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BlogArrowReal Estate News & CommentaryArrowThe Data is In: These Are the Best Cities for Rental Investing
Real Estate News & Commentary

The Data is In: These Are the Best Cities for Rental Investing

G. Brian Davis
Expertise: Landlording & Rental Properties, Real Estate News & Commentary, Personal Finance, Real Estate Investing Basics
139 Articles Written

How’s the economy in your city? Is it in a growth spurt? Or is it just puttering along?

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And how does your city’s economy compare to that of other cities?

A week or two ago, WalletHub released a comprehensive analysis of the economic growth of more than 500 U.S. cities. Experts broke down 15 metrics, weighted them, then ranked cities on their growth.

Pretty useful information for a real estate investor, right?

But if you’re a long-term investor (like me), you’re not just looking for potential appreciation. You’re also looking for cash flow, which means your returns rely on more than just economic growth. After all, it doesn’t make sense to buy a $500,000 property that only rents for $1,000/month, right?

So I decided to take WalletHub’s list and add a few more numbers, to build our own rental-investing crystal ball.

First, WalletHub’s Numbers (And Where They Came From)

WalletHub examined cities based on 15 metrics, which they split into two categories: Sociodemographics and Jobs & Economy. Each category was given a 50 percent weighting.

Yet the Sociodemographic category only has three metrics, while Jobs & Economy has 12.

Sociodemographics – Total Points: 50

  • Population growth: double weight (~25 points)
  • Working-age (16-64) population growth: full weight (~12.5 points)
  • College-educated population growth: full weight (~12.5 points)

Jobs & Economy – Total Points: 50

  • Job growth: double weight (~3.7 points)
  • Increase in ratio of full-time to part-time jobs: half weight (~1.85 points)
  • Median household income growth: full weight (~3.7 points)
  • Unemployment rate decrease: full weight (~3.7 points)
  • Poverty rate decrease: full weight (~3.7 points)
  • Increase in number of businesses: full weight (~3.7 points)
  • Growth in regional GDP per capita: double weight (~7.41 points)
  • Increase in number of startups: full weight (~3.7 points)
  • Increase in venture capital investment amount: full weight (~3.7 points)
  • Median house price growth: full weight (~3.7 points)
  • Building-permit activity growth: full weight (~3.7 points)
  • Foreclosure rate decrease: full weight (~3.7 points)

If it seems like they’ve weighted the sociodemographic factors much heavier than the economic factors, well, think of it as looking long term. Local GDP will swing quarter to quarter, but population growth (especially among college-educated residents) is a strong predictor of future economic growth.

As for the timeframe for this data, WalletHub looked at trends over the past five years (although some data varied slightly by availability).

You’ll notice that the economic data already includes some real estate metrics: home price growth, building permit growth, and foreclosure rates are all classic measurements of housing market health.

All right, enough talking already! Here are the top 20 cities on the list:

Overall Rank City Total Score ‘Sociodemographics’ Rank ‘Jobs & Economy’ Rank
1 Frisco, TX 76.01 1 27
2 Kent, WA 68.32 2 138
3 Lehigh Acres, FL 67 3 65
4 Meridian, ID 62.71 4 69
5 Midland, TX 62.64 6 14
6 McKinney, TX 62.42 5 31
7 Fort Myers, FL 62.33 8 10
8 Bend, OR 60.96 27 1
9 Austin, TX 59.88 15 7
10 Pleasanton, CA 59.69 9 56
11 Saint George, UT 58.7 26 3
12 Murfreesboro, TN 58.41 12 47
13 Irvine, CA 58.06 7 117
14 Round Rock, TX 57.87 17 37
15 Cape Coral, FL 57.35 24 21
16 Odessa, TX 57.18 20 36
17 Springdale, AR 56.96 16 61
18 Milpitas, CA 56.28 46 2
19 Boynton Beach, FL 55.67 41 12
20 Charlotte, NC 55.45 34 39

Related: 5 Reasons the Midwest is Hands Down the Best Place to Invest

Price/Rent Ratio

As I mentioned above, strong economic growth isn’t enough to make a market a good long-term rental investment. You still need cash flow!

