\n<\/p>\n
We\u2019re about to show you the eight <\/strong>best housing markets<\/strong><\/a> you\u2019ve never heard <\/strong>of before. If you want boring, unsexy markets that give you mailbox money every month<\/strong>, have growing populations, cheap homes<\/a>, and strong economies, bring your notepad because you probably haven\u2019t thought of any of these markets before. We sent our On the Market<\/em> researchers on a quest to find the country\u2019s most boring, underrated, yet promising rental property markets<\/strong>\u2014and we\u2019re sharing the list with you today.<\/p>\n From college football towns <\/strong>to underrated beach cities<\/strong> and strong manufacturing centers<\/strong>, almost all these cities have cash-flowing real estate where you can find steals and deals easier than already-tapped markets like Miami, D.C., or Denver. Some of these markets are on the smaller side. Still, with housing affordability<\/strong><\/a> tanking<\/strong>, these cheaper states<\/strong> could see a massive influx in population<\/strong> as coastal workers seek financially stable inland cities.<\/p>\n So, if you\u2019ve been saving up to buy your next deal but can\u2019t find anything worth investing in around your area, check out ANY of these eight markets because if you don\u2019t buy in them, we will<\/strong> (and Henry already has)!<\/p>\n Dave: Henry: Dave: Kathy: Dave: James: Dave: James: Dave: Kathy: James: Dave: James: Dave: James: Dave: Kathy: Dave: James: Dave: James: Dave: Kathy: James: Dave: James: Dave: James: Henry: James: Henry: Dave: Kathy: Dave: James: Dave: James: Kathy: Dave: Henry: Dave: Henry: Dave: Henry: Dave: Henry: Kathy: James: Kathy: Henry: James: Kathy: Henry: James: Henry: James: Dave: Henry: Dave: James: Henry: Dave: Henry: Dave: Henry: James: Henry: Dave: Henry: Dave: Henry: Kathy: Dave: Henry: Dave: James: Henry: Dave: Henry: James: Dave: Henry: Dave: Henry: James: Dave: James: Henry: James: Dave: Henry: Dave: James: Dave: Henry: Dave: Henry: Dave: Kathy: Dave: Kathy: Henry: Kathy: Henry: Kathy: Dave: Henry: James: Kathy: Henry: James: Kathy: Henry: Dave: Kathy: Dave: Henry: Dave: Henry: Dave: Henry: Dave: Henry: Dave: Kathy: Dave: Kathy: Dave: Henry: Dave: Henry: Dave: Kathy: James: Dave: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Email <\/em>[email\u00a0protected]<\/span><\/em><\/a>.<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
Hey, everyone. Welcome to On the Market. I\u2019m your host, Dave Meyer, joined by Kathy Fettke, Henry Washington, James Dainard, fresh back from BPCON 2023.
Henry, what was your favorite memory of the conference this year?<\/p>\n
Oh wow. My favorite memory of the conference? Man, I had a lot of favorite memories. I think one of the best moments was getting to meet so many fans of On the Market. So I had a couple of pieces of feedback. One, tons of people said, \u201cHey, this is the show. This is the one I listen to. This is the one that gives me the information I need,\u201d which is great feedback. And the other thing I heard multiple times was that there\u2019s a lot of people in my camp about investing in the unsexy markets, as much crap as y\u2019all give me about it. They were like, \u201cNo, we\u2019re with you. We get it. We like these unsexy markets. There\u2019s cashflow out there.\u201d And I\u2019m like, \u201cThat\u2019s what I\u2019m trying to tell people.\u201d<\/p>\n
Well, if people agree with that feedback, they\u2019re going to really like this episode because we\u2019re going to be talking about a bunch of unsexy markets today.
Kathy, what about you? Any favorite memories from the conference?<\/p>\n
Dave, your keynote was fabulous. You just looked like a pro up there and you simplified complicated topics and put them in little cartoons. It was a big comparison from last year where it was very heady and big graphs that no one understood. So just loved it. Loved it.<\/p>\n
James the emcee did a great job emceeing the conference. Do you have any highlights?<\/p>\n
Well, I agree with Kathy. Your keynote speech was incredible. You absolutely killed it.<\/p>\n
Oh, thank you.<\/p>\n
But it was hard to compete against the Velociraptor and Universal Studios.<\/p>\n
Dude, I can\u2019t believe no one else said that yet.<\/p>\n
That was amazing.<\/p>\n
I was talking about it, watching everybody scream, be terrified. Best ride I\u2019ve ever been on. When I heard BiggerPockets rented out Universal Studios, I was like, okay, this will be kind of cool. I thought it was going to be like a mellow kind of meetup group thing. Way better. No lines. We got to rip the roller coaster. I don\u2019t know if my voice was blown out from talking in the hallways too much or screaming on the Velociraptor, but either way, it took a full day for me to recover from BPCON.<\/p>\n
If you guys didn\u2019t see this on Instagram or anything, BiggerPockets, for the conference this year, literally rented out all of Universal Studios. So I guess, probably normally, 50,000 or a hundred thousand people are there in a day, and we had 2,500 people. The whole place was open. There was bars everywhere. Free food, free games. It was so much fun. And the whole On the Market crew, we were obsessed with rollercoasters and we were just lapping rollercoasters for four straight hours. It was extremely fun.
