Real Estate News & Commentary

My Top 3 Picks for Up-and-Coming U.S. Real Estate Markets

Expertise: Real Estate Investing Basics
23 Articles Written
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When looking at real estate, you want places in growth whenever possible. I like to look at three things to measure this: the state economy, job market diversification, and population growth. If a city is in decline in any of these areas, it’s easy to expect decline in other areas as well.

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  • State growth: How a state runs its financials matters to you. You want governments that reinvest in their economy. States that have extractive financial practices like Kansas, which is now bankrupt, can’t afford to reinvest in their state. You can’t grow without reinvestment, and it’s unlikely you can outpace a failing state economy.
  • Job market diversification: Find out who the big employers are in town. If it’s limited to one or two—or even one or two industries—you have to worry about this. If a town is supported by only one employer, you may be only a few bad quarterly reports from disaster.
  • Population growth: These metrics are easy to find and compare. If people are moving to a city, then opportunity is increasing. When people are moving away from a city, find out why. Don’t be the last to realize it’s a lousy place to live.

Remember, our financial well-being has far more to do with the higher level economies that we are a part of than with ourselves. Sure, some people make it against all the odds, but most people make it with the odds. Use geography to shift the benefits to your favor, move to a city that is in growth mode, and you’ll have no choice but to grow with it.

Nashville

Nashville is growing quite fast if you hadn’t noticed, and it’s at the top of everyone’s “move-to” list. It’s a large city of ~1.9M people, which puts inside of the top 20 biggest metro areas in the United States. It boasts strengths in factors that make any locale promising: low cost of living, underpriced housing, lots of opportunity. What else could you want? The hype is picking up in Nashville—I personally know a few people who have moved there this year just for real estate.



Related: I Used to Think All U.S. Markets Were Too High—Until I Started Investing in This City

Las Vegas

Two years ago, I looked at the Las Vegas market and knew it was about to blow up. It turned out I was right. Sure, Vegas had been on an upswing for a while, but I watched a culmination of factors come together just before we moved, and it spiked after we got there. What did I look for? Population and job growth estimates: I knew the Raiders were going to close soon.

Three weeks after I got there, they announced it. Marijuana was about to be legalized, something that has a massive impact on state economics. Additionally, there are billions of dollars in big casino projects in the pipeline, most of which will be complete around 2020. Vegas is showing few signs of slowing, and in many ways, it’s picking up steam. Additionally, the SALT (state and local tax) laws changed last year, which will make Vegas even more appealing.

Tampa

Similar to Nashville and Las Vegas, Tampa has no state income tax, a low cost of living, low housing costs, and tons of opportunity. Tampa metro is over 3M people, which means there is no shortage of opportunity. Tampa also means you get to live near the beach, which my wife says is a good thing. Tampa really is an ideal city except for one big systemic risk: hurricanes. If you’ve never had your house ruined and flooded from a hurricane, I assure you it’s not fun—and it’s not cheap. Tampa is like every great C class property that looks fantastic on paper, but in real life, it’s just too difficult to manage and not worth it.

All that said, this is a hard opportunity to pass up. So instead of living in fear of hurricanes, my wife and I are trying to devise an emergency escape plan built into our move. Any time a hurricane shows up, we drive north for a few days. It’s not feasible for everyone, but may be the best fix for an otherwise perfect place to live.

Other Factors to Consider

Low Cost of Living

All three of my recommendations have one big thing in common: no state income tax. This is really a huge benefit when comparing one location to another. When I moved to Nevada from North Carolina, my cost of living immediately went down 4% just because of different state laws. These are the states that have no income tax:

  • Alaska
  • Florida
  • Nevada
  • South Dakota
  • Texas
  • Washington
  • Wyoming
  • Tennessee (wages only)
  • New Hampshire (wages only)

Location & Natural Disaster Risk

For long-term outlooks, moving inland and upwards is going to become an extremely obvious advantage as time moves forward. Hurricanes, floods, rising water levels, fires, and other natural disasters are going to increase risks and costs. In Miami, rising sea levels are causing massive infrastructure to be built to prevent any damage. Well, who do you think pays for this?

Related: Why “Overpriced” Markets Like San Francisco May Be Healthier Than You Think

Two years ago, Hurricane Matthew did significant damage to my primary residence back in North Carolina. FEMA and my insurance company paid out about $22,000 to fix the flooding, roof damage, and all the felled trees. I was recommended to place flood insurance on the building for the indefinite future—and my insurance company dropped me over this very legitimate claim. I was forced to go with a much more expensive company.

Geographic location and the climate that comes with it are not to be underestimated. The associated costs of negative climate events can make or break your business, and the volume of instances are absolutely going to increase at the coastlines over the next few decades. When you’re considering moving, go inland and upwards.

Population Growth

This one is simple: Go where the people are. Every dollar you ever make in life is going to come from another human being, so go where there are lots of humans. Population growth means opportunity growth. It’s not controversial to say if you want to find a lot of opportunity, you should stay away from small, dying cities in the middle of nowhere. You don’t have to move to the middle of Manhattan, but a reasonably-sized city in growth is a really good idea. If you’re in a small town that doesn’t even have a regular real estate meeting, how much are you hindering your real estate growth?