So, how do property prices compare to rents? What kind of income will my investing dollars buy me?

Enter: price/rent ratio.

It’s an extremely simple calculation:

Purchase Price

__________________________________________

Monthly Rent

For investors, a lower ratio is better—it means that prices are lower and rents are higher.

I can already hear the skeptics starting to grumble. “That’s all well and good, Brian, but there’s a lot more to cash flow than just the mortgage. Price/rent ratio tells me jack (poop) about vacancy rates, rent default rates, evictions, crime, and other factors that determine how a property performs!”

That’s true, of course. In fact, we went into some detail about this when we talked about why the “2% rule” is usually not worth the paper it’s scribbled on.

But WalletHub’s metrics have already been screened for these concerns, at least indirectly. Foreclosure rates are heavily correlated with eviction rates (for obvious reasons). Unemployment and poverty rates are also closely tied to rent defaults and vacancy rates.

And of course population growth (the heaviest weighted factor) and job growth both drive some serious demand for housing. Read: lower vacancy rates.

That’s why these numbers, together, provide a rounded, holistic glimpse into what markets make for good rental investing.

How Accurate Is This Price/Rent Ratio Data?

The heckler retorts: “OK, wise guy, but price/rent ratio is notoriously inaccurate! In most markets, the kind of properties being rented are very different from the kind of properties being sold!”

Slow your roll there, killer. I have to give a shout out to Zillow, whose housing data rivals the federal government’s (and you can be sure it spends a lot less per datum to acquire it, too).

When Zillow produces its price/rent ratios, it only looks at properties listed for rent. It then takes the Zestimate (Zillow’s home-value estimate) to calculate the ratio.

“But Zestimates aren’t always accurate!”

All right, now you’re just being difficult. Data has to come from somewhere. Jerk.

Strong Economic Growth, Low Housing Prices, High Rents

All right, cut to the chase already! Let’s see some data!

To compare apples to apples, we split the list into large cities (more than 300,000 people), mid-size cities (100,000-300,000), and small cities (under 100,000).

Here are the three lists, ranked based on economic growth:

WH Rank Large Cities WH Score P/R Ratio
1 Austin, TX 59.88 14.06
2 Charlotte, NC 55.45 11.62
3 Denver, CO 54.36 15.82
4 Seattle, WA 52.65 21.25
5 Nashville, TN 51.38 12.26
6 San Jose, CA 50.64 22.22
7 Miami, FL 50.01 12.16
8 Oakland, CA 48.99 18.68
9 San Francisco, CA 48.98 23.51
10 Raleigh, NC 48.87 12.69

 

WH Rank Mid-Sized Cities WH Score P/R Ratio
1 Frisco, TX 76.01 13.49
2 Kent, WA 68.32 14.98
3 Lehigh Acres, FL 67 10.19
4 Midland, TX 62.64 8.18
5 McKinney, TX 62.42 13.06
6 Murfreesboro, TN 58.41 12.51
7 Irvine, CA 58.06 20.07
8 Round Rock, TX 57.87 12.18
9 Cape Coral, FL 57.35 11.57
10 Odessa, TX 57.18 8.01

 

WH Rank Small Cities WH Score P/R Ratio
1 Meridian, ID 62.71 13.34
2 Fort Myers, FL 62.33 10.65
3 Bend, OR 60.96 17.33
4 Pleasanton, CA 59.69 23.87
5 Saint George, UT 58.7 13.61
6 Springdale, AR 56.96 10.11
7 Milpitas, CA 56.28 23.04
8 Boynton Beach, FL 55.67 10.69
9 Redwood City, CA 54.33 27.59
10 Concord, NC 54.11 11.65

Trendspotting

The first trend that pops out is that California, despite having several cities on the list, has some ugly price/rent ratios for investors.