Well, if y\u2019all didn\u2019t hear, BiggerPockets Conference was awesome this year. Next year, they\u2019re doing it in Cancun. It\u2019s going to be at an all-inclusive resort, and every year, they just keep getting better, so highly recommend it if you haven\u2019t been yet. And if you have feedback similar to Henry\u2019s where you think that On the Market is the best real estate podcast, best BiggerPockets podcast, best anything, we really appreciate reviews. So if you love this show, please give us a review on either Spotify or Apple.
Now today, we are going to get into a really, I think, helpful topic for a lot of people. We\u2019re going to be talking about a boring old strategy, long-term rental property investing, and we\u2019re going to identify eight different markets where you can still find cashflow. They also have really strong fundamentals like population growth and being under the median home price for the United States right now. And so these are markets that, honestly, most investors can get into. So hopefully, this information will help you if you\u2019re sort of stuck trying to figure out how to invest in 2024. We have some markets and strategies that are going to work for you.
Before we get into this, all of these markets, the eight markets that we pulled, have to be under the median home price in the United States because, at least if you agree with me and a lot of us on this show, affordability sort of reigns right now. I want to quiz you all about what you think the median home price in the country is right now, according to HUDD, the Housing and Urban Development Department.
James, so what do you think the median home price is in the US right now?<\/p>\n
I think, last time I checked, it was around $410,000. But that was a few months ago when I looked, but $410k to $415, right in there.<\/p>\n
Henry?<\/p>\n
$475,000.<\/p>\n
Kathy?<\/p>\n
I\u2019m just going to go with a clean $420k.<\/p>\n
Classic California answer.<\/p>\n
Malibu lifestyle.<\/p>\n
Kathy, you won though. It is $430,000, according to HUDD. And these estimates, just so you all know, they vary a bit based on the source. So HUDD has one. Zillow has one. NAR has another. But they\u2019re all, from my observation, between about $400k and $440k right now. And that is up somewhere between one and 3% year over year. And so when we get into the eight markets we\u2019re covering today, all of them will have the median home price, and I think all of them are pretty well under that mark, so they\u2019re relatively affordable for people to get into.
We are going to take a quick break, but then we\u2019ll be back with our eight excellent markets for investing in 2024.
All right, James, kick us off with your first market. And again, just to remind everyone, these are markets that we think work for most investors, even in a high interest rate, somewhat riskier environment like we\u2019re in right now, because they are highly affordable, they have great fundamentals, and they offer cashflow. So, James, what\u2019s your first one?<\/p>\n
All right. So I\u2019m excited to talk about this one because I was just there. I was on my conquest of the Carolinas and I was checking out North Carolina, South Carolina, all the coastal communities. And my first market I want to talk about is Myrtle Beach, South Carolina. I was there with my daughter and my family. We had an absolute blast. She got henna tattoos, great time. But more importantly, it\u2019s a very solid market to look at.
And what we\u2019ve seen is we\u2019ve seen a lot of these coastal community towns, the vacation towns, after the pandemic, people have just been like, \u201cForget it. I\u2019m just moving to where I want to hang out and have fun.\u201d And this is one of those towns that people have been moving to. It is a very, very strong investing market. The average home price is at $336k, so it\u2019s below the median home price. I feel like it has growth and it could easily get to the median home price over the next couple of years.
And the population is growing. It is grown nearly 4%, 3.87% year over year. And it is that whole pandemic lifestyle. People are like, \u201cI want to live where I want a vacation, I think,\u201d and it is growing. And I don\u2019t blame them. When we were there, the beaches were awesome. The weather was great. It was very good people watching on the strip, had a good time. So I think people have learned that they want to live where they want to live and that\u2019s why it\u2019s growing so much.
And as far as an investor goes, back to that 1% rule, we all know about that 1% coverage rule and it\u2019s been very hard to achieve the last couple of years with the pricing going up, and then interest rates are helping a little bit. And it\u2019s kind of became an outdated metrics, but it\u2019s close. It\u2019s at 0.67%. It\u2019s closer than most market is to get you to that 1% rule. So it\u2019s got high growth. It\u2019s got good income. And not only that, it\u2019s below the median home price and it\u2019s a great place to live. So based on quality living, I think it has a lot further growth and we\u2019re really seeing this in these coastal community towns.<\/p>\n
Nice. That\u2019s a great one. I just want to provide two points of clarification for everyone. First of all, population of growth of 4% is insane. The national average is about 1%, so four times the national average. And, James, I think in your research, you said that it was named the fastest growing city over the last year by US News and World Report, so that is obviously strong fundamentals.
Then I just wanted to follow up on the 1% rule that James just mentioned. What he\u2019s referring to, if you haven\u2019t heard, is something called the rent to price ratio. You divide one month of median rent by the median home price for a given market, and what you get is usually somewhere between 0.5% and 1.5%. And back in 2010, 2012, some investors came up with this rule called the 1% rule where you had to get it above 1%, which signified that you could probably get great cashflow. Now we all know, it\u2019s not 2010 anymore, and so finding markets that average 1% on that rent price ratio is exceedingly rare. There are probably less than 10 in the entire country.
That doesn\u2019t mean that you can\u2019t find cashflow in these markets. You still can, because we\u2019re in a different type of market environment. And I\u2019ve actually done some research into this, and if you have a rent to price ratio of anywhere from 0.6 to 0.7 or above, there\u2019s usually cash flowing properties in that city. Now remember, if I\u2019m saying that the rent to price ratio for that market is 0.6 to 0.7, that is the average. So that means there are deals worse than that, and there are deals better than that in that market. And as an investor, it is your job to go find the ones that are better than the average one. So just when we say a rental price ratio is 0.7%, go out there and find yourself the 0.9% one because that means that they exist there. So I just wanted to go on that diatribe and explain those things.
