{"id":170811,"date":"2024-04-19T14:27:24","date_gmt":"2024-04-19T20:27:24","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=170811"},"modified":"2024-04-19T14:27:27","modified_gmt":"2024-04-19T20:27:27","slug":"best-sunbelt-housing-markets-for-cash-flow","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/best-sunbelt-housing-markets-for-cash-flow","title":{"rendered":"The 25 Best Sunbelt Markets for Cash Flow\u2014And a Closer Look at the Top 4"},"content":{"rendered":"\n

Jazz icon and Los Angeles native Roy Ayers once famously sang, “Everybody Loves The Sunshine.”<\/span><\/p>\n\n\n\n

Never have <\/span>truer<\/span> words <\/span>been said<\/span>. The Sunbelt states are having their moment in the (ahem) sun, with hordes of new residents taking flight from cold or pricey Northern and coastal states like migratory birds at the first hint of autumn. Tracking their flight patterns is a valuable tool for real estate investors looking to buy a rental property in the Sunbelt to maximize <\/span>cash flow<\/span><\/a>.<\/span><\/p>\n\n\n\n

For reference,\u00a0these are the states referred to as the \u201cSunbelt.\u201d<\/span><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

U.S. Census<\/span><\/a> data showed that Southern states are driving the population shift. The South accounted for 87% of the nation’s growth in 2023, adding 1.4 million residents for a total population of 130 million, with a hefty 706,266 people added via net domestic migration. <\/span>The Northeast\u2014mainly New York and Pennsylvania\u2014was the hardest hit by the movement, <\/span>which lost<\/span> 43,330 residents in 2023, down from a 216,576 decline in 2022 <\/span>and<\/span> a 187,054 decline in 2021.<\/span><\/p>\n\n\n\n

However, the Sunbelt’s heat has not <\/span>merely<\/span> <\/span>been fueled<\/span> by its lower cost of living, balmy temperatures, and shift toward <\/span>remote work<\/span><\/a>. Jobs are fanning the flame, too, with three Florida cities making the top <\/span>10 hottest job markets<\/span><\/a> in 2023, along with Austin and Dallas, Texas. Nashville topped the list of 2022’s <\/span>hottest job markets<\/span><\/a>, followed by Austin and Jacksonville, Florida.<\/span><\/p>\n\n\n\n

BiggerPockets decided to investigate the numbers, scouring an extensive housing market database that ranked Sunbelt cities with over 500,000 residents for their rent-to-price ratios (RTP), a <\/span>common<\/span> gauge for measuring the ability to cash flow. For example, RTP ratios closer to one are best for cash flow. Given today\u2019s market conditions and the lack of good cash flow options, the bar <\/span>is <\/span>set<\/span> around 0.60-0.70% for ideal targets.<\/span><\/p>\n\n\n\n

The Highest Rent-to-Price Ratios of Sunbelt Markets With Populations Above 500,000<\/span><\/h2>\n\n\n\n
Metro Area<\/strong><\/th>Population<\/strong><\/th>RTP (%)<\/strong><\/th><\/tr><\/thead>
El Paso, TX<\/td>871,323<\/td>0.71%<\/td><\/tr>
Jackson, MS<\/td>580,661<\/td>0.70%<\/td><\/tr>
New Orleans, LA<\/td>1,246,176<\/td>0.69%<\/td><\/tr>
McAllen, TX<\/td>888,367<\/td>0.63%<\/td><\/tr>
Memphis, TN<\/td>1,330,954<\/td>0.62%<\/td><\/tr>
Columbia, SC<\/td>847,804<\/td>0.61%<\/td><\/tr>
Augusta, GA<\/td>622,829<\/td>0.61%<\/td><\/tr>
Lakeland, FL<\/td>787,404<\/td>0.60%<\/td><\/tr>
Greensboro, NC<\/td>784,101<\/td>0.60%<\/td><\/tr>
Tulsa, OK<\/td>1,033,157<\/td>0.60%<\/td><\/tr>
Fayetteville, NC<\/td>529,318<\/td>0.58%<\/td><\/tr>
Pensacola, FL<\/td>523,146<\/td>0.58%<\/td><\/tr>
Baton Rouge, LA<\/td>873,060<\/td>0.58%<\/td><\/tr>
Oklahoma City, OK<\/td>1,459,380<\/td>0.58%<\/td><\/tr>
Little Rock, AR<\/td>757,945<\/td>0.57%<\/td><\/tr>
Miami-Fort Lauderdale, FL<\/td>6,139,340<\/td>0.57%<\/td><\/tr>
Melbourne, FL<\/td>630,693<\/td>0.57%<\/td><\/tr>
Tampa, FL<\/td>3,290,730<\/td>0.56%<\/td><\/tr>
Birmingham, AL<\/td>1,116,857<\/td>0.56%<\/td><\/tr>
Daytona Beach, FL<\/td>705,897<\/td>0.55%<\/td><\/tr>
Fort Myers, FL<\/td>822,453<\/td>0.55%<\/td><\/tr>
Knoxville, TN<\/td>906,674<\/td>0.55%<\/td><\/tr>
Houston, TX<\/td>7,340,118<\/td>0.54%<\/td><\/tr>
Greenville, SC<\/td>958,958<\/td>0.54%<\/td><\/tr>
Myrtle Beach, SC<\/td>536,165<\/td>0.54%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Above is the dataset for the top 25 markets with populations above 500,000. As you can see, El Paso tops the list with an RTP of 0.71%. Below is a visualization that gives you a better idea of the relationship between RTP values and population size. The reality is that when the population is above 500,000, the relationship isn’t too strong. It seems like population sizes below 1 million offer the most variability, with either end of the spectrum delivering solid cash flow or not much at all. What we can tell, however, is that as the population increases, cash flow seems to decrease. Since we’re using a small sample size here, we can’t say with absolute confidence what the real relationship is here, but you can get an idea based on the results.<\/p>\n\n\n\n

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