“Shocker! California’s expensive—stop the presses!”

Okay, that’s enough out of you.

But truly, California investors will have a tough time finding good deals in these booming cities.

Another trend that emerges is that the smaller and mid-size cities tend to look better on both economic growth and price/rent ratio.

Check out the tenth-ranked mid-sized city on the list: Odessa, Texas. Its economic growth rating is higher than almost every city on the large city list. Only the best-ranked large city, Austin, has better economic growth than the tenth-ranked mid-sized city.

The same pattern holds true for price/rent ratio. Among the mid-sized cities, only one has a price/ratio above 15 (take a wild guess what state it’s in). But fully half of the large cities on the top 10 list have price/rent ratios above 15.

Remember a few weeks back when we talked about how rents are stumbling in large cities, but going strong in mid-tier cities? Case in point for rental investors!

Related: 28 Smart Questions to Ask a Broker When Investing in Out-of-State Markets

What Cities Should I Avoid?

There’s always someone who’s into buying homes for $3,000 apiece in Flint, Michigan. And good for them, if they have a system in place to make money and not pull their hair out.

But there’s a word for that kind of investing: niche.

Investing in stagnating cities, or dying cities for that matter, is a recipe for disaster for the average investor. Shrinking economies mean shrinking demand, and it’s hard to make money as a long-term real estate investor in markets with shrinking demand.

Here are the bottom 20 cities on WalletHub’s list, a few of which may surprise you:

Overall Rank City Total Score ‘Sociodemographics’ Rank ‘Jobs & Economy’ Rank
496 Springfield, IL 25.45 432 508
497 Cleveland, OH 25.4 469 497
498 Kenner, LA 25.26 489 482
499 Lawton, OK 25.25 464 499
500 Peoria, IL 25.04 409 511
501 Las Cruces, NM 24.79 387 512
502 Syracuse, NY 24.79 483 496
503 New Britain, CT 24.74 503 455
504 Erie, PA 24.46 492 489
505 Topeka, KS 24.09 514 417
506 Waterbury, CT 23.4 501 488
507 Racine, WI 23.24 505 481
508 Fort Smith, AR 23.21 495 500
509 Davenport, IA 22.98 491 506
510 Baton Rouge, LA 22.81 513 476
511 Montgomery, AL 22.72 508 480
512 Decatur, IL 22.54 494 505
513 Fayetteville, NC 20.97 457 514
514 Jacksonville, NC 19.06 496 513
515 Shreveport, LA 17.38 506 515

 

Side-by-Side Comparisons

Would you like to see the best and the worst listed side-by-side? Perhaps a breakdown of specific metrics, like which cities have the fastest population growth or fastest job growth?

Here’s a quick graphical breakdown from WalletHub:

Getting Out of Your Backyard

When we teach rental investing to our online students, we encourage them to stick within an hour of home.

Why? Because no one should invest in markets they don’t understand. Plus, it’s hard to learn and understand markets that are far from home.

But what if you live in San Francisco, and you’re more than three hours from the nearest state border? Or perhaps you’re an expert ninja investor, and don’t like the way your home market is shaping up?

That’s where this list comes in handy.

Hopefully, you’ll walk away from this article with 10-15 ideas for new markets to check out. The same rules apply, of course—if you don’t know a market well, you’ll either need to learn it or find a partner who knows it intimately.

But as we talked about in reviewing real estate industry tech trends, more investors are buying properties from a distance, sight-unseen. The world gets smaller every day.

If your market is starting to feel a little stale, maybe it’s time to try a new market where conditions are ripe for rental investors!

Thinking about trying a new market for investing? Which ones? Have you ever bought properties long-distance? I’d love to hear your thoughts on the lists above!