But, Kathy, I think you had something to add here.<\/p>\n
Oh, I just want to say I had to rewrite my book because of that 1% rule. People were like, \u201cI\u2019m not going to buy anything because I can\u2019t get it.\u201d But I wrote that in 2014, so I had to revise it, came out with a new one.
We are actually getting 1% in our fund, but that\u2019s active. If you\u2019re an active investor, you can probably still get it, meaning you\u2019re buying something that\u2019s not very expensive. You can improve it and still get it way under market, but they\u2019re strong rents. It\u2019s just not easy to do, especially if you\u2019re investing from afar. That can be difficult to do. Unless you\u2019re someone like Henry, he\u2019s probably finding that, but it\u2019s probably harder.
Anyway, Myrtle Beach, back to that. Love Myrtle Beach. The southeast is my jam. This is so underpriced. The entire southeast coastal market is so cheap. Find me somewhere in California where the median price is $336,000 for a coastal property. It doesn\u2019t exist. So that\u2019s why it\u2019s growing so quickly. And the Carolinas specifically, they\u2019re kind of referred to as the boomerang states because, a lot of times, the northeastern people who are just done with cold weather and they\u2019re able to retire or live remotely, they\u2019ll go to Florida and then sometimes think, \u201cWow, it\u2019s too hot and too humid,\u201d and so they boomerang back a bit to the Carolinas where it\u2019s a little bit less hot and humid and still so affordable.
Darling town. I surfed there when I went to check it out. It\u2019s still so affordable. Considering what we just said, that the median home price in the US is higher than that, and you could get coastal property in a really cute town, I mean, it\u2019s great. I don\u2019t invest there, but I could see where that would be a great opportunity.<\/p>\n
Yeah, and the beaches are awesome. I know we\u2019re talking about unsexy markets, but definitely, beaches are stacked full of good looking people. I don\u2019t know how that works for investing, but it\u2019s a bonus. It is growing. Rents are up 33% over the last three years. I mean, it\u2019s a growing town, it\u2019s quality living, and it\u2019s fun to go to. So I definitely will be back.<\/p>\n
I\u2019ve always wanted to go because I\u2019ve heard there\u2019s great golf there. And I\u2019m not great at golf, but I enjoy playing, so maybe-<\/p>\n
That is not true. Dave said he didn\u2019t golf, and Dave crushed the ball all day long. I was lucky I was paired up.<\/p>\n
Very, very inconsistent. But James and I played two other investors and we crushed them. So that\u2019s all that matters. We crushed them.
All right, James, what is your second market that you\u2019re bringing us today?<\/p>\n
So the second market is Tallahassee, Florida, which I have never been to. To be honest, I don\u2019t have a whole lot of desire to go there unless it\u2019s for an FSU football game. I think that would be pretty fun. But it\u2019s a very affordable market in Florida, and as we know, Florida has gotten very expensive and it\u2019s been hard to get cashflow in a lot of these locations. Pricing\u2019s way up in Florida. It\u2019s hard to make deals pencil, but there\u2019s still a lot of good markets around, like Tampa, Tallahassee, that you can invest in.
And what I like about it is the average home price is $272,000, so it\u2019s really, really affordable. And as these rates keep staying persistent and the money seems like it\u2019s going to be a lot higher than we thought, a lot of us were predicting that the rates were going to be down middle of next year, that might not happen. It\u2019s a good market to be looking at because the pricing is so below the median home price and the quality of living is really good. So it has some runway, in my opinion.
The population growth, not as strong as Myrtle Beach, doesn\u2019t have the same trend. It\u2019s 0.72%, so it is growing below the national average. I don\u2019t really like that as much, but it does have steady growth and the overall investment. But I think there is other potential here. The rent to price is at 0.54, so it\u2019s below Myrtle Beach, half of the 1%. But like Dave said, that\u2019s the average and who wants to be average?<\/p>\n
Yeah.<\/p>\n
You can find value in any market, but I do believe that this market has growth potential because it\u2019s so affordable. The quality of living\u2019s good. They would rank the ninth best quality of living in Florida. And so people do want to live there.
In addition to, there\u2019s a lot of college there. College towns are great for steady rent income. And as college pricing and the cost of college goes up, so will housing. They\u2019re going to go up one and the same. We\u2019ve seen that in our Seattle market, we own a lot of rooming houses. So I do like college towns. I like the quality of living, and I think it\u2019s very dependable for an investor to be looking at.<\/p>\n
Yeah, I like this because of, I just think college towns are great investment areas, especially when those college towns are surrounded by other major metropolitan areas. And so Tallahassee definitely ticks those boxes. People think of Florida State when they think of Tallahassee, but you\u2019ve also got Florida A&M University and a host of other small universities that are out there. And so you\u2019ve got a large student population. That means the universities are employing a large percentage of the people who are working there. And so housing, affordable housing is needed.
