Best markets to invest in?

Question

Which cities do you think would be best to invest in and are set for growth over the next 5 years?

Melissa Justice · Answer

@Eric Shim,

Great question - when looking at cities with strong growth potential over the next 5 years, you want to focus on markets that combine:

*Population and job growth
*Affordability relative to income
*Landlord-friendly regulations
*Diverse economic drivers (not just one big employer)
*Strong rental demand

Here are some top picks (organized by region) that check many of those boxes and are popular with both new and experienced investors:

Midwest (Cash Flow + Stable Growth)
1. Cleveland, OH
* Low entry prices ($80K–$150K range)
* Strong cash flow potential
* Healthcare and education are major employers
* Revitalization happening downtown and in key suburbs

2. Indianapolis, IN
* Very landlord-friendly
* Diverse economy and low unemployment
* Consistent population growth and infrastructure development

Southeast (Growth + Affordability + Tax Benefits)

3. Birmingham, AL
* Strong demand for affordable housing
* High rent-to-price ratio
* Turnkey inventory readily available
* Section 8 and workforce housing markets are solid

4. Columbia, SC
* Government and military-driven economy (Ft. Jackson)
* Strong college and healthcare presence
* Emerging market with room to grow

5. Ocala or Citrus Springs, FL
* Popular among retirees and remote workers
* No state income tax
* New construction rentals under $250K with decent yields

Wildcard Growth Markets
6. Chattanooga, TN
* Tech and outdoor lifestyle hub
* Growing startup scene, strong tourism and logistics
* Still relatively affordable compared to Nashville

7. Fayetteville, NC
* Military-driven demand (Fort Liberty)
* Lower property taxes and high rental demand
* Entry point for new investors

Look for submarkets within these metros where population is growing faster than average, schools are improving, and new developments are going in - that’s often where both cash flow and appreciation intersect.

Always here to discuss markets more in depth - happy to help!

Best of luck,

Melissa

Samuel Diouf · Answer

A lot of investors based in expensive markets where the numbers don't work are choosing to purchase their investments OOS in the Midwest because of the affordability and numbers making more sense.

Kerlous Tadres · Answer

Hey Eric, A great real estate investment market is driven by factors like population growth, job market stability, and economic diversity. Look for areas with expanding industries such as tech, healthcare, and education, as they create steady demand for housing. Cities with ongoing infrastructure development, such as new transportation hubs or business districts, also offer strong potential for appreciation. Additionally, affordability compared to national averages, along with a solid rental market and increasing demand from young professionals or families, makes a location prime for long-term growth. Be sure to assess local zoning laws, tax incentives, and overall quality of life, as these contribute to future market stability.

Marcus Auerbach · Answer

The Midwest. But it does not matter as much as you think. REI is not the stock market, where you have no control. With REI what you do matters much more than where you do it. And your home field advantage is probably >20%, so use it!

Travis Biziorek · Answer

Detroit’s definitely one of my top picks if you’re looking at growth over the next 5 years—especially when factoring in affordability, rental demand, and appreciation potential.

I started investing in Detroit back in 2019 while living in the city, built a 12-door portfolio using the BRRRR strategy, and have been involved in the market ever since. I’ve since moved back to California, but my team still operates full-time on the ground there.

Here’s why I still believe in Detroit:

• Revitalization is real. Billions have been poured into the core, and it’s slowly rippling into the surrounding neighborhoods. Momentum is slow but steady.
• Rent-to-price ratio is strong. You can still find solid cash flow in C/C+ neighborhoods—though it’s getting tougher.
• Price points are low. That creates opportunity for newer investors, BRRRR deals, and value-add plays.
• Population is finally growing again. After decades of decline, Detroit’s population ticked up last year for the first time in a long time, which is a big psychological and economic milestone.

Revitalization is real. Billions have been poured into the core, and it’s slowly rippling into the surrounding neighborhoods. Momentum is slow but steady.

Rent-to-price ratio is strong. You can still find solid cash flow in C/C+ neighborhoods—though it’s getting tougher.

Price points are low. That creates opportunity for newer investors, BRRRR deals, and value-add plays.

Population is finally growing again. After decades of decline, Detroit’s population ticked up last year for the first time in a long time, which is a big psychological and economic milestone.

The catch? Detroit is super block-by-block, and managing properties remotely can be tough if you don’t have a solid team in place. It’s not a passive, plug-and-play type of market—at least not without experience or help. But if you’re willing to dig in and do the work (or work with someone who does), the upside can be really strong.

Happy to share more if you’re seriously considering it.

Min Zhang · Answer

From my experience investing in the Midwest, C-class neighborhoods have often been the sweet spot for hitting the 1% Rule. But aside from cash flow, I also look at key drivers like local job growth, especially in industries like healthcare, manufacturing, and logistics, which keep demand stable. Population trends matter as well as places with steady or growing populations tend to support rising rents and home values. That said, even if a property meets the 1% Rule and hits these indicators, you still need to do your homework. Sometimes a deal looks good on paper but is actually in a rougher neighborhood, which can hurt your investment. That’s why I always recommend do your due diligencce. Connect with an active investor in the area and pick their brains on what's working for them

Eric Fernwood · Answer

Hello @Eric Shim,

You’re absolutely right to prioritize choosing the right city for your real estate investments. Where you invest determines all long-term income characteristics. While I can’t recommend specific cities without understanding your current situation and long-term goals, I will share a straightforward process for creating a short list of cities for potential further consideration.

Before I do, I want to ensure we have a common understanding of the goal of real estate investing.

The Goal of Real Estate Investing

The ultimate goal of real estate investing is lifelong financial independence. This isn’t a one-time milestone or a fixed amount of money—it’s about creating a sustainable income stream that meets two key criteria:

• Rents Outpace Inflation: Rental income must grow faster than inflation to cover rising costs. Cities with strong, sustained population growth are more likely to meet this requirement.
• Lifelong Income Stability: Your income must last a lifetime. This requires tenants to maintain stable employment, even as companies come and go. Cities that attract new businesses, have low crime rates, a metro population over 1 million (for infrastructure and skilled labor), and low operating costs are best positioned to meet this need.

Where to Start Your Search

Evaluating every city in the U.S. isn't practical. Focus instead on cities with metropolitan populations over 1 million that show significant, sustained population growth. This Wikipedia page has the data you need. Smaller cities are typically more vulnerable to economic downturns and market shifts.

After identifying cities that meet these basic criteria, apply the following filters to narrow down your list:

• Low Crime Rates: Avoid cities with high crime rates. Use resources like CBS’s list of the 50 Most Dangerous Cities in America to identify cities to avoid.
• Low Operating Costs: High operating costs erode your profits. Key considerations include property taxes and insurance rates. Resources like ValuePenguin and LendingTree can help you compare your operating costs across cities.
• No Rent Control: Rent control can limit your ability to raise rents, screen tenants, or evict non-performing tenants. Avoid investing in cities with rent controls.

By filtering out cities that don’t meet these criteria, you’ll create a shortlist of potential investment locations for further evaluation.

Remote Investing

Live where you like, but invest where you can achieve lifelong financial independence.

Most investors don't live in cities that meet all the requirements for financial independence. Therefore, the real question isn't whether to invest remotely—it's where and how to do it safely.

Once you've selected a city that meets the requirements, you'll need an experienced local investment team to minimize risk and maximize returns. While books, seminars, podcasts, and websites offer valuable general knowledge, ultimately, you're investing in a specific property in a specific city. This requires deep local expertise. Only an experienced local team can provide the local market knowledge and resources essential for success.

Summary

By following the steps outlined above, you can quickly narrow your focus to cities that support lifelong financial independence. However, if you invest in a city that doesn’t meet these criteria, no number of properties will compensate for the long-term challenges you’ll face.

Best markets to invest in?

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