By G. Brian Davis
G. Brian Davis is a landlord, personal finance expert, and financial independence/retire early (FIRE) enthusiast whose mission is to help everyday people create enough rental income to cover their living expenses. Through his company at SparkRental.com, he offers free rental tools such as a rental income calculator, free landlord software (including a free online rental application and tenant screening), and a free masterclasses on how to reach financial independence within 5 years.
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58 Replies
    Scott Trench President of BiggerPockets from Denver, CO
    Replied over 3 years ago
    Nice Summary! I’m coming out with the Investment market index for 2017 (your article uses data to make forward predications, my study will look backwards). This is great!
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    Thanks Scott! Looking forward to checking out your investment market index, sounds extremely useful.

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    Christopher Smith Investor from brentwood, california
    Replied over 3 years ago
    This information is modestly helpful for a big picture snapshot of relevant housing trends and metrics. However, beyond that I think its value is limited. Real Estate is comprised of literally a million Micro climates that can have grand slam areas nestled virtually on top of utter forbidden zones (and everything in between), all of which are constantly changing and evolving. You better be relying on something a whole lot more focused, refined and time nuanced than this before you make any final decisions, cause this ain’t gonna get you there in and of itself, as generally helpful as the information might be.
    Tim Boehm Investor from Tillamook, Oregon
    Replied over 3 years ago
    right on Chris!

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    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    Very true that this is a big picture snapshot. It would take a book, not an article, to evaluate even a fraction of the housing microclimates and neighborhoods in the US. But the idea is to get investors thinking about towns outside their own backyard, since so many of us get stuck in a local rut.

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    Aaron
    Replied over 3 years ago
    Texas, Texas, Texas, Texas, Texas, Texas, Texas…..I think your data is a little lone starred.
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    Haha, makes me wish I owned property there!

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    Chris Soignier Real Estate Broker from North Richland Hills, TX
    Replied over 3 years ago
    I live near Frisco and McKinney, two of the cities on the stronger end of the lists. I represent several CA investors, some of whom have expressed interest in Frisco thanks to stories like these, which prove that there’s no substitute for local knowledge. One especially critical factor you missed is property taxes, and they’re very high in TX. High enough to tank many “deals” that might otherwise look good based on metrics like these that omit them. Frisco is a great city w/ a lot going for it, but it’s hard to find rental investments w/ decent cash flow! You’ll actually do much better heading west to Tarrant County, in the Fort Worth area.
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    Great point about property taxes. They were outside the scope of this article, since they’re assessed on the local level, but we did run an article earlier this year about total tax burden by state, and how many people are leaving higher-tax burden states for lower: https://www.biggerpockets.com/renewsblog/americans-flee-high-tax-states/

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    John Barnette Investor from San Francisco, California
    Replied over 3 years ago
    Agreed about Texas Taxes. Eeek. And from what I hear harsh climate for durability. SF guy here. 3 Bay area burbs, all 3 Bay area Cities in the mix. Interesting that Milpitas, Pleasanton, and Redwood City score well. Two low key Silicon Valley burbs. Pleasanton is fairly far East Bay and is a bedroom community for SF, Oakland, maybe even San Jose. No rent control makes it much more attractive. Public train transit is key. I invest successfully in Richmond and San Pablo which are more north and East bay. Smaller communities. I think investing in smaller communities whether suburbs or just smaller communities outside of A-list pricey cities is a good strategy. How many of these Texas towns are outside Austin? Surprised to not see many or even any comunities outside Denver, Seattle, LA, Washington DC.
    George Creel Homeowner from Georgetown, TX
    Replied over 3 years ago
    Only Round Rock was an Austin suburb. Others were Dallas and Houston Suburbs. Midland is an oil-boom town in west Texas – not near anything.