And when you can get property in a college town, the average home price retail is $270k. That means if I go in there and start looking for deals, I\u2019m going to be buying stuff for sub a hundred, just over a hundred thousand dollars for properties because I want to get really good at finding good deals. And so going out to a college town and buying a property for between 100 and 150 grand, and being able to get the rent you\u2019re looking for because college students need a place to live, man, that\u2019s a dream.<\/p>\n
Knowing what I know about being a tenant in a college town has always scared me away from being a landlord in a college town.<\/p>\n
Totally.<\/p>\n
But what you\u2019re saying makes sense.<\/p>\n
And I think they rage at FSU. I heard they like to have a good time, so you kind of want to get bulletproof rental specs. Just make sure it can handle the durability.<\/p>\n
Yeah. I went to a pretty nerdy engineering school and we destroyed properties, so I can\u2019t imagine what it would be like at FSU.
All right. Well, it sounds like a very interesting market. Again, yeah, so it sounds like Myrtle Beach has growth potential and a little bit more cashflow. Tallahassee may be lower cashflow potential, still possible, but might have more room to run because it\u2019s really just very affordable in a state that is absolutely booming right now.<\/p>\n
Yeah, I think the equity can grow a lot quicker, and that\u2019s going to make a big difference in your overall return. And if you can get that equity growth, that will offset your cashflow that might be a little underperforming.<\/p>\n
100% in Myrtle Beach for sure. But I think also in Tallahassee, you might look at short-term and midterm rentals. We actually have a college in my town, and what I\u2019ve noticed is that a lot of parents want to come and visit their kids. And so having a short-term rental, you\u2019re still kind of getting the benefit of having students in town, but you have parents living in the rental if it\u2019s a short-term. If you\u2019ve got a big party house, Dave, like you do in a ski area, well, then your short-term rental might be a party house. But if it\u2019s little, just enough for the parents, that can stay rented.<\/p>\n
All right. Well, moving to another state that is absolutely booming, Henry, what\u2019s your first market?<\/p>\n
My first market is Jonesboro, Arkansas. So this is a town maybe not a lot of people have heard of, but the numbers are kind of ridiculous. So check it out. Average home price of $188,000. So you\u2019re sub-200 on the average home price. So now we\u2019re talking retail, which means if you\u2019re looking for deals, you can get screaming deals. You\u2019re talking sub a hundred thousand dollars, finding good deals out there. That\u2019s crazy.
But population growth is 1.29%, so people are moving there. And that\u2019s due to the economy. It is an economy that hosts a lot of manufacturing. So that\u2019s what\u2019s most of the workforce is doing out there. So you\u2019ve got Nestle, Unilever, Frito-Lay, Riceland Foods and a couple of others. But as well as healthcare is big out there. So you\u2019ve got a couple of big hospitals that are also employing a lot of the people out there. And so you\u2019ve got population growth. You\u2019re not too far from Memphis, and so you\u2019re not too far from a major metropolis. You\u2019ve got unemployment at 2.9% and your rent to price is 0.74. So there is cashflow.
And if you think about it, I was looking, the average rent for a two-bedroom or for a three-bedroom is just over a thousand dollars. So if you can get a deal and get average rents, then you\u2019re going to be able to cashflow, especially if you\u2019re finding a really good deal in this market.
The other thing about Jonesboro is, the vacancy rate is 6.7%, which means most everything is getting rented. So it\u2019s got all the right stats. Definitely, definitely really good numbers. I\u2019m surprised, because I\u2019ve gotten leads for deals in Jonesboro and I\u2019ve turned them down just because of how far it is proximity wise to where I live in Arkansas. And now, I\u2019m thinking I might need to take a second look at some of these leads I\u2019m getting out in Jonesboro.<\/p>\n
Okay. So this is not northwest Arkansas. I\u2019m looking it up on a map right now. This is northeast Arkansas.<\/p>\n
Northeast Arkansas, yes.<\/p>\n
Yeah. Okay. And as you mentioned, closest major city is Memphis. It\u2019s actually quite close to Memphis, yeah, as you said. So, Henry, do you hear about Jonesboro? Is it a big town? Yeah. Is it a place it\u2019s commonly talked about in Arkansas?<\/p>\n
Yeah. People talk about it all the time. I\u2019ve just avoided it because of how far it is from me. It\u2019s about, I\u2019d say a five-hour drive from where I currently invest. And so I just like to be able to get to my properties, it\u2019s just a personal thing for me. But I mean, the market dynamics sound pretty good. Like I said, I get leads all the time coming through my website from this area and I just pass them on to investors I know that invest out there, but I\u2019d never looked into it until this. This is cool.<\/p>\n
I mean, a market that is under $200,000, so less than half the median home price. Population growth is above the national average. The unemployment rate is below the national average. It has really good rent to price ratio. I mean, those are pretty tough to find these days. This one\u2019s pretty good. Yeah.<\/p>\n
Pretty solid.<\/p>\n
I\u2019m sold.<\/p>\n
You know what also sounds nice is the price of a hundred grand. That is our earnest money check to write hundred deals. It\u2019s like, Kathy, I think we might be doing this wrong. I\u2019m like, I\u2019m listening to this. I\u2019m like, why not go out of state? But you got to get outside your comfort zone when you get to long distance investing and you got to set up the right systems. And it\u2019s hard when you\u2019re, like Henry says, I\u2019m a backyard investor too, looking at these markets. But the math is saying that you should really explore it. And it\u2019s for investors to figure out the systems that\u2019s going to work. And so as these markets are getting more and more affordable compared to what the other markets, it is something I think everyone should be looking at. Yes, you have to set up new systems, but those are great metrics to get good cashflow.
