likely get nice cashflow. Now everyone knows, it’s not 2010 anymore, and so discovering markets that common 1% on that hire value ratio is exceedingly uncommon. There are most likely lower than 10 in all the nation.
That doesn’t imply you can’t discover cashflow in these markets. You continue to can, as a result of we’re in a special sort of market setting. And I’ve truly finished some analysis into this, and when you have a hire to cost ratio of wherever from 0.6 to 0.7 or above, there’s normally money flowing properties in that metropolis. Now bear in mind, if I’m saying that the hire to cost ratio for that market is 0.6 to 0.7, that’s the common. So meaning there are offers worse than that, and there are offers higher than that in that market. And as an investor, it’s your job to go discover those which can be higher than the common one. So simply once we say a rental value ratio is 0.7%, go on the market and end up the 0.9% one as a result of that implies that they exist there. So I simply needed to go on that diatribe and clarify these issues.
However, Kathy, I feel you had one thing so as to add right here.

Kathy:
Oh, I simply wish to say I needed to rewrite my guide due to that 1% rule. Folks have been like, “I’m not going to purchase something as a result of I can’t get it.” However I wrote that in 2014, so I needed to revise it, got here out with a brand new one.
We are literally getting 1% in our fund, however that’s energetic. When you’re an energetic investor, you’ll be able to most likely nonetheless get it, which means you’re shopping for one thing that’s not very costly. You may enhance it and nonetheless get it means underneath market, however they’re robust rents. It’s simply not straightforward to do, particularly in case you’re investing from afar. That may be troublesome to do. Except you’re somebody like Henry, he’s most likely discovering that, but it surely’s most likely tougher.
Anyway, Myrtle Seaside, again to that. Love Myrtle Seaside. The southeast is my jam. That is so underpriced. Your complete southeast coastal market is so low cost. Discover me someplace in California the place the median value is $336,000 for a coastal property. It doesn’t exist. In order that’s why it’s rising so shortly. And the Carolinas particularly, they’re type of known as the boomerang states as a result of, a whole lot of instances, the northeastern people who find themselves simply finished with chilly climate they usually’re capable of retire or dwell remotely, they’ll go to Florida after which typically suppose, “Wow, it’s too sizzling and too humid,” and they also boomerang again a bit to the Carolinas the place it’s slightly bit much less sizzling and humid and nonetheless so inexpensive.
Darling city. I surfed there once I went to test it out. It’s nonetheless so inexpensive. Contemplating what we simply stated, that the median dwelling value within the US is larger than that, and you possibly can get coastal property in a extremely cute city, I imply, it’s nice. I don’t make investments there, however I might see the place that might be an ideal alternative.

James:
Yeah, and the seashores are superior. I do know we’re speaking about unsexy markets, however positively, seashores are stacked full of fine wanting individuals. I don’t understand how that works for investing, but it surely’s a bonus. It’s rising. Rents are up 33% over the past three years. I imply, it’s a rising city, it’s high quality residing, and it’s enjoyable to go to. So I positively will probably be again.

Dave:
I’ve at all times needed to go as a result of I’ve heard there’s nice golf there. And I’m not nice at golf, however I take pleasure in enjoying, so maybe-

James:
That’s not true. Dave stated he didn’t golf, and Dave crushed the ball all day lengthy. I used to be fortunate I used to be paired up.

Dave:
Very, very inconsistent. However James and I performed two different traders and we crushed them. In order that’s all that issues. We crushed them.
All proper, James, what’s your second market that you just’re bringing us immediately?

James:
So the second market is Tallahassee, Florida, which I’ve by no means been to. To be trustworthy, I don’t have a complete lot of want to go there until it’s for an FSU soccer sport. I feel that might be fairly enjoyable. But it surely’s a really inexpensive market in Florida, and as we all know, Florida has gotten very costly and it’s been laborious to get cashflow in a whole lot of these areas. Pricing’s means up in Florida. It’s laborious to make offers pencil, however there’s nonetheless a whole lot of good markets round, like Tampa, Tallahassee, you can spend money on.
And what I like about it’s the common dwelling value is $272,000, so it’s actually, actually inexpensive. And as these charges hold staying persistent and the cash looks like it’s going to be so much larger than we thought, a whole lot of us have been predicting that the charges have been going to be down center of subsequent 12 months, which may not occur. It’s an excellent market to be taking a look at as a result of the pricing is so beneath the median dwelling value and the standard of residing is actually good. So it has some runway, for my part.
The inhabitants development, not as robust as Myrtle Seaside, doesn’t have the identical pattern. It’s 0.72%, so it’s rising beneath the nationwide common. I don’t actually like that as a lot, but it surely does have regular development and the general funding. However I feel there’s different potential right here. The hire to cost is at 0.54, so it’s beneath Myrtle Seaside, half of the 1%. However like Dave stated, that’s the common and who needs to be common?