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    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    I’m with you about suburbs John – did you see our article a few weeks back about the second wave of suburbanization?
    John Barnette Investor from San Francisco, California
    Replied over 3 years ago
    Yes Good one

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    Sawyer Dina Flipper/Rehabber from Cleveland, OH
    Replied over 3 years ago
    I’m pretty surprised seeing Cleveland, OH towards the bottom of this list when their Price/Rent ratio is among the lowest in the country. Their ratio is commonly held at around a 4. It’s pretty easy to buy houses for $50K and below and renting them out for $1000+ a month. That’s HUGE cash flow. I’m renting out my own house (while I live there) and I’m cash flowing $150/mo, that $150 accounts for ALL my expenses including mortgage, taxes, insurance, vacancy, repairs & capex. I’m just confused how CLE is at the bottom if that market is capable of this. Any thoughts?
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    Hi Sawyer – it’s worth mentioning that Cleveland is at the bottom of WalletHub’s list, based on their 15 metrics of economic growth. That doesn’t take into account price/rent ratio. I own some lower end properties in Baltimore, which have good price/ratios, but which have bad cash flow because of the high vacancy rates, crime rates, default rates, etc. I imagine you might run into similar challenges if you invested in some of the cheaper areas of Cleveland.

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    John Rives Investor from Birmingham, Alabama
    Replied over 3 years ago
    Impressive article. In particular the graphics. Did you create the map of the US, if so what program did you use to incorporate your data? It looks like the color represents one metric (‘Sociodemographics’ Rank) and the size of the circle another metric (assume population). It is a very helpful visualization. Thanks.
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    Thanks John! I can’t claim credit for the graphics though, those were put together by WalletHub, I just included them because I thought they were useful and fun.

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    Christian Carson from Cleveland, Ohio
    Replied over 3 years ago
    Interesting analysis. I talked to my friend in Charlotte this week about housing and rents. He told me he can easily get $2,500/mo for his 2-bedroom condo outside downtown. That gave me some pause and made me think about who can/will pay for such a place. So, perhaps an additional dimension of rent-to-median-income ought to be considered. That ratio is off the charts in big cities, which can explain the ongoing exodus of younger professionals out of New York and Chicago. If Charlotte’s ratio is out of whack as well (and I’d be willing to bet it is), then that may be a long-term leading indicator. I’d also caution against using municipality data to analyze a rental market. For example, the Cleveland city data is not at all representative of the metropolitan area as Cleveland only accounts for about 30% of the county population and only 18% of the metro area population.
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    Income definitely matters, and you’re right that in the largest cities, rents skew higher than incomes. While WalletHub’s data does take into account income growth, job growth, and poverty decline, it doesn’t directly compare rents to incomes. While it was outside the scope of this particular article, I’m always looking for trends to look at in future articles!

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    Matt R. from Sherman Oaks, CA
    Replied over 3 years ago
    Good info. Here is the top 3 most profitable cities for total returns ( cash flow + equity gains) on average since 2000 (sfh) and that is LA, SF and San Diego. The YOY list are always all over the map and maybe less meaningful for the bigger pockets picture investment stuff.
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    San Francisco certainly exploded post-2000. Out of curiosity, what data source are you looking at?

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    Stephen Kaplan from Seattle, Washington
    Replied over 3 years ago
    Should be either “The data are in” or the “the datum is in”. Common mistake. I vote for the prior.
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    Ha! I love it Stephen. A grammar nerd after my own heart. Reminds me of an armchair philosophy question I sometimes wonder: At what point does a nearly ubiquitous grammatical error become considered acceptable standard grammar? While data is technically plural (to your point), it’s nearly universally used as shorthand for “data set”. Same thing with the subjunctive – almost everyone messes it up, so at what point does it just become standard English to say “I wish he was” rather than “I wish he were”? Anyway, thanks for a little grammatical diversion!
    Stephen Kaplan from Seattle, Washington
    Replied over 3 years ago
    I appreciate your upbeat and defusing response. Philosophical armchairs aside, why do it wrong on purpose? Regardless, I enjoyed the interesting perspective your article brings. Thank you for taking the time to write it.
    G. Brian Davis from Baltimore, MD
    Replied about 3 years ago
    Thanks Stephen, and to answer your question, I didn’t write the title. But if I had, I may well have done the same thing, using “data” as a shorthand for “data set.” So I can’t get on a high horse about this particular grammar issue.

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    Stephen Hundley Realtor from Lafayette, LA
    Replied over 3 years ago
    Dang, didn’t know I was located in the Lowest Regional GDP Growth in the US.
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    Ouch! Sorry Stephen, didn’t mean to be the bearer of bad news.

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    Josh McGuire Investor from Los Angeles, CA
    Replied over 3 years ago
    Great article. Insightful for “big picture” research. Thanks for taking the time to expand on WalletHub’s data and sharing!!
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    Thanks for saying so Josh! I appreciate it.

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    Tom Shepherd
    Replied over 3 years ago
    Very good article. However, your price to rent ratios are from Zillow’s Zesimate. And from my experience the looking at Zestimate it is always too high. So please don’t just say “data must come from somewhere”. I own 6 homes and each one is overpriced according to Zestimate. Perhaps a better argument is as long as each home is overpriced the same then your numbers are still valid. Perhaps you can get your data points from MLS from each major city. Great job on a well written article!
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    I hear you on Zestimate Tom. And while I’ve seen Zestimates be inaccurate, I still think it’s more important to separate homes available for rent from homes available for sale. There aren’t enough homes listed for both simultaneously to get that kind of perfect data, so I stand by this approach as being the closest to accurate (while admittedly imperfect). It’s also worth mentioning that we’re not really looking for absolute numbers in these price/rent ratios, but rather we’re looking to compare cities. But it’s true that every piece of data has to be taken with a grain of salt, and imperfections must be acknowledged.
    Oladapo Otesile
    Replied over 3 years ago
    Brian, very nice article on data-driven real estate investing. Good data combined with a positive feel for the location is a potent tool for the investor. My opinion on Zestimates is that while they are not always accurate, the come pretty close. I have properties in Parker, CO (a suburb of Denver) and Houston, TX and I use the Zestimate data often (along with other tools) with a reasonable standard deviation for each area. Looking forward to your next article!
    G. Brian Davis from Baltimore, MD
    Replied about 3 years ago
    Thanks Oladapo! And I’m glad to hear you’re having success investing in multiple markets.

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    John Barnette Investor from San Francisco, California
    Replied over 3 years ago
    Zillow pulls actual sale data from tax records which would match MLS. Then uses algorithms to develop estimates for all other properties. Don’t know anymore than that. The more homogeneous the housing mix in a specific area the better. I am a realtor and advertise in Zillow and have inquired about how it is formulated.

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    Jay Bennett Real Estate Investor from Belmont, Massachusetts
    Replied over 3 years ago
    And of course, there is nothing like the taste and feel of checking these places out for yourself. Surprised for example Lehigh Acres, FL looks so good by the numbers. It may have recently climbed out of the deep FL crash and still bargains remain, but the remnants of that distress are still there, Lehigh might be the weakest community in the Ft Meyers area in a downturn and more upscale developments in other suburban Fort Meyers towns might leave this town behind. Sometimes these numbers aren’t what they appear to be. Pictures and analysis here worth a thousand words. https://www.strongtowns.org/journal/2016/8/17/suburban-poverty-boomtown-lehigh-acres-florida
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    Very true that this sort of high-level, national overview data doesn’t tell the whole story. In my opinion, these sorts of nationwide big-picture looks serve best as a starting place, when investors are looking for new markets. But there’s nothing like a deep dive into a market to truly understand what you’re getting into before investing!

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    Chad Carson Investor from Clemson, SC
    Replied over 3 years ago
    Brian, you are the man on these deep-stats articles! Well done.
    G. Brian Davis from Baltimore, MD
    Replied over 3 years ago
    Thanks Chad! Much appreciated 🙂

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    Sheree H. Rental Property Investor from Atlanta, GA
    Replied over 3 years ago
    Interesting article, thank you! Love that last graphical comparison. But… Where does Atlanta stand?
    G. Brian Davis from Baltimore, MD
    Replied about 3 years ago
    Thanks Sheree! Hotlanta is ranked 78 on WalletHub’s list, with a combined score of 48.26. It’s ranked 56 for Sociodemographics (not too shabby) but a less impressive 171 for Jobs & Economy.

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    John Morgan Flipper/Rehabber from Salt Lake City UT; St. Pete, FL
    Replied over 3 years ago
    Great Post! Its good to have a high level reality check occasionally. I was especially excited to see the Zillow Price/Rent Indexes. Very useful. I had no idea that the Ft Myers/Lehigh Acres/Cape Coral area in FL was so good with relatively low P/Rs. Maybe I’ll need to shift south from the Tampa/St. Pete area which I’ve been working the last several months! I definitely do understand that even in a given metro area you can have hot sellers market neighborhoods surrounded by cold static buyers markets. I’ll also enjoy looking over the high tax states, I’ve noticed that IL has prohibitively high taxes as well as TX.
    G. Brian Davis from Baltimore, MD
    Replied about 3 years ago
    Glad you enjoyed it John! And that it got you thinking about new potential markets – that was my goal 🙂

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    Stu Basham from Jersey City, NJ
    Replied over 3 years ago
    This is amazing research. Never thought my hometown of Bend, OR would make the list! Awesome.
    G. Brian Davis from Baltimore, MD
    Replied about 3 years ago
    Thanks Stu!

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    Eric Bilderback Real Estate Agent from Sisters, OR
    Replied about 3 years ago
    Excellent job Brian. I appreciate all of the information you have in your articles.
    G. Brian Davis from Baltimore, MD
    Replied about 3 years ago
    Thanks Eric! Very much appreciated.

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    Robert Holsti Investor from Corona, California
    Replied about 3 years ago
    Thanks for such a great article. I live in California and Buy property on the Island of Guam sight unseen. Why? I used to live there, I have a long term relationship with a property manager/local realtor, he provides me with photos and his opinion of what should be done to renovate. All of the homes there are solid concrete construction unlike Puerto Rico and the whole island is hardened to reduce Typhoon damage. Doing business with my property manager/realtor is worry free and I always get my rent check promptly. Best of all, the annual property tax is a laughing matter. One of my rentals on Guam that is 1500 sq feet 3×2 is only $500 tax/year as compared to my property tax in California where its almost $5000. and I am bringing home $2200 a month. A solid winner.
    G. Brian Davis from Baltimore, MD
    Replied about 3 years ago
    Awesome Robert! That’s definitely a point that many rental investors would like to be at!

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    Matt Faircloth Rental Property Investor from Trenton, NJ
    Replied about 3 years ago
    Hey Brian, Great article! I find that once a town has made a list like this, the opportunity has already passed and the smart money is already in. Do you think there is still room to grow in the cities at the tip of your lists? I didn’t see median income versus average rent as a comparison in your study. We use that as a primary comparison to gauge the affordability of a rental deal. It may be tempting to buy in an area with high rents but can the average resident afford that rent? That leads me to my real question, which involves Fayetteville NC. We are bullish on that market and are buying there actively. Yes, it is a C and B class market but we are workforce housing investors so that works for us. The economy is not growing by leaps and bounds as the other cities you listed but it is stable and backed by the largest military installation in the world by population, Fort Bragg. Perhaps I’m investing in different parameters but I would love to get your opinion on Fayetteville as a market and why it finds itself at the bottom of your list. Matt
    G. Brian Davis from Baltimore, MD
    Replied about 3 years ago
    Thanks Matt! I don’t own properties in any of these markets, as a disclaimer, so I don’t have firsthand knowledge of them. Still, some of the markets on this list remain pretty obscure. If I were actively investing right now, I’d look closer at some of these small and mid-sized cities with strong economic growth and low price/rent ratios. As for Fayettesville, I don’t know much about it specifically. But what I will say is that military housing is a niche in itself, and if it’s a niche you’re experienced and comfortable with, then that can trump high-level data like we looked at here. It’s also worth mentioning that I’m not certain how WalletHub handled some of its metrics with regards to military personnel. It’s possible the data is misleading on that point, given the temporary nature of the workforce.