And also, it allows you to invest very low risk. When you\u2019re buying properties at a hundred grand and they sit vacant for a little bit, you can stomach that hit. But when you\u2019re dealing with expensive stuff and expensive metro right now, you really have to make sure you\u2019re on it or that debt cost, that vacancy cost, all these things can compound. I definitely think I need to get some operators in different states and just start partnering up. It\u2019s a hundred grand. That would be nice. What\u2019s your earnest money amount? Like $1,500 bucks. That\u2019s awesome.<\/p>\n
Oh man. The grass is always greener, right? We look it, James, but do you make hundreds of thousands of dollars on one transaction. And they\u2019re so sexy.<\/p>\n
You\u2019d have to do 10 deals.<\/p>\n
But you can also lose a hundreds of thousands of dollars on one transaction.<\/p>\n
This is definitely my kind of market. I love that it\u2019s kind of off the radar, but it\u2019s got all the things that you need in a good buy and hold market. So yeah. Hey, Henry, James, you guys set something up there? I will be your buyer.<\/p>\n
I got you.<\/p>\n
Ditto.<\/p>\n
I got you.<\/p>\n
Yeah.<\/p>\n
All right. Well, Henry, you got another fire market for us next?<\/p>\n
Yeah. This is a market that I actually currently invest in, Joplin, Missouri. So this is about a 50-minute drive from Northwest Arkansas where I live, and I currently invest there. I have seven doors there now and I have another 16 doors under contract there now. So I am growing my portfolio in this market.
And why I\u2019m growing my portfolio in this market is because of these pretty strong market dynamics. So average home price is just over $200,000, at $205k, $206,000. It\u2019s got population growth of 1.1%. Now I know it\u2019s not the highest population growth on this list, but for a small market in southwest Missouri, that\u2019s pretty good. Low unemployment, 3% unemployment. And rent to price is at 0.65. And I\u2019m buying cashflow deals in this market left and right. I just closed on a house in Joplin two days ago. I paid $67,000 for the house. I\u2019m going to put $30,000 into it, and it is going to rent for over $1,500 a month. And it has an extra lot next door that I\u2019m going to either be able to sell for about $15 to $20 grand, or I can build a new construction home on because so many builders are building homes out there to infill, because there\u2019s not enough homes for the people who live and work in that Joplin market. And so I love Joplin.
Another reason I love Joplin that you\u2019re not going to hear about or see about if you just do the research on your own is, because it\u2019s about a 50-minute drive from Northwest Arkansas, as Northwest Arkansas is expanding because of all of the big companies out here, a lot of people are starting to feel like, hey, this is becoming a little bigger and busier than I like, and people are starting to spread out and go a little further out. And so, I think that that\u2019s driving some of the population growth in the markets like Joplin as well. And so you\u2019ve got people moving there, trying to get away from the hustle and bustle of Northwest Arkansas, if you can even say hustle and bustle in Northwest Arkansas in the same sentence. So I really, really do like this market, and I am growing and expanding in this market because of the solid dynamics.
As far as the economy goes, this is another manufacturing town, so there\u2019s lots of different manufacturers out there. You\u2019ve got General Mills out there. But it\u2019s a really, really big healthcare community. So many hospitals. There\u2019s a St John\u2019s. We\u2019ve got Ozark Medical. There\u2019s Mercy clinics. There\u2019s tons of different healthcare out there as well. So it\u2019s a really solid market with solid market dynamics that\u2019s growing steadily, not super fast, but growing steadily, and you\u2019re just getting a lot of quality tenants because they have good jobs and they can actually afford the rents in the market.<\/p>\n
I had never heard of Joplin before the show Barry on HBO, if anyone watch that. But I\u2019ve long liked the idea of finding a tertiary city outside a main area that\u2019s like 50 to 60 miles away. When I was investing primarily in Denver, you saw Longmont, which is a city where Colorado State University is, but no one invested there, and Denver just got so hot. To Henry\u2019s point, people just wanted to move somewhere a little quieter or maybe somewhere even more affordable. And these places that are sort of, they\u2019re not like satellite cities, but it\u2019s nice to be close to a place with a big airport, for example, or be able to go to a big city within an hour, hour and a half drive, but has more of a small town feel. So I\u2019ve always just sort of liked that approach, and it sounds like Joplin fits the bill for that strategy.<\/p>\n
And look how wired Henry is on the market he invest in. Talk about market research. He generally passionately loves the market. He knows everything about it. A lot of times, people are just going in and buying that thing because they were told in a book or a podcast to do it. But Henry really dug into the market, knows it like the back of his hand, and that\u2019s why he can grow is because he knows it. He believes in it so he can invest kind of carefree. So kudos to you, Henry. I mean, you definitely have this market down.<\/p>\n
Thank you, brother.<\/p>\n
All right. Well I\u2019m going next and my first market is somewhere I\u2019ve never really even been close to, but it is Tuscaloosa, Alabama, and the average home price there is $211,000, so less than half our median home price. Population growth, 1.4%, so just over the national average. And just as you\u2019re saying, I think any market that\u2019s growing is pretty good, but it\u2019s always nice to be above the national average. The unemployment rate is at 2.4%. And the unemployment rate is pretty low everywhere in the country right now, but 2.4% is about 30% lower than the national average, so that\u2019s great. And the rent to price ratio is excellent at 0.8%. So I think this is really strong fundamentals for Tuscaloosa.