Henry:
Yeah.

James:
You could find worth in any market, however I do consider that this market has development potential as a result of it’s so inexpensive. The standard of residing’s good. They might rank the ninth very best quality of residing in Florida. And so individuals do wish to dwell there.
Along with, there’s a whole lot of school there. School cities are nice for regular hire earnings. And as school pricing and the price of school goes up, so will housing. They’re going to go up one and the identical. We’ve seen that in our Seattle market, we personal a whole lot of rooming homes. So I do like school cities. I like the standard of residing, and I feel it’s very reliable for an investor to be taking a look at.

Henry:
Yeah, I like this due to, I simply suppose school cities are nice funding areas, particularly when these school cities are surrounded by different main metropolitan areas. And so Tallahassee positively ticks these bins. Folks consider Florida State once they consider Tallahassee, however you’ve additionally acquired Florida A&M College and a bunch of different small universities which can be on the market. And so that you’ve acquired a big pupil inhabitants. Meaning the colleges are using a big proportion of the people who find themselves working there. And so housing, inexpensive housing is required.
And when you will get property in a school city, the common dwelling value retail is $270k. Meaning if I’m going in there and begin in search of offers, I’m going to be shopping for stuff for sub 100, simply over 100 thousand {dollars} for properties as a result of I wish to get actually good at discovering good offers. And so going out to a school city and shopping for a property for between 100 and 150 grand, and with the ability to get the hire you’re in search of as a result of school college students want a spot to dwell, man, that’s a dream.

Dave:
Figuring out what I learn about being a tenant in a school city has at all times scared me away from being a landlord in a school city.

Kathy:
Completely.

Dave:
However what you’re saying is smart.

James:
And I feel they rage at FSU. I heard they prefer to have an excellent time, so that you type of wish to get bulletproof rental specs. Simply be certain that it could possibly deal with the sturdiness.

Dave:
Yeah. I went to a fairly nerdy engineering college and we destroyed properties, so I can’t think about what it might be like at FSU.
All proper. Effectively, it seems like a really attention-grabbing market. Once more, yeah, so it seems like Myrtle Seaside has development potential and slightly bit extra cashflow. Tallahassee could also be decrease cashflow potential, nonetheless doable, however may need extra room to run as a result of it’s actually simply very inexpensive in a state that’s completely booming proper now.

James:
Yeah, I feel the fairness can develop so much faster, and that’s going to make an enormous distinction in your general return. And if you will get that fairness development, that can offset your cashflow that may be slightly underperforming.

Kathy:
100% in Myrtle Seaside for certain. However I feel additionally in Tallahassee, you would possibly have a look at short-term and midterm leases. We even have a school in my city, and what I’ve observed is that a whole lot of dad and mom wish to come and go to their youngsters. And so having a short-term rental, you’re nonetheless type of getting the good thing about having college students on the town, however you’ve gotten dad and mom residing within the rental if it’s a short-term. When you’ve acquired an enormous celebration home, Dave, such as you do in a ski space, properly, then your short-term rental may be a celebration home. But when it’s little, simply sufficient for the dad and mom, that may keep rented.

Dave:
All proper. Effectively, shifting to a different state that’s completely booming, Henry, what’s your first market?