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    Sourabh Bora from Bronx, New York
    Replied about 3 years ago
    Hi, I plotted these cities on google maps /earth for easy viewing https://drive.google.com/open?id=1k5bOH–nQ4nIqvCOF0wR-dAqwCaNYUMm&usp=sharing Example 159-OMAHA-393-286-408958 , it means, 159 socio-demographic rank, OMAHA = city name , 393=jobs rank, 286 overall rank, 408958 = population In the description, we have 0.0308 (score)——–:127.088 sq mi329.157 km2(Area)——–:3,218 per sq mi1,242 9km-2 (density) Here is a google spreadsheet of it https://docs.google.com/spreadsheets/d/1uTFd3a-1h34fumXAZzkX0OxGj1FZjJLPlB8oBrwz_UI/edit?usp=sharing

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    Sourabh Bora from Bronx, New York
    Replied about 3 years ago
    Oops sorry, I modified it a bit, Now, the name specifies overall ranking—city_name—state—population—Sociodemographics’ Rank—jobs/economy rank

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    Michael P. Lindekugel Real Estate Broker from Seattle, WA
    Replied about 3 years ago
    all of it is meaningless when investors can’t read financial statements and perform discounted cash flow analysis to calculate IRR, NPV, and MIRR and incorrectly believe capitalization rate is some kind of ROI calculation. i see them invest in crap on regulate basis because they went to some get rich over the weekend real estate seminar.

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    Account Closed Rental Property Investor from Benicia, CA
    Replied over 2 years ago
    You say look for a lower price to rent ratio….but a higher price to rent ratio by city corresponds to a higher demand for rental properties. As a real estate investor, you should always look for investment properties in these locations to ensure a high return on investment and year-long occupancy.

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    Mason Fiascone Real Estate Broker from Tri-Cities, WA
    Replied over 2 years ago
    I’m coming to this article a little late to the conversation, but wanted to say thank you for an awesome write-up! Some serious value provided here, love it. Some comments are certainly true about not being granular enough for any one market, but there is no way to do it all in one article! I am just beginning my REI journey, and since I’ve moved around a bit (lived in WA, AZ, IL, OH, NC, NJ and I’m 24!), and don’t know where I’ll settle (but likely will be West Coast), I am looking to invest out of state and identifying the right market is so important! It’s a tricky time to get started given national trends, but this article is a perfect starting point, even if from 2017. You’ve really helped me narrow in on a few cities/regions to now go in and apply additional criteria mentioned in the comments – thank you thank you! -Mason
    G. Brian Davis from Baltimore, MD
    Replied over 2 years ago
    Glad the article and research were useful for you Mason! Feel free to reach out over private message any time with questions, here to help!

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    Edgar Garnys Rental Property Investor
    Replied over 1 year ago
    Hi Brian, this is a great analysis for those considering to invest outside of their backyards. I actually performed a similar analysis by comparing current price-to-rent ratios to the 1 yr, 3 yr, and 9 yr population growth of cities with greater than 250,000 people. Like you mentioned, population growth is one of the strongest indicators of economic growth, but I like that you also included other factors to come up with a more accurate conclusion about where to invest. Is there any chance that you performed a similar analysis for 2018/2019? I would be happy to chat with you and compare results!

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    Angela R.
    Replied over 1 year ago
    Where can I find current market rents for a particular area using a free website? Any suggestions other than rent-o-meter?

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