Now it’s your turn: What are you favorite picks for up-and-coming markets?

Weigh in below!

Alex has spent his career in sales and finance industries and now invests in rental real estate along with working in the underwriting department at a bank in Las Vegas. Alex is an expert in long-d...
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    Jake Walroth Investor from Cincinnati, OH
    Replied over 1 year ago
    I just think its interesting to note, I know a lot of people who have left Nashville of late… back to Cincinnati or Louisville-other cool towns that actually “affordable”. Nashville use to be “affordable”, quaint, and a cozy town with lots of entertainment…. now its cranes and 10x more Bachelorette parties. Not saying I disagree, just thought it was interesting you knew people moving their for the real estate, and I know people electing to leave–costs of realestate/housing being reason #1.
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied over 1 year ago
    Interesting! You mentioned cranes, which to me says they are building and growing. What more could ya want?? 😉
    Jason Hartman Rental Property Investor from Indianapolis, IN
    Replied over 1 year ago
    I agree Jake. I’m not saying there isn’t room for growth in Nashville but I definitely would not classify it as a “low priced” or “affordable” market. This seems outdated. Having lived in Tampa Bay, it isn’t just the hurricanes that are an issue, but the cost of permitting, remodeling, property taxes, and insurance are real killers too.
    Michael Walton Rental Property Investor from Tallahassee, FL
    Replied over 1 year ago
    Sinkholes are also a unique issue for the Tampa area – which can mean increased insurance costs depending where in the Tampa area you are looking to invest (and more importantly what is under the ground there).
    Jonathan Klunk from Louisville, Kentucky
    Replied over 1 year ago
    I’ve noticed the same. I have a lot of Nashville investors coming to Louisville because they have been priced out of the market. Many say the market cap is the same as Manhattan.
    Isaac Agbolosoo Rental Property Investor from Grosse ile
    Replied over 1 year ago
    + Michigan 🙂
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied over 1 year ago
    I don’t think that’s a city 😉
    Isaac Agbolosoo Rental Property Investor from Grosse ile
    Replied over 1 year ago
    Invest close to home, ignore these lottery predictions:)
    Costin I. Rental Property Investor from Round Rock, TX
    Replied over 1 year ago
    + San Antonio, TX ?
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied over 1 year ago
    didn’t make my list unfortunately 😉
    Alexis Schreier Rental Property Investor from San Francisco, CA
    Replied 5 months ago
    Great post! Could you briefly explain why not San Antonio?
    Linda Weeks Investor from Atlanta, Georgia
    Replied over 1 year ago
    Solano County, CA
    Tina Huffman from Napa, CA
    Replied over 1 year ago
    Hi Linda – I live near Solano County, CA and I’m curious to know what made you list it?
    Vaughn K. from Seattle, WA
    Replied over 1 year ago
    I’m originally from there. I have no comment as to current conditions as far as investing goes… BUT it is the last place in the Bay Area that is semi sanely priced. It is the cheapest location in the bay, pretty much bar none. So if Silicon Valley, and California in general, don’t implode, it theoretically has upside. That said, my personal opinion is that SF and the whole area is in a ridiculous bubble, and all the idiocy in California will catch up with it sooner rather than later. BUT if you have faith in CA and SF, it’s one of the only parts of that region that MIGHT still have a large upside, as it hasn’t been gentrified to high heaven yet. Vallejo is finally having it happen apparently, and Fairfield and other areas may well in the future.
    Todd Keith Real Estate Investor from Dallas, TX
    Replied over 1 year ago
    That’s coincidental. I just ran across 20 Multifamily units in Tampa. (10 duplexes) Maybe we’ll move on those.
    Tina Huffman from Napa, CA
    Replied over 1 year ago
    I too am avoiding any hurricane prone location. Global warming ain’t getting any better any time soon, and denying it won’t change anything for sure. (The insurance companies certainly aren’t.) I’m currently looking at different locations in Alabama.
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied over 1 year ago
    Birmingham!
    David M. Investor from Torrance, California
    Replied over 1 year ago
    I’ve considered Las Vegas but dismissed it because of the very reason that you cite: limited diversity of industry. A huge part of their economy is based on discretionary entertainment spending. Construction jobs are there in the good times but crater in the bad. Lots of retirees for sure. How did you get around the limited industry to put Las Vegas in the top three for the country?
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied over 1 year ago
    Luckily there is a lot more to Vegas than gambling these days. Most of us locals don’t even go anywhere near the blvd. Lots of other industry here, the strip is only 3 mile portion of the whole city. There is a LOT of investment going on right now too so it’s not like that one industry is in any sort of decline. in the next 24 months there is about 20Billion of projects wrapping up which will bring a ton of jobs and income. That said, sure your right in that it’s mostly banking on one industry, but there is a huge demand for finance jobs (I’m a commercial loan analyst), and it’s one of the top cities for nursing (which my wife is). So since we’ve been here we’ve only flourished, along with many many others. Lastly, I didn’t say these are objectively the top 3 cities, they are just MY top 3 😉
    Ann Kelly
    Replied over 1 year ago