Henry:
My first market is Jonesboro, Arkansas. So this can be a city perhaps not lots of people have heard of, however the numbers are type of ridiculous. So test it out. Common dwelling value of $188,000. So that you’re sub-200 on the common dwelling value. So now we’re speaking retail, which implies in case you’re in search of offers, you will get screaming offers. You’re speaking sub 100 thousand {dollars}, discovering good offers on the market. That’s loopy.
However inhabitants development is 1.29%, so individuals are shifting there. And that’s as a result of economic system. It’s an economic system that hosts a whole lot of manufacturing. In order that’s what’s a lot of the workforce is doing on the market. So that you’ve acquired Nestle, Unilever, Frito-Lay, Riceland Meals and a few others. However in addition to healthcare is huge on the market. So that you’ve acquired a few huge hospitals which can be additionally using a whole lot of the individuals on the market. And so that you’ve acquired inhabitants development. You’re not too removed from Memphis, and so that you’re not too removed from a serious metropolis. You’ve acquired unemployment at 2.9% and your hire to cost is 0.74. So there’s cashflow.
And if you consider it, I used to be wanting, the common hire for a two-bedroom or for a three-bedroom is simply over a thousand {dollars}. So if you will get a deal and get common rents, you then’re going to have the ability to cashflow, particularly in case you’re discovering a extremely whole lot on this market.
The opposite factor about Jonesboro is, the emptiness price is 6.7%, which implies most every part is getting rented. So it’s acquired all the precise stats. Positively, positively actually good numbers. I’m stunned, as a result of I’ve gotten leads for offers in Jonesboro and I’ve turned them down simply due to how far it’s proximity sensible to the place I dwell in Arkansas. And now, I’m considering I’d have to take a second have a look at a few of these leads I’m getting out in Jonesboro.

Dave:
Okay. So this isn’t northwest Arkansas. I’m wanting it up on a map proper now. That is northeast Arkansas.

Henry:
Northeast Arkansas, sure.

Dave:
Yeah. Okay. And as you talked about, closest main metropolis is Memphis. It’s truly fairly near Memphis, yeah, as you stated. So, Henry, do you hear about Jonesboro? Is it an enormous city? Yeah. Is it a spot it’s generally talked about in Arkansas?

Henry:
Yeah. Folks speak about it on a regular basis. I’ve simply averted it due to how far it’s from me. It’s about, I’d say a five-hour drive from the place I presently make investments. And so I similar to to have the ability to get to my properties, it’s only a private factor for me. However I imply, the market dynamics sound fairly good. Like I stated, I get leads on a regular basis coming by means of my web site from this space and I simply cross them on to traders I do know that make investments on the market, however I’d by no means regarded into it till this. That is cool.

Dave:
I imply, a market that’s underneath $200,000, so lower than half the median dwelling value. Inhabitants development is above the nationwide common. The unemployment price is beneath the nationwide common. It has actually good hire to cost ratio. I imply, these are fairly powerful to search out as of late. This one’s fairly good. Yeah.

Henry:
Fairly strong.

Kathy:
I’m offered.

James:
You recognize what additionally sounds good is the value of 100 grand. That’s our earnest cash verify to put in writing hundred offers. It’s like, Kathy, I feel we may be doing this incorrect. I’m like, I’m listening to this. I’m like, why not exit of state? However you bought to get exterior your consolation zone whenever you get to lengthy distance investing and you bought to arrange the precise methods. And it’s laborious whenever you’re, like Henry says, I’m a yard investor too, taking a look at these markets. However the math is saying that you must actually discover it. And it’s for traders to determine the methods that’s going to work. And in order these markets are getting an increasing number of inexpensive in comparison with what the opposite markets, it’s one thing I feel everybody must be taking a look at. Sure, it’s a must to arrange new methods, however these are nice metrics to get good cashflow.
And in addition, it means that you can make investments very low threat. If you’re shopping for properties at 100 grand they usually sit vacant for slightly bit, you’ll be able to abdomen that hit. However whenever you’re coping with costly stuff and costly metro proper now, you actually need to ensure you’re on it or that debt value, that emptiness value, all these items can compound. I positively suppose I have to get some operators in several states and simply begin partnering up. It’s 100 grand. That may be good. What’s your earnest cash quantity? Like $1,500 bucks. That’s superior.

Kathy:
Oh man. The grass is at all times greener, proper? We glance it, James, however do you make a whole lot of 1000’s of {dollars} on one transaction. And so they’re so horny.

Henry:
You’d need to do 10 offers.

James:
However you too can lose a a whole lot of 1000’s of {dollars} on one transaction.

Kathy:
That is positively my type of market. I really like that it’s type of off the radar, but it surely’s acquired all of the issues that you just want in an excellent purchase and maintain market. So yeah. Hey, Henry, James, you guys set one thing up there? I will probably be your purchaser.

Henry:
I acquired you.

James:
Ditto.

Henry:
I acquired you.

James:
Yeah.

Dave:
All proper. Effectively, Henry, you bought one other hearth marketplace for us subsequent?

Henry:
Yeah. This can be a market that I truly presently spend money on, Joplin, Missouri. So that is a couple of 50-minute drive from Northwest Arkansas the place I dwell, and I presently make investments there. I’ve seven doorways there now and I’ve one other 16 doorways underneath contract there now. So I’m rising my portfolio on this market.
And why I’m rising my portfolio on this market is due to these fairly robust market dynamics. So common dwelling value is simply over $200,000, at $205k, $206,000. It’s acquired inhabitants development of 1.1%. Now I do know it’s not the best inhabitants development on this listing, however for a small market in southwest Missouri, that’s fairly good. Low unemployment, 3% unemployment. And hire to cost is at 0.65. And I’m shopping for cashflow offers on this market left and proper. I simply closed on a home in Joplin two days in the past. I paid $67,000 for the home. I’m going to place $30,000 into it, and it will hire for over $1,500 a month. And it has an additional lot subsequent door that I’m going to both be capable of promote for about $15 to $20 grand, or I can construct a brand new development dwelling on as a result of so many builders are constructing properties on the market to infill, as a result of there’s not sufficient properties for the individuals who dwell and work in that Joplin market. And so I really like Joplin.
Another excuse I really like Joplin that you just’re not going to listen to about or see about in case you simply do the analysis by yourself is, as a result of it’s a couple of 50-minute drive from Northwest Arkansas, as Northwest Arkansas is increasing due to the entire huge firms out right here, lots of people are beginning to really feel like, hey, that is changing into slightly greater and busier than I like, and individuals are beginning to unfold out and go slightly additional out. And so, I feel that that’s driving among the inhabitants development within the markets like Joplin as properly. And so that you’ve acquired individuals shifting there, making an attempt to get away from the hustle and bustle of Northwest Arkansas, in case you may even say hustle and bustle in Northwest Arkansas in the identical sentence. So I actually, actually do like this market, and I’m rising and increasing on this market due to the strong dynamics.
So far as the economic system goes, that is one other manufacturing city, so there’s a number of totally different producers on the market. You’ve acquired Basic Mills on the market. But it surely’s a extremely, actually huge healthcare neighborhood. So many hospitals. There’s a St John’s. We’ve acquired Ozark Medical. There’s Mercy clinics. There’s tons of various healthcare on the market as properly. So it’s a extremely strong market with strong market dynamics that’s rising steadily, not tremendous quick, however rising steadily, and also you’re simply getting a whole lot of high quality tenants as a result of they’ve good jobs they usually can truly afford the rents available in the market.

Dave:
I had by no means heard of Joplin earlier than the present Barry on HBO, if anybody watch that. However I’ve lengthy appreciated the thought of discovering a tertiary metropolis exterior a important space that’s like 50 to 60 miles away. Once I was investing primarily in Denver, you noticed Longmont, which is a metropolis the place Colorado State College is, however nobody invested there, and Denver simply acquired so sizzling. To Henry’s level, individuals simply needed to maneuver someplace slightly quieter or perhaps someplace much more inexpensive. And these locations which can be kind of, they’re not like satellite tv for pc cities, but it surely’s good to be near a spot with an enormous airport, for instance, or be capable of go to an enormous metropolis inside an hour, hour and a half drive, however has extra of a small city really feel. So I’ve at all times simply kind of appreciated that strategy, and it seems like Joplin suits the invoice for that technique.

James:
And look how wired Henry is in the marketplace he spend money on. Discuss market analysis. He usually passionately loves the market. He is aware of every part about it. Quite a lot of instances, individuals are simply moving into and shopping for that factor as a result of they have been instructed in a guide or a podcast to do it. However Henry actually dug into the market, is aware of it just like the again of his hand, and that’s why he can develop is as a result of he is aware of it. He believes in it so he can make investments type of carefree. So kudos to you, Henry. I imply, you positively have this market down.

Henry:
Thanks, brother.

Dave:
All proper. Effectively I’m going subsequent and my first market is someplace I’ve by no means actually even been near, however it’s Tuscaloosa, Alabama, and the common dwelling value there’s $211,000, so lower than half our median dwelling value. Inhabitants development, 1.4%, so simply over the nationwide common. And simply as you’re saying, I feel any market that’s rising is fairly good, but it surely’s at all times good to be above the nationwide common. The unemployment price is at 2.4%. And the unemployment price is fairly low in every single place within the nation proper now, however 2.4% is about 30% decrease than the nationwide common, in order that’s nice. And the hire to cost ratio is great at 0.8%. So I feel that is actually robust fundamentals for Tuscaloosa.
Now, I regarded all this up as a result of I’ve by no means been right here, however it’s a small metropolis. It’s a school city, which we’ve simply been speaking about the advantages of. The College of Alabama is from there, so is Stillman School and Shelton State Group School, which contribute about $3 billion of financial impression to the world, which is about 25%. In order that’s actually attention-grabbing.
Usually, I at all times prefer to say, you wish to search for an economic system that’s properly diversified, however when you’ve gotten an economic system that perhaps, be happy to disagree with me, that’s based mostly on one thing actually strong like a school or public sector jobs which can be actually secure, I feel that may be a comparatively good basis for an economic system. So I actually like that tourism has actually been choosing up. In addition they have one of many greatest, or perhaps the most important Mercedes-Benz meeting plant within the nation. So there’s so much that’s most likely resulting in that actually excessive employment price. And that’s all I learn about Tuscaloosa. Have you ever guys, any of you ever been there?

Henry:
I’ve. I went to an Alabama-Arkansas soccer sport just a few years again.

Dave:
How superior was that?

Henry:
At Alabama. I imply, it’s a factor. The entire everyone seems to be there.

James:
So jealous.

Henry:
Every little thing else is closed. It’s solely the stuff on the school that’s open. It was only a tremendous intense setting.
However to type of piggyback in your level, when this represents about 25%, you stated, of the economic system there, I feel that that’s okay on this state of affairs as a result of College of Alabama just isn’t going wherever. These individuals would begin a warfare.

Dave:
Their followers are very passionate.

Henry:
If that college went wherever. It’s protected and sound there. However no, it was an ideal place. I loved it. It didn’t really feel that small to me. I used to be stunned to see it’s solely 100k individuals as a result of it felt a lot greater than that.

Dave:
Effectively, I feel a whole lot of instances, these school cities, they don’t depend college students as a result of they’re not full-time residents. I do know, Boulder for instance, Colorado, the place the College of Colorado is, says it’s like 100 thousand, after which when college students are there, it’s like 140,000. So it goes up by like 40%. I wager Alabama’s even greater than [inaudible 00:30:00]. But it surely makes you suppose, based mostly on what you’re saying, Henry, that along with pupil leases, short-term leases most likely do rather well if it’s that huge of a draw and individuals are coming for sports activities, amongst different issues. The college clearly has different attracts. I truly noticed that they only broke floor on a $50 million performing arts heart on the college. So there’s clearly a whole lot of points of interest within the space which may warrant various kinds of rental methods.

Henry:
Yeah. And I feel that’s an excellent name out too concerning the short-term leases as a result of one of many issues I like about my market, which is a school city as properly the place College of Arkansas is, is simply, there’s not a ton of inns. There’s just a few. There’s positively not a bunch of good ones. And so, whenever you’ve acquired soccer season and folks coming from throughout to come back to those soccer video games, they acquired to have a spot to remain. The resort promote out tremendous quick, and so these cities want Airbnbs as a result of their economic system relies on these individuals coming to go to.

Kathy:
That’s such an excellent level. That’s why I like these kind of off the radar markets since you don’t have builders flocking to them. They don’t even know they exist. So that you’re not seeing new inns and new properties, however whenever you’re seeing the type of development, inhabitants development that this space is seeing, yeah, it’s going to be good for short-term, medium time period, long run. It looks like, both means you go, you possibly can make it work on this market.

Dave:
Positively. Simply ensure you have a sufficiently big car parking zone for individuals to tailgate in at your short-term rental.

Henry:
I’m wondering how a lot of the common dwelling value Nick Saban’s home drives up that quantity.

Dave:
Add like three zeros to that quantity.

James:
I feel we have to discover the market and do a dwell podcast at a soccer sport. Like the school soccer set.

Henry:
Like school sport day?

Dave:
That may be so superior.

Henry:
We might put a type of college mascot hats on you when you-

James:
I’m 100% in.

Dave:
Effectively, my subsequent market does have a school in it. It’s the College of Wisconsin-Oshkosh. I don’t know if they’ve the identical degree soccer workforce as the opposite ones that we’ve been speaking about.

Henry:
I really feel such as you simply made that up.

Dave:
I truly didn’t. It’s an actual factor. However the subsequent market I’ve is Oshkosh, Wisconsin, which I’ve solely heard of as a result of, as a child, did you guys put on OshKosh overalls or OshKosh?

Henry:
Yeah. OshKosh B’gosh, yeah.

James:
It jogs my memory of Chucky.

Dave:
Sure, precisely. Sure.
So Oshkosh, I’ve realized, is a extremely attention-grabbing city. It truly was once referred to as the sawdust capital of the world as a result of it has probably the most sawmills, I suppose, on the earth. Not, but it surely did at one level. However actually, they really have actually robust fundamentals. So simply to undergo the stats, common dwelling value is $265,000. Inhabitants development at 0.9%. Unemployment price, 3.5%. And a hire to cost ratio of 0.6%. It’s a small metropolis of 67,000 individuals.
However I began taking a look at this as a result of, I don’t know in case you guys have seen this, however whenever you have a look at lists of locations with sizzling housing markets, even throughout this bizarre market we’re in, Wisconsin is among the locations that’s at all times up there. Clearly, you see a whole lot of locations within the southeast, however Wisconsin, constantly, for a 12 months or two now, has been up there.
And so I regarded into it. I actually simply Googled, “why is everybody shifting to Wisconsin?”, and discovered that there’s only a lot to love about it and actually ranks excessive when it comes to training, when it comes to healthcare and well being, one of many highest states for high quality of life and protected locations to dwell. And so evidently lots of people are shifting to Wisconsin, and I feel Oshkosh is getting swept up into that. So kind of in our idea of auxiliary cities close to huge cities, perhaps like close to Milwaukee or Madison, Oshkosh is close to these and in addition close to Inexperienced Bay, and so may be a type of secondary cities the place you will get cashflow now, however in a state that appears poised for development, given the current traits.
Wisconsin clearly is among the hottest cities in all the nation. Sheboygan, Inexperienced Bay, it’s close to all of these. So it’s type of sandwiched in there and will kind of profit from the tides which can be elevating all these ships, so to talk. It’s additionally on Lake Winnebago. It seems very lovely from the images I noticed. I actually don’t know any extra about it, but it surely appeared like an attention-grabbing market.

James:
I’m picturing a Lego city the place all people’s sporting Oshkosh, strolling round.

Henry:
Everyone seems to be a practice conductor.

James:
All people’s a practice conductor.

Dave:
Is that firm nonetheless in enterprise?

Henry:
Oh, they acquired to be.

Dave:
I wager it’s.

James:
It’s timeless, Dave. That doesn’t exit of fashion.

Dave:
Yeah. I hope not. Effectively, I might go test it out. I’ve been to Lake Geneva in Wisconsin. It was very lovely, so I’m certain it’s very nice up there.

Henry:
So there’s a whole lot of smaller cities in that Wisconsin, Illinois type of area which can be rising proper now the place you will get superb cashflow, locations like Racine, Wisconsin, which is smack in between Milwaukee and Chicago, which is ideal, as a result of as these cities unfold out and affordability will get worse there, you should purchase duplexes there for $150 grand in cashflow. It’s insane these markets.

Dave:
And on the lake, very nice.

Henry:
Nice dynamics on the market.

Dave:
All proper. Effectively, that became an commercial for all the state of Wisconsin, which we’ve barely been to, however on paper, it seems excellent.
All proper, Kathy, what about you? What’s your first market?

Kathy:
Effectively, I began to get slightly hair standing up on my arms or no matter once I noticed this one as a result of I don’t like investing in locations the place it’s actually depending on one economic system, particularly oil, as you understand, my heartbreak story shopping for in North Dakota. So Odessa, Texas, it’s within the Permian Basin. There’s a whole lot of oil there, in order that’s good. There’s a few employers there you would possibly’ve heard of. Halliburton, Schlumberger, these are large oil firms there.
The typical dwelling value is $212,000, in order that’s far beneath the common. Inhabitants development, not so spectacular, 0.64%. Unemployment price, 3.8%. Although I checked out different websites and a few stated it’s not, it’s a lot larger than that. So once more, it’s laborious to get the precise data. Zumper stated that rents elevated 17% 12 months over 12 months, perhaps in sure areas. That’s the factor about these oil cities is it’s actually risky. And proper now, I don’t even know the place costs are in oil, it simply goes up and down.
However I do know the Permian Basin is doing higher than North Dakota. However right here’s proper off the bat why I might not personally make investments on this space. 114,000 individuals. In the entire Permian Basin, it’s 500,000. I prefer to be in bigger markets. I prefer to have a bigger rental pool. So to me, it’s simply too small of a market, too depending on one economic system that’s an economic system that’s manipulated by not America. Effectively, additionally America, relying on politics, it’s manipulated. However then oil business is manipulated typically. So I don’t prefer it. I wouldn’t make investments there.
With that stated, I wager individuals are making a ton of cash investing on this city. So similar to you stated earlier, if you understand your city and you understand the place to purchase and you understand the place the roles are there to remain, you’re going to do exactly high-quality. And the value level’s proper.

Dave:
Simply to make clear, the best way that we got here up with this listing is, we got here up with standards, which is underneath the median dwelling value, inhabitants development, an excellent RTP above the nationwide common, unemployment price beneath the nationwide common. And so what occurred was, our analysts at BiggerPockets pulled that information and we have been every assigned to have a look at one. So Kathy is presenting this, however that doesn’t imply she is endorsing it, simply to make clear.

Kathy:
And like I stated, you possibly can make cash in any market, so that you don’t have to fret a lot about being in the precise market if you know the way to purchase the precise actual property. I do know there’s locals on this market who’re killing it as a result of they know.

Henry:
You understand how I do know Kathy’s not into this market. As a result of she’s saying it incorrect. As a result of in case you’re into it, it’s not oil. It’s ole. There’s an ole.

Kathy:
That’s proper.

Henry:
There’s a ole city. There’s ole cash on the market.

Kathy:
Yeah.

Dave:
Does that imply you’ve bid down there, Henry?

Henry:
No. It simply means I dwell within the south.

James:
However that’s one thing to search for is the vitality. We’re seeing a whole lot of totally different world issues happening proper now. There’s world conflicts. There’s provide chain points. Quite a lot of these main nations, we’re not getting together with a whole lot of main nations that do provide a whole lot of oil. And the US would possibly want to begin producing extra vitality. And there could possibly be some runway in these oil cities, ole cities. There we go.

Kathy:
Are you saying I ought to maintain onto my land in North Dakota for the day that sometime we determine that we would have to have some oil right here?

Henry:
Do you’ve gotten minimal rights?

James:
Simply dangle on.

Kathy:
Okay. Since you stated so.

Henry:
You’d be just like the Malibu hillbillies.

Dave:
All proper. Kathy, was your second market we assigned you slightly bit extra inspiring to you?

Kathy:
Sure. The second market is extra diversified. It’s an excellent, for my part, secure cashflow market. Oklahoma Metropolis, Oklahoma. This can be a market the place, in case you simply need cashflow and no surprises and never a risky market, it’s going to be right here. I do know lots of people who’ve invested in Oklahoma Metropolis and have been blissful they did.
Inhabitants development is simply so, so, 0.94%, so about common. Common dwelling value, $228,000, that’s means beneath what we noticed within the median and you’ll most likely make the numbers work there. Unemployment price, 3.2%. And the hire to cost ratio, about 0.6. However once more, in case you purchase proper, you are able to do higher than that. Lease development sadly has not been too spectacular in Oklahoma Metropolis this previous month, down 0.3%. However 12 months over 12 months, up 0.3%, so flat. Let’s simply name it flat.
However which may be as a result of, in 2022, hire development was large, one of the and highest within the nation truly, 24%. So one thing occurred there, I might name it a pandemic. So rents went up massively. However meaning you can’t have a look at the previous. You bought to have a look at what’s subsequent. And with rents going up that a lot so quick, it might keep flat for a bit in order that wages can catch up.
However one of many points is lack of housing and lack of inexpensive housing that we’re seeing in every single place. So if you’re all in favour of extra Part 8 housing, apparently there are 30,000 individuals on the wait listing for Part 8 housing in Oklahoma Metropolis. And that may be an ideal funding, regular earnings from the federal government. 330,000 new jobs created over the previous decade. So provide is low, however demand is excessive, which is why 40% of residents say they a lot reasonably hire than personal as a result of proudly owning simply doesn’t make sense for them proper now. So a robust rental market, very diversified.
Now, I prefer to be in markets the place there’s going to be a growth of some form. I don’t need a growth market depending on one factor, however I do need one thing that’s going to make it growth. And one thing which may make that occur and may be very thrilling, and one of many the explanation why our new rental fund is in Oklahoma is the governor is pushing to get the state earnings tax to zero, like Texas, to compete with Texas. If that occurs, I actually suppose we’re going to see fairly a growth.

