Jazz icon and Los Angeles native Roy Ayers once became famous for singing “Everybody Loves the Sunshine.”
never more true words Was told. Like migratory birds heralding the arrival of fall, Sunbelt states are getting their moment in the sun as new residents take off from cold, expensive northern and coastal states in droves. For real estate investors looking to buy rental properties in the Sunbelt, tracking flight patterns is a valuable tool. Cash flow.
For reference, these are the states known as the “Sunbelt.”
us census The data showed that southern states were driving population migration. The South accounted for 87% of the country’s growth in 2023, with an increase of 1.4 million residents for a total population of 130 million, and a significant population increase of 706,266 due to net internal migration. The Northeast, primarily New York and Pennsylvania, were hardest hit by the movement. The one who lost The number of residents in 2023 will be 43,330, down from 216,576 in 2022. and In 2021, there will be a decrease of 187,054 people.
However, the Sunbelt fever is still simply fueled Low cost of living, mild temperature, and remote work.Employment is also adding fuel to the fire, with three of his Florida cities ranking at the top. The 10 hottest job markets In 2023, so will Austin and Dallas, Texas.Nashville tops the 2022 list hottest job marketfollowed by Austin and Jacksonville, Florida.
BiggerPockets decided to investigate this number by scouring an extensive housing market database that ranks Sunbelt cities with more than 500,000 residents by rent-to-price ratio (RTP). general A gauge for measuring cash flow capacity. For example, the closer your RTP ratio is to 1, the better your cash flow. Given today’s market conditions and lack of good cash flow options; teeth set Approximately 0.60-0.70% for ideal targets.
Sunbelt markets with a population of over 500,000 people have the highest rent-to-price ratios.
metropolitan area | population | RTP (%) |
---|---|---|
El Paso, Texