BiggerPockets Real Estate Podcast - The Best Markets to Buy Rental Properties Right Now (2025)

Starting point is 00:00:00 These are the best markets to buy rental properties right now. You may be hearing that cash flow has dried up, but it is still alive and well in 2025 if you know where to look. Today, we'll reveal three of our favorite markets for anyone looking to progress towards financial freedom through real estate, plus a few bonus markets you really need to know about. What's up, everyone? It's Dave Meyer, back with another episode of the Bigger Pockets podcast, and we've got a fun one today that many of you keep requesting for us to repeat. We actually did a show just like this back in

Starting point is 00:00:37 August, one of the most popular ones we did last year. It featured Ashley Care and Henry Washington. We each picked our on markets. So to do the repeat of this episode, I've invited Ashley and Henry back again. Ashley, good to see you. Yes. Thanks so much for having me. And fresh off your home city of Buffalo being named the hottest housing market for Zillow in 2025. So second year running. I know. We're not letting you pick it because it's too obvious right now. So we're going to handicap you a little bit. And Henry, we already know you picked like the best market of the last 10 years. So, and live in it in Northwest Arkansas.

Starting point is 00:01:13 So we're also not letting you pick that one. Fair enough, fair enough. So we did this show back in August of 2024. You can go check that out. In that show, we had a data download that accompanied the show and the research that Ashley Henry and I did. And we've done the same thing. You can go to biggerpockets.com slash resources and

Starting point is 00:01:31 download data for more than 300 markets in the United States. It has stuff like rent to price ratio, population growth, basically all the stuff that we're going to be talking about today. You can grab that for free. So go check that out. In today's episode, we're going to pick each of our favorite markets. So I'm eager to hear what you guys have. And then at the end, we're going to do two quick bonus rounds, one for the most affordable market that you like the most, which we're going to define as a median home price of $200,000 or less. Those still do exist. And it'll be fun to see which ones you pick. And we'll do another one for big cities because I don't know about you guys. I hear a lot that big cities are too expensive. You can't invest in them. And so I'm going to challenge you

Starting point is 00:02:11 both to do that. So, Henry, you picked two out of 300 plus markets that we provide you with some data on. How did you get it down to these two? Yeah, absolutely. So when I'm looking at this data set, what's important to me is I want a place where the median home price is under the national average or at the national average. So that means there's, air quotes, affordability. And then the second thing I'm looking at is I want a place where the median rents are at or above the national average. That means I can buy a house for less than the average, but rent it for above the national average. And then I'm looking for positive population growth over the last five years, something close to the normal or above. Doesn't have to be crazy population growth. It just has to show me that

Starting point is 00:02:51 people are continuously moving to that area and it's not a dying city where people are moving away from it. Once I have those three data points, then I start to narrow it down a little more based on what I'm seeing in those markets. So I might remove super coastal cities or I might remove areas where the weather's going to be extreme or like extremely cold. And then I'm going to dive into what's driving the economy in those areas. I'm also going to look at what's the unemployment rate in the area and what is the average income of the people living there. Because when you get that right mix of affordable home prices with higher rents, with an economy that is growing and driving people to want to move to that place. I think it's a great mix of finding a market where you can

Starting point is 00:03:39 get some cash flow, but also appreciation. I'm looking for both. Totally. If you're going to do this type of analysis for yourself, I think it's really helpful to just sort of narrow down to three or five markets and say, like, I'm going to pick one of these three to five. I'm not going to spend years pondering what is a perfect market because there's no such thing. And just doing what Henry said, making sure that the fundamentals are there, and then picking based on where you're going to have a good team, a place you like to go visit, somewhere you have a good gut feeling about. And so that's how I recommended. It's not this precise science. There is art and some data research you should be doing, but there is a bit more than just looking at data. So with all of that preamble, let's get started.

Starting point is 00:04:22 Henry, I'll start with you. What market did you pick? Yeah, I actually picked two markets, mostly because one of them I would probably invest in if my location, like where I currently live didn't matter. And the other one I would invest in, like if I truly had to pick one to actually go buy a property in tomorrow, it would probably be this other market. So you cheated and did too. So I cheated and did too, right. So the markets I picked were Oklahoma City. I love Oklahoma City.

Starting point is 00:04:48 I do too. I really like Oklahoma City. And Huntsville, Alabama. or the two markets I picked. Why I picked Oklahoma City. It's kind of a hidden gem of a big city. Like, people kind of forget that it's a thing. And there's a lot of really good economy there. It's got great jobs in higher education because there are several universities close by. It's got great government and military jobs. It's got great health care jobs. It's got great corporate jobs. Sonic is headquartered there. And they're spending tons of money on infrastructure and their downtown in Bricktown.

Starting point is 00:05:21 areas. Population growth is 5.5 over the last five years. So that's pretty solid. So that means people are still moving there. Median home price is 244,000. That's pretty reasonable for a big city. That's amazing. For reference for everyone, that the average across the country is about 420. So not half, but man, that is affordable by American standards. The median rent is 1523, which probably doesn't seem super great compared to a $244,000 purchase price. But when you think about as an investor, a lot of the times you're going to buy undermarket value, even if you're buying on the market. And that's the median rent, right? So the rents are getting higher. So that tells me that you can probably get a decent rent for a fairly inexpensive home price in the area without having to do a ton

Starting point is 00:06:09 of crazy work to find the most amazing deal possible. And unemployment, 2.8%. Wow. It's basically as low as it gets. Yeah, right. So Oklahoma City, I think, is a great big city sleeper market where you can feel comfortable and confident investing in that market. It's not going anywhere anytime soon. Infrastructure is great. Jobs are great. I would pick Oklahoma City because I live about three hour drive from Oklahoma City. And I've been there several times. Now, the market I would pick if my location didn't matter is Huntsville, Alabama. You know me. I like unsexy sleeper markets. Like, I want the things that are under the radar. And people hear Alabama and sometimes they just get turned off because they think of the South and there's nothing. great going on there, but Alabama is on the come-up. There's tons of aerospace, engineering jobs, defense contracting jobs. There's tons of really smart, high-income earners that are moving and living in Alabama. You get a job at NASA and make like 300 grand a year and live in Huntsville and pay like $400,000 for like the nicest house. You're living a good life. You're living a good life. Average home price is $338,000 there, but you've got a lot of high-income earners. You've got a lot of aerospace, technology, engineering jobs, companies that are moving operations to Alabama because of all of the defense contracts.

Starting point is 00:07:26 Because you think of these defense contractors, what they do is they get R&D money. And they pretty much have to spend that R&D money every year. And so you get a lot of these subsidiary companies who work with defense contractors who now go and open up offices near all these defense contracting companies to try to land some of that R&D money. So you've got a lot of great job opportunities. Plus manufacturing is big. Auto manufacturing is big in Alabama. So you've got Toyota that's got a great place there. Mazda, Mercedes has a place nearby where they're all building cars and they're all growing and expanding their operations there.

Starting point is 00:07:57 So it's kind of a sleeper market in terms of lots of great economy where you get people with really good jobs. A lot of these people are going to rent. You got a median rent price of 1776, which is pretty good. Very patriotic too. Yeah, right. So I really, really, really, like Huntsville as a sleeper market. That's probably the one I would pick if location didn't matter to me. Well, let me just first say, you are going to lose this competition for cheating and picking, too.

Starting point is 00:08:27 But I really like Alabama. It's very affordable. Obviously, like everywhere, it's very local, but there's some really good markets. We've talked a lot about Tuscaloosa being a really good cash flow market in the U.S. And the thing I like about Huntsville in particular is that it's northern Alabama, because Southern Alabama is experiencing a lot of what's going on in Florida with insurance costs, just like going through the roof being on the Gulf there. So, I mean, you're basically in Tennessee, right? And it's like on the Tennessee border. So it's a little insulated from those insurance shocks that I think a lot of people along the Gulf Coast are seeing right now.

Starting point is 00:09:05 Okay. So we need to take a quick break. But first wanted to thank our sponsor, Fundrise. This week's bigger news is brought to you by the Fundrise Flagship, fund. You can invest in private market real estate with the Fundrise flagship fund. Check it out at funrise.com slash pockets to learn more. We'll be right back. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand new construction homes,

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Starting point is 00:12:50 Ashley. What did you pick? Well, first I want to make it clear that I did follow instructions. I've never been good at that, by the way. I did pick one market. And Oklahoma City was on the excluded list of cities we can't choose. I picked Columbus, Ohio. Oh, I like it. So I picked this one. So I looked at a couple different things as far as like I definitely wanted the median price to be under 400,000. Because I'm looking at this as a rookie perspective. And to purchase your first investment, I would rather it be less money than more money for your first property that you're going to buy as a rental. So I wanted to be under that 400,000 threshold. The median rent is 1,800.

Starting point is 00:13:37 And then vacancy rates, since I'm looking at rentals, I didn't want. want that high. I mean, some markets had like a vacancy rate of like 16%. So this one's at 6%. And then the unemployment rate isn't too bad. It is 3.3%. First of all, before even getting into those numbers, the first thing I'm narrowing down is landlord-friendly states. As an investor in New York, I will never ever invest in a city that is tenant-friendly again for rentals. So like that would be my biggest thing and then I would kind of narrow down from there. So once I looked at the numbers of Columbus, I did some digging into what actually would make it attractive for people to live there or to move there. So Amazon actually is doing a $10 billion investment into their data center

Starting point is 00:14:30 infrastructure. There's also some kind of huge development grant that's happening. It's like $292 million development. It's going to be residential units, office. space, everything like that. And it's anticipated to be completed by 2026. Then I was like if there's a university or school there too. So if you ever need to pivot to college housing, that may be an option. So Ohio State is there. Yeah. Columbus is one of those markets I feel like has just been booming. Once that Chips Act got announced and Intel said they were going to start manufacturing processors there. It's been like a free for all. I actually drove there myself to see if I wanted to go invest there. It's a very strong market fundamentally. My only knock against it personally was like

Starting point is 00:15:18 my buy box is like something that I can at least break even cash flow on. And it was hard for me to find that just because there seems to be a lot of investor activity in Columbus already. Yeah. I've heard a lot of people talk about it and you'll find it in the forums too, a lot of mentions of Columbus, Ohio. Lots of investor activity there. Lots of older homes, too. Lots of older multifamily. So you have to take into consideration, like, truly what your buybox is and watch out

Starting point is 00:15:47 for those maintenance and capital expenses in a market with a lot of older properties. The property I'm sitting in was built in the 1800s. Really? Yeah. All the house is yours, like that old. That is something I've experienced now that I do some investing in the Midwest. Henry's right. A lot of them are from the early 1900s, late 1800s.

Starting point is 00:16:08 And it's tough because you obviously don't want to get something that is a lot of CapEx and a lot of deferred maintenance. But they're also like some of the nicest areas. Old homes are traditionally built in the most desirable areas, close to downtown or close to some attractions. And they have a lot of charm, which I like. And so it's kind of finding the balance. I personally try and look for ones that as long as the bones are good and the

Starting point is 00:16:33 internal components are upgraded. No knob and tube, for example, you know, new plumbing, that kind of stuff. I think you can still do it, but Henry's 100% right. You need to be very careful with these types of things. Yeah, it's not a complete turnoff. I'm just saying you got to pay attention to like if you can find one where somebody's already coming and done that work for you, that's amazing. But I mean, lots of boilers, you know, things that aren't normal across the rest of the country that can be expensive if you have never dealt with them before. And like one thing to do, like if you're not sure about that, is when you do your home inspection, ask the inspector, can you tell me one year from now, five years from now, and 10 years from now, what do you think's

Starting point is 00:17:14 going to need to be replaced? And they can actually kind of help you, like, plan that out, like, okay, a roof probably in five years, new furnace and 10, or whatever that may be, to kind of like help ease the navigation of figuring that out for yourself too when you're looking at a property. All right. Well, very good choice. I think if you can find solid cash or you want to invest for appreciation only Columbus is going to be a really, a really good one. My market that I picked will move on is another Midwest market, not surprising. If everyone listens to me, I am, I call myself long on the Midwest. It means I don't think it's going to be the highest performer next year or three years, but I think

Starting point is 00:17:54 five, 10, 20 year horizon, the Midwest is really good fundamentals, mostly based on affordability. Home prices are very expensive throughout the country. And you see over time, people tend to gravitate towards places that are more affordable because businesses move to places that are more affordable. And they offer tax incentives. And for me, when I look at markets, job growth is number one. Affordableity is number two. And the Midwest has a lot of those things. So I picked what is often cited as the fastest growing population-wise market in the Midwest, which is Indianapolis.

Starting point is 00:18:29 Indiana. Have you guys ever been there, spent any time there? I went to a wedding once and it was in August and it was so hot. It was outside. Everybody would go into the bathroom. They had those bathroom trailers because it was only air conditioning. Really? I didn't realize Indianapolis was that hot or maybe it was just like a freak thing. That's like a cool day where Henry is. Maybe just in Buffalo you have no tolerance. Oh my God, it's about 60. I'm sweating. Well, I like Indianapolis, super affordable market at 270,000. But the fundamentals here that I love are just the employment growth.

Starting point is 00:19:06 Like to me, when there's a lot of jobs, people start moving there to that. People start getting paid more. You see an unemployment rate of just 3.6%. And if you really want to get nerdy about it and look into what jobs are growing, you see it really across the board. It's a well-diversified economy. But I like seeing that one of the fastest growing industry. in Indianapolis was financial activities. So banking and stuff, that is pretty stable industry,

Starting point is 00:19:33 high-paying jobs, professional and business services are going quickly, education and health services, which are really recession-resistant jobs. I really like all of that. And if you look at the Trump administration's policies, they're really trying to restart American manufacturing. And if that happens, I think you're going to start to see a lot more growth in the Midwest. And so that's another reason I'm picking Indianapolis. And in addition to just being sort of like manufacturing, they have huge players like Eli Lilly, one of the biggest pharmaceutical companies, is based out of their. Salesforce, big tech company has a huge employment there.

Starting point is 00:20:13 There's racing, Cummings. So there's a lot going on there. I think similar to what Ashley said, it's just kind of like a centralized place. And it's a very landlord-friendly state. So that's why I picked Indianapolis. Yeah. Yeah, Indianapolis is a lot cooler than I thought it was going to be before I went there. The downtown area, I mean, you've got the Lucas Oil Stadium right down the street from where the

Starting point is 00:20:35 Indiana Pacers play. Eli Lilly's office isn't far from there either. And so it's, you can tell there's a lot of money being poured into the area, but there's a lot of job diversity and job growth, lots of great infrastructure. I was really pleasantly surprised with Indianapolis. 270,000 for median home price, pretty solid. You know, you have to imagine with all the growth going on there that that's going to be going up similar there lots of older homes yeah for sure one thing i learned uh about the area is it's some of the best golf in the country oh tell me more so many golf courses so many pete dyed design courses there's actually a golf course right right there's like nine holes of the golf course are right inside the track where they race indianapolis 500

Starting point is 00:21:16 so dude i saw i've only been once and it was for a conference but when i was flying in i was like is that real because you fly right over the the racetrack and there's golf holes in there. It's so cool. Absolutely there is, yes. All right. Well, I think it's a great market. Henry, whenever we do our Lake Effect Cashfellow road trip, we're stopping at Indianapolis. Sounds great to me. Ashley, you don't know, but now you have to come on this trip, too. Oh, I remember it from last time. I was already going to invite myself. Yeah. Good. Well, no, you were always officially invited. I just figured you didn't want to come. All right. So those are our favorite markets. We are going to take a quick break, but when we come back,

Starting point is 00:21:54 we're going to do a speed round to talk about our favorite affordable markets and our favorite big cities. We'll be right back. People love to call real estate passive income, which is interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they pick the wrong market. Rent to retirement flips that model. They help investors buy turnkey new construction homes, often 10% below market value in top rental markets across the country. Their local teams handle the build, the property management, and the details, so you don't have to. In some cases, investors even receive 50 to 75% of their down payment back at closing, and there are interest rates as low as 3.75%.

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Starting point is 00:27:08 210 or less. Henry, you went first last time. So, Ashley, why don't you give us yours? Okay, so I picked Sioux City and I selected this because it was under $210,000. But also, it was really hard to find a market that didn't have a really high unemployment rate, like somewhere like 16%. And then Sioux City was 2.7%. Holy moly, 16%. That's like higher than it was during the Great Recession. Yeah, there is a lot of them that had really high ones. Yeah, that's serious unemployment. All right. Good choice then. Henry, what do you got? I picked the same thing, Sioux City. There wasn't a ton of options there, but Oh my God, you're such a cheer. Median home price of 190. But the thing to watch out for, The population is only 144,000.

Starting point is 00:27:55 So a little bit of a red flag. But vacancy, 5.87%, which was pretty good. Unemployment, 2.7%. It was the best option of the options of an under $210,000 price point. Yeah. The vacancy rate, too. I just double-checked it. It was actually super high on the other ones, too, that were 210,000 also.

Starting point is 00:28:16 Well, it's not the best because the one I picked is the best. Which is Rockford, Illinois. I actually started looking at this before I started researching this show because Realtor.com came out and said it would be the hottest housing market for 2025. And I started just like digging into it a little bit. I wouldn't say it's a suburb of Chicago. It's like 90 miles away. So it's, I don't know many people who would commute that far.

Starting point is 00:28:41 But it's also like sort of equidistant to Milwaukee. And so there's a good amount of industry there. The median home price is just 188,000, which is really nice. And the vacancy rate, to your point, was just 7.3%, which is not amazing, but not terrible. And the unemployment rate is 5.4%. Now, 5.4%, probably a little bit higher than normally I would choose. But I did some extra homework and started looking at the history of their unemployment rate. And it was eight a couple years ago, and it's actually been steadily going down,

Starting point is 00:29:18 meaning that there is strong job growth in the area. Just a little tip for people to remember that you don't just need to look at things at the point in time, but try and look at an overall trend because if their unemployment rate has been trending down, like it has been, that can be generally a good thing for an area. So that was my quick affordable market, Rockford, Illinois. We're now going to do our second speed round, which was big city. So basically the opposite. Well, I guess it kind of turned out to be the opposite.

Starting point is 00:29:48 the first one was based off price, but there aren't a lot of big cities where you can buy for under 210,000. So this criteria, Henry, will start with you, is over two million. And I want to know what you picked. Over two million. I picked San Antonio, Texas. What do you like about it? I like San Antonio. It seemed like everybody was just having a good time in San Antonio. I don't know what it was. Everybody was having a blast when I went to San Antonio, Texas. What were you doing there? Were you like out a bachelor party? No, no, I was speaking at a real estate event. Oh, nice.

Starting point is 00:30:20 But it just seemed like everybody was having a great time. I went to the downtown area and walked around for a little while. It was super cool. Lots of history, obviously. But $265,000 as a median home price, which is really reasonable. Population of $2.6 million, but a $265,000 median home price, I thought that was like hard to find, hard to come by. Plus, you have unemployment at 3.9% and population growth at 7.69% over the last five years. I just think those are pretty good numbers for a big city.

Starting point is 00:30:49 I like San Antonio. I thought there's a lot of fundamentals. And I feel like people don't realize this. It's the eighth biggest city in the country. It's huge compared to. Yeah, it's really big. And it's close enough in my mind to Austin that you're going to get a little bit of that tech money runoff going on. It's its own city and its own right.

Starting point is 00:31:08 It's much bigger than Austin, actually. But you know, you just see a lot of investment into Austin. And it's driving distance. It's like, you know, I think it's like under 100 miles. Yeah, so 45 minutes. Yeah. So I think it's a good market. It has been in a little bit of a slump, like a lot of Texas and Florida, but long-term

Starting point is 00:31:27 fundamentals are very strong there. All right. Big City, Ashley, what do you pick? I picked Minneapolis. Oh, interesting. So this one actually had a population of 3.6 million, but the median price was 371,000. So that wasn't that bad. Five-year growth, 4.25%.

Starting point is 00:31:45 vacancy rate was a little bit higher than some of the other markets we looked at today at 4.68%, but still not awful. Then unemployment 2.7. Whoa. They are considered landlord semi-friendly, so not all the way landlord-friendly. There are some rent controls in Minneapolis, I think. The last thing about them, too, is they're putting a lot of money into the Mississippi River waterfront and have like this big build initiative. where they're putting a lot of money into the city and the waterfront area. San Antonio already hasn't ever walked, so we're better.

Starting point is 00:32:23 There's no potential for growth then. You want to get in before that attraction is there. Minneapolis is one of those sneaky cities. There's all sorts of really big companies there. Target, Medtronic. There's a lot of big companies. I've honestly never spent any time outside of the glorious airport, but people who live there love it, too. It's just one of those places where people really say it has a high quality of what.

Starting point is 00:32:45 So I personally really like investing in places with high quality of life. I think they have like strong demand, especially around young people, good renters, that kind of stuff. All right. For my big city, I picked Philadelphia, Pennsylvania. I actually started looking at this based off Reddit because I love following Reddit. And people were just talking about how Philadelphia is such a great city. And when you actually dig into the numbers, it is pretty compelling. you're starting to see, I think, sort of like a resurgence in housing markets across the northeast.

Starting point is 00:33:21 You're seeing this in places in New Hampshire and Vermont. You see this in Rhode Island is one of the hottest places. And Philadelphia, for being a city with like a ton of economic engines, the median home price is just 366,000. So trying to buy in a big city, you guys pick good ones, but it's pretty rare to see something that cheap. The unemployment rates at 3.6%. Population growth for the Northeast is really good. It's not like amazing for the Southwest, but for a big city in the Northeast, it's really solid.

Starting point is 00:33:55 Vacancy rates are low. And I just hear great things, again, about the quality of life there, which like I was just saying, sort of I lend value to that. So I picked Philadelphia. They also have four pro sports teams. Yeah. Like one of the few cities that actually have four of them. that's true. When you go there too, all of their stadiums are right together. It's like this whole

Starting point is 00:34:19 little complex thing and they're all right there. It's pretty cool. I never really thought about that as a metric, but this definitely major economic engine. All right. Well, thank you both so much for doing your homework. Clearly, Ashley is the winner because Henry, you're disqualified like two different times. Now I know this is rigged because every time you say that it's me, but Henry definitely had the better markets this time. I don't know. I give points for following directions. I've never been a rule follower. I marched to my own beat. That's why you're an entrepreneur. But if we didn't need to make a podcast episode, I would have sent you home from school today.

Starting point is 00:34:58 But thank you both. This is really insightful. And hopefully for everyone listening, you learned a little bit about how we take a look at markets. If you're going to do this kind of work for yourself, my recommendation is always to look at the data. you can get it for free again, go to biggerpockets.com slash resources, pick the criteria that really matter to you, narrow it down to three to five, and then really start working on your team and actually start analyzing deals in these markets to see if they work for you in your strategy. Because on paper, things in Texas, for example, they all look great. I think Oklahoma City is another one looks great on paper. It is still a good market, but insurance costs are super high in Oklahoma City.

Starting point is 00:35:36 So really just go in and look at the numbers, and you're going to start to see which. which market of the five you sort of select as your short list are going to work for you, are going to find the deals that you're looking for. Also, too, on that point, Dave, if you're going to pick a market that you actually want to get to, you might also look at where direct flights can get you to based on the markets in your direct list because you don't want to pigeonhole yourself into a long drive if getting there is important to you. Dude, I'm getting crushed on that right now.

Starting point is 00:36:02 I picked a market when I was still living in Amsterdam. Now I moved back to the States and I can't get direct flights to the market I'm investing and I'm like, I'm going to sell all this stuff. Yeah, man, it's important. I hate layovers. It's like my number one pet peeve is layovers. I don't want to do it. The last thing I want to add is if you go to biggerpockets.com slash a Ricky resource.

Starting point is 00:36:21 We actually have a market analyzer template in there that you can use. That kind of talks about all the different data points we looked at today, things to consider when analyzing a market. Ah, great tip. Thank you so much. Thank you all so much for listening to this episode of the Bigger Pockets podcast. Ashley and Henry, thanks for being. in here. We'll see you for another episode in just a couple days. Thanks for listening. Do you ever notice how every passive investment somehow turns into a very active lifestyle,

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