Now, I looked all this up because I\u2019ve never been here, but it is a small city. It is a college town, which we\u2019ve just been talking about the benefits of. The University of Alabama is from there, so is Stillman College and Shelton State Community College, which contribute about $3 billion of economic impact to the area, which is about 25%. So that\u2019s really interesting.
Normally, I always like to say, you want to look for an economy that\u2019s well diversified, but when you have an economy that maybe, feel free to disagree with me, that is based on something really solid like a college or public sector jobs that are really stable, I think that is a relatively good foundation for an economy. So I really like that tourism has really been picking up. They also have one of the biggest, or maybe the biggest Mercedes-Benz assembly plant in the country. So there\u2019s a lot that\u2019s probably leading to that really high employment rate. And that\u2019s all I know about Tuscaloosa. Have you guys, any of you ever been there?<\/p>\n
I have. I went to an Alabama-Arkansas football game a few years back.<\/p>\n
How awesome was that?<\/p>\n
At Alabama. I mean, it\u2019s a thing. The whole everyone is there.<\/p>\n
So jealous.<\/p>\n
Everything else is closed. It\u2019s only the stuff at the college that\u2019s open. It was just a super intense environment.
But to kind of piggyback on your point, when this represents about 25%, you said, of the economy there, I think that that\u2019s okay in this situation because University of Alabama is not going anywhere. Those people would start a war.<\/p>\n
Their fans are very passionate.<\/p>\n
If that school went anywhere. It is safe and sound there. But no, it was a great place. I enjoyed it. It didn\u2019t feel that small to me. I was surprised to see it\u2019s only 100k people because it felt much bigger than that.<\/p>\n
Well, I think a lot of times, these college towns, they don\u2019t count students because they\u2019re not full-time residents. I know, Boulder for example, Colorado, where the University of Colorado is, says it\u2019s like a hundred thousand, and then when students are there, it\u2019s like 140,000. So it goes up by like 40%. I bet Alabama\u2019s even bigger than [inaudible 00:30:00]. But it makes you think, based on what you\u2019re saying, Henry, that in addition to student rentals, short-term rentals probably do really well if it\u2019s that big of a draw and people are coming for sports, among other things. The university obviously has other draws. I actually saw that they just broke ground on a $50 million performing arts center at the university. So there\u2019s obviously a lot of attractions in the area that might warrant different types of rental strategies.<\/p>\n
Yeah. And I think that\u2019s a good call out too about the short-term rentals because one of the things I like about my market, which is a college town as well where University of Arkansas is, is just, there\u2019s not a ton of hotels. There\u2019s a few. There\u2019s definitely not a bunch of nice ones. And so, when you\u2019ve got football season and people coming from all over to come to these football games, they got to have a place to stay. The hotel sell out super fast, and so these towns need Airbnbs because their economy is dependent on these people coming to visit.<\/p>\n
That\u2019s such a good point. That\u2019s why I like these sort of off the radar markets because you don\u2019t have builders flocking to them. They don\u2019t even know they exist. So you\u2019re not seeing new hotels and new homes, but when you\u2019re seeing the kind of growth, population growth that this area is seeing, yeah, it\u2019s going to be good for short-term, medium term, long term. It seems like, either way you go, you could make it work in this market.<\/p>\n
Definitely. Just make sure you have a big enough parking lot for people to tailgate in at your short-term rental.<\/p>\n
I wonder how much of the average home price Nick Saban\u2019s house drives up that number.<\/p>\n
Add like three zeros to that number.<\/p>\n
I think we need to explore the market and do a live podcast at a football game. Like the college football set.<\/p>\n
Like college game day?<\/p>\n
That would be so awesome.<\/p>\n
We could put one of those school mascot hats on you when you-<\/p>\n
I\u2019m a hundred percent in.<\/p>\n
Well, my next market does have a college in it. It\u2019s the University of Wisconsin-Oshkosh. I don\u2019t know if they have the same level football team as the other ones that we\u2019ve been talking about.<\/p>\n
I feel like you just made that up.<\/p>\n
I actually didn\u2019t. It\u2019s a real thing. But the next market I have is Oshkosh, Wisconsin, which I have only heard of because, as a kid, did you guys wear OshKosh overalls or OshKosh?<\/p>\n
Yeah. OshKosh B\u2019gosh, yeah.<\/p>\n
It reminds me of Chucky.<\/p>\n
Yes, exactly. Yes.
So Oshkosh, I\u2019ve learned, is a really interesting town. It actually used to be known as the sawdust capital of the world because it has the most sawmills, I guess, in the world. No longer, but it did at one point. But really, they actually have really strong fundamentals. So just to go through the stats, average home price is $265,000. Population growth at 0.9%. Unemployment rate, 3.5%. And a rent to price ratio of 0.6%. It\u2019s a small city of 67,000 people.
But I started looking at this because, I don\u2019t know if you guys have seen this, but when you look at lists of places with hot housing markets, even during this weird market we\u2019re in, Wisconsin is one of the places that\u2019s always up there. Obviously, you see a lot of places in the southeast, but Wisconsin, consistently, for a year or two now, has been up there.