    Thinking of moving to central Florida. Looking for low cost real estate in a good neighborhood. Where is the best place in Florida to move to?
    Harry Looknanan Jr. Rental Property Investor from San Antonio TX
    Replied over 1 year ago
    Hi Ann. Fort Myers is a great option. Also Englewood and Rotunda. Very nice beaches in Englewood without the crazy crowds.
    John Cleveland Real Estate Agent from Wimauma, FL
    Replied over 1 year ago
    Hi Ann, When you mention “Central Florida” that can encompass many different areas. I am a native Floridian so when you say Central Florida the only thing that comes to mind is Orlando. Now of course there are several different surrounding areas such as kissimmee (Disney), maitland, oviedo etc. If you are talking about orlando and the surrounding areas that are low cost real estate i would start with around the pine hills area which is on the west of Orlando and then i would go east as far as USF (college) if you are thinking about college rentals. Let me know what your thoughts are if you would like to reach out to me.
    Ashley Dennis
    Replied over 1 year ago
    Does anyone know of an investor friendly realtor in the Nashville, TN area? After reading your blog on recommended investment areas, Nashville sounds attractive. I lived there in the late 90s on the west side and sold my new home when I moved away for a new job. Thanks. Ashley Dennis
    Margaret Lane
    Replied over 1 year ago
    I live in the Nashville area and used this guy to close on a few rentals. He was great and I highly recommend. Bo Zivak http://homesforsale.benchmarkrealtytn.com/idx/agent/48259/bo-zivak
    Monty Powers Real Estate Broker from Clarksville, Tennessee
    Replied over 1 year ago
    Ashley, send me a pm if you would like to work with me to find a home. I work the areas in/ around the Nashville area as a real estate agent.
    John Cleveland Real Estate Agent from Wimauma, FL
    Replied over 1 year ago
    Great article. I am a real estate agent in Tampa. I have been living here for 20 years and it is expanding really quick. I am familiar with several of the pockets of growth here. If any one needs the lay of the land and would like to network please connect with me. I will be more than happy to help you in the great market!!
    Melissa Noel
    Replied over 1 year ago
    I think I’ll take you up on that offer Cleveland.
    Ynnez NA
    Replied over 1 year ago
    How about New Jersey? Yes, I know there are sky high taxes but there is close proximity to larger metropolitan cities (NYC and Philly).
    Daniel Hegelein
    Replied over 1 year ago
    People have been leaving NJ for years now and as a owner/landlord you have no rights to speak of.
    Winston Parks Developer from Nashville, TN
    Replied over 1 year ago
    Nice post, but I’d say Nashville RE has been crushing it since 2010 with several projects still in the pipeline. Yes, cranes are everywhere, which is great and the growth continues. That said, the amount of homes sold in July ’18 were less than July ’17. Definitely a higher priced market, but still great if you can afford the cost of entry.
    Michele Orgell Rental Property Investor from Oceanside, CA
    Replied over 1 year ago
    All good points within the article, but one problem: Tampa is part of the area known as “Sinkhole Alley.” Not only Miami will be subject to rising tides.
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied over 1 year ago
    I don’t disagree, but there is a lot of room for opportunity between now and the ~20 years it’s going to really negatively affect Tampa, IMO
    Michael Walton Rental Property Investor from Tallahassee, FL
    Replied over 1 year ago
    Agree. Sinkholes are also a unique issue for the Tampa area – which can mean increased insurance costs depending where in the Tampa area you are looking to invest (and more importantly what is under the ground there).
    Colin March Rental Property Investor from Portland, ME
    Replied over 1 year ago
    Not very cutting edge to choose three 5 cap cities! Maybe this would have been better to bring a contrarian view to cities that are currently not performing as well but there is a reason why that may change in 3-5 years.
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied over 1 year ago
    They asked me to write it this way and I enjoyed doing so. Also, from the comments I received I assure you it was apparently received as quite contrarian LOL
    John Odibo Rental Property Investor from Denver, CO
    Replied over 1 year ago
    Been in Tampa for 3 years now. Market really is turning out to be a great situation but starting to sky rocket. Any investors in Tamp looking to connect?
    Vaughn K. from Seattle, WA
    Replied over 1 year ago
    Yeah… Picking areas that have recently skyrocketed and had massive growth in recent years… That mostly just means their current boom cycle is probably close to worn out. No city sustains the kind of growth they’ve had perpetually. If anything you need to look for places that have had population and job growth that has been trending upwards, but perhaps haven’t had prices spike yet… This is the equivalent of jumping onto a hot stock AFTER the price has doubled in the last couple months. If there is any upside left in the stock, it ain’t much. So it is with these hot real estate markets. That said, IF these areas have a downturn, THEN might be a good time to jump in.
    Isaac Agbolosoo Rental Property Investor from Grosse ile
    Replied over 1 year ago
    I will not buy out of state properties anymore. Rather invest in your county of residence and self manage.
    Prasad J. Investor from Kenmore, Washington
    Replied over 1 year ago
    Great Article! Do you know where we can look up predicted population and job growth stats for a given city for the next 5 or 10 years?