Dave:
Attention-grabbing.

Henry:
Yep. So I really like Oklahoma Metropolis. It’s one other sleeper market as a result of it’s a main metropolis, however you’ll be able to nonetheless get smaller metropolis economics there, smaller metropolis numbers there. Additionally, there’s a little little bit of a tech growth occurring in Oklahoma Metropolis. A number of tech firms are opening places of work there, and so there’s a number of tech jobs which herald youthful workers. And in order that creates development over time. They did lose lots of people to the Texas or Dallas space throughout the pandemic. Lots of people moved over to Texas, and which may be what’s pushing a few of this. We’re making an attempt to get to the zero earnings tax like Texas there. But it surely’s additionally, not solely know-how jobs, but it surely’s the house workplace for Sonic the quick meals restaurant.

Dave:
Good.

Henry:
So a number of good things occurring there.

Dave:
I’ve by no means been to Sonic in my complete life and it’s one in all my greatest regrets.

Henry:
Oh, the meals isn’t value it, however the drinks are nice.

Dave:
The commercials of these two guys-

Henry:
They’re hilarious.

Dave:
Seared into my mind for the remainder of my life, telling me to go to Sonic. Yeah, I’ve recognized a few individuals who spend money on Oklahoma Metropolis and really among the cities round it, and it simply looks like a wonderful place. There’s simply not a whole lot of draw back or threat that I see. It simply looks like fairly robust fundamentals in every single place.

Kathy:
Simply tornadoes could be the chance and you’ve got insurance coverage for that.

Dave:
Simply tornadoes.

Kathy:
Simply tornadoes.

Dave:
One thing by no means having lived within the Midwest or the South have ever considered. However yeah.

Henry:
It’s about an hour and a half west of Tulsa, which is one other first rate marketplace for cashflow. After which about three hours from right here in Northwest Arkansas. So I imply, I prefer it.

Dave:
Cool. All proper. Effectively these are our eight markets. And once more, what we’re speaking about right here is markets the place, even throughout a complicated market, the place some markets are going to do properly, some markets aren’t going to do as properly, we predict these eight markets supply robust potential, there are not any ensures, however robust potential to do properly over the subsequent 12 months, whilst affordability is low and there are some questions on what’s going to occur over the approaching 12 months.
And as we talked about so much on the BiggerPockets Convention, in case you’re going to be an investor, it’s okay to vary ways. It’s anticipated to vary ways based mostly on what’s happening within the economic system. However no less than for, I do know the 4 of us and for lots of the individuals I talked to there, what individuals are not planning on doing is to simply cease investing altogether. It’s to attempt to determine, like Kathy stated earlier, what’s working on this market and adjusting your technique accordingly. So we hope that that is actually useful for you. We’d love to listen to from you within the feedback or critiques. When you spend money on any of those markets, inform us slightly bit extra about them. Clearly, in case you’re listening on YouTube, you’ll be able to put these feedback in there as properly.

Henry:
Particularly OshKosh, is that also a factor? Can we nonetheless get overalls?

Dave:
Sure. Subsequent episode, we’re all going to be sporting OshKosh B’Gosh overalls and going to Oshkosh.

Kathy:
Actually? Okay.

James:
I imply, the Minions nonetheless put on it. The Minions nonetheless rock Oshkosh. We love Minions.

Dave:
All proper. Effectively, thanks all a lot for listening. We actually admire it, and we’ll see you for the subsequent episode of On The Market.
On The Market was created by me, Dave Meyer, and Kailyn Bennett. The present is produced by Kailyn Bennett, with modifying by Exodus Media. Copywriting is by Calico Content material, and we wish to prolong an enormous thanks to everybody at BiggerPockets for making this present doable.