And so I looked into it. I literally just Googled, \u201cwhy is everyone moving to Wisconsin?\u201d, and found out that there\u2019s just a lot to like about it and really ranks high in terms of education, in terms of healthcare and health, one of the highest states for quality of life and safe places to live. And so it seems that a lot of people are moving to Wisconsin, and I think Oshkosh is getting swept up into that. So sort of in our theory of auxiliary cities near big cities, maybe like near Milwaukee or Madison, Oshkosh is near those and also near Green Bay, and so might be one of those secondary cities where you can get cashflow now, but in a state that seems poised for growth, given the recent trends.
Wisconsin obviously is one of the hottest cities in the entire country. Sheboygan, Green Bay, it\u2019s near all of those. So it\u2019s kind of sandwiched in there and could sort of benefit from the tides that are raising all those ships, so to speak. It\u2019s also on Lake Winnebago. It looks very beautiful from the pictures I saw. I really don\u2019t know any more about it, but it seemed like an interesting market.<\/p>\n
I\u2019m picturing a Lego town where everybody\u2019s wearing Oshkosh, walking around.<\/p>\n
Everyone is a train conductor.<\/p>\n
Everybody\u2019s a train conductor.<\/p>\n
Is that company still in business?<\/p>\n
Oh, they got to be.<\/p>\n
I bet it is.<\/p>\n
It\u2019s timeless, Dave. That does not go out of style.<\/p>\n
Yeah. I hope not. Well, I would go check it out. I\u2019ve been to Lake Geneva in Wisconsin. It was very beautiful, so I\u2019m sure it\u2019s really nice up there.<\/p>\n
So there is a lot of smaller cities in that Wisconsin, Illinois kind of region that are growing right now where you can get amazing cashflow, places like Racine, Wisconsin, which is smack in between Milwaukee and Chicago, which is perfect, because as those cities spread out and affordability gets worse there, you can buy duplexes there for $150 grand in cashflow. It\u2019s insane these markets.<\/p>\n
And on the lake, really nice.<\/p>\n
Great dynamics out there.<\/p>\n
All right. Well, that turned into an advertisement for the entire state of Wisconsin, which we\u2019ve barely been to, but on paper, it looks very good.
All right, Kathy, what about you? What\u2019s your first market?<\/p>\n
Well, I started to get a little hair standing up on my arms or whatever when I saw this one because I don\u2019t like investing in places where it\u2019s really dependent on one economy, specifically oil, as you know, my heartbreak story buying in North Dakota. So Odessa, Texas, it\u2019s in the Permian Basin. There is a lot of oil there, so that\u2019s good. There\u2019s a couple of employers there you might\u2019ve heard of. Halliburton, Schlumberger, these are massive oil companies there.
The average home price is $212,000, so that\u2019s far below the average. Population growth, not so impressive, 0.64%. Unemployment rate, 3.8%. Though I looked at other sites and some said it\u2019s not, it\u2019s much higher than that. So again, it\u2019s hard to get the actual information. Zumper said that rents increased 17% year over year, maybe in certain areas. That\u2019s the thing about these oil towns is it\u2019s really volatile. And right now, I don\u2019t even know where prices are in oil, it just goes up and down.
But I know the Permian Basin is doing better than North Dakota. But here\u2019s right off the bat why I would not personally invest in this area. 114,000 people. In the whole Permian Basin, it\u2019s 500,000. I like to be in larger markets. I like to have a larger rental pool. So to me, it\u2019s just too small of a market, too dependent on one economy that is an economy that is manipulated by not America. Well, also America, depending on politics, it\u2019s manipulated. But then oil industry is manipulated in general. So I don\u2019t like it. I wouldn\u2019t invest there.
With that said, I bet people are making a ton of money investing in this town. So just like you said earlier, if you know your town and you know where to buy and you know where the jobs are there to stay, you\u2019re going to do just fine. And the price point\u2019s right.<\/p>\n
Just to clarify, the way that we came up with this list is, we came up with criteria, which is under the median home price, population growth, a good RTP above the national average, unemployment rate below the national average. And so what happened was, our analysts at BiggerPockets pulled that data and we were each assigned to look at one. So Kathy is presenting this, but that does not mean she is endorsing it, just to clarify.<\/p>\n
And like I said, you could make money in any market, so you don\u2019t have to worry so much about being in the right market if you know how to buy the right real estate. I know there\u2019s locals in this market who are killing it because they know.<\/p>\n
You know how I know Kathy\u2019s not into this market. Because she\u2019s saying it wrong. Because if you\u2019re into it, it\u2019s not oil. It is ole. There\u2019s an ole.<\/p>\n
That\u2019s right.<\/p>\n
There\u2019s a ole town. There\u2019s ole money out there.<\/p>\n
Yeah.<\/p>\n
Does that mean you\u2019ve bid down there, Henry?<\/p>\n
No. It just means I live in the south.<\/p>\n
But that is something to look for is the energy. We\u2019re seeing a lot of different global things going on right now. There\u2019s global conflicts. There\u2019s supply chain issues. A lot of these major countries, we\u2019re not getting along with a lot of major countries that do supply a lot of oil. And the US might need to start generating more energy. And there could be some runway in these oil towns, ole towns. There we go.<\/p>\n
Are you saying I should hold onto my land in North Dakota for the day that someday we decide that we might need to have some oil here?<\/p>\n
Do you have minimal rights?<\/p>\n
Just hang on.<\/p>\n
Okay. Because you said so.<\/p>\n
You\u2019d be like the Malibu hillbillies.<\/p>\n
All right. Kathy, was your second market we assigned you a little bit more inspiring to you?<\/p>\n
Yes. The second market is more diversified. It\u2019s a very good, in my opinion, stable cashflow market. Oklahoma City, Oklahoma. This is a market where, if you just want cashflow and no surprises and not a volatile market, it\u2019s going to be here. I know a lot of people who have invested in Oklahoma City and have been happy they did.
Population growth is just so, so, 0.94%, so about average. Average home price, $228,000, that\u2019s way below what we saw in the median and you can probably make the numbers work there. Unemployment rate, 3.2%. And the rent to price ratio, about 0.6. But again, if you buy right, you can do better than that. Rent growth unfortunately has not been too impressive in Oklahoma City this past month, down 0.3%. But year over year, up 0.3%, so flat. Let\u2019s just call it flat.
But that may be because, in 2022, rent growth was massive, one of the most and highest in the country actually, 24%. So something happened there, I would call it a pandemic. So rents went up massively. But that means that you can\u2019t look at the past. You got to look at what\u2019s next. And with rents going up that much so fast, it may stay flat for a bit so that wages can catch up.
But one of the issues is lack of housing and lack of affordable housing that we\u2019re seeing everywhere. So if you are interested in more Section 8 housing, apparently there are 30,000 people on the wait list for Section 8 housing in Oklahoma City. And that can be a great investment, steady income from the government. 330,000 new jobs created over the past decade. So supply is low, but demand is high, which is why 40% of residents say they much rather rent than own because owning just doesn\u2019t make sense for them right now. So a strong rental market, very diversified.
Now, I like to be in markets where there\u2019s going to be a boom of some kind. I don\u2019t want a boom market dependent on one thing, but I do want something that\u2019s going to make it boom. And something that might make that happen and is very exciting, and one of the reasons why our new rental fund is in Oklahoma is the governor is pushing to get the state income tax to zero, like Texas, to compete with Texas. If that happens, I really think we\u2019re going to see quite a boom.<\/p>\n
Interesting.<\/p>\n
Yep. So I love Oklahoma City. It\u2019s another sleeper market because it is a major metropolis, but you can still get smaller city economics there, smaller city numbers there. Also, there is a little bit of a tech boom happening in Oklahoma City. Lots of tech companies are opening offices there, and so there\u2019s lots of tech jobs which bring in younger employees. And so that creates growth over time. They did lose a lot of people to the Texas or Dallas area during the pandemic. A lot of people moved over to Texas, and that may be what\u2019s pushing some of this. We\u2019re trying to get to the zero income tax like Texas there. But it\u2019s also, not only technology jobs, but it\u2019s the home office for Sonic the fast food restaurant.<\/p>\n
Nice.<\/p>\n
So lots of good stuff happening there.<\/p>\n
I\u2019ve never been to Sonic in my whole life and it\u2019s one of my biggest regrets.<\/p>\n
Oh, the food isn\u2019t worth it, but the drinks are great.<\/p>\n
The commercials of those two guys-<\/p>\n
They\u2019re hilarious.<\/p>\n
Seared into my brain for the rest of my life, telling me to go to Sonic. Yeah, I\u2019ve known a couple of people who invest in Oklahoma City and actually some of the cities around it, and it just seems like an excellent place. There\u2019s just not a lot of downside or risk that I see. It just seems like pretty strong fundamentals everywhere.<\/p>\n
Just tornadoes would be the risk and you have insurance for that.<\/p>\n
Just tornadoes.<\/p>\n
Just tornadoes.<\/p>\n
Something never having lived in the Midwest or the South have ever thought about. But yeah.<\/p>\n
It\u2019s about an hour and a half west of Tulsa, which is another decent market for cashflow. And then about three hours from here in Northwest Arkansas. So I mean, I like it.<\/p>\n
Cool. All right. Well those are our eight markets. And again, what we\u2019re talking about here is markets where, even during a confusing market, where some markets are going to do well, some markets are not going to do as well, we think these eight markets offer strong potential, there are no guarantees, but strong potential to do well over the next year, even as affordability is low and there are some questions about what\u2019s going to happen over the coming year.
And as we talked about a lot at the BiggerPockets Conference, if you\u2019re going to be an investor, it\u2019s okay to change tactics. It\u2019s expected to change tactics based on what\u2019s going on in the economy. But at least for, I know the four of us and for many of the people I talked to there, what people are not planning to do is to just stop investing altogether. It\u2019s to try and figure out, like Kathy said earlier, what is working in this market and adjusting your strategy accordingly. So we hope that this is really helpful for you. We\u2019d love to hear from you in the comments or reviews. If you invest in any of these markets, tell us a little bit more about them. Obviously, if you\u2019re listening on YouTube, you can put those comments in there as well.<\/p>\n
Specifically OshKosh, is that still a thing? Can we still get overalls?<\/p>\n
Yes. Next episode, we are all going to be wearing OshKosh B\u2019Gosh overalls and going to Oshkosh.<\/p>\n
Really? Okay.<\/p>\n
I mean, the Minions still wear it. The Minions still rock Oshkosh. We love Minions.<\/p>\n
All right. Well, thank you all so much for listening. We really appreciate it, and we\u2019ll see you for the next episode of On The Market.
On The Market was created by me, Dave Meyer, and Kailyn Bennett. The show is produced by Kailyn Bennett, with editing by Exodus Media. Copywriting is by Calico Content, and we want to extend a big thank you to everyone at BiggerPockets for making this show possible.<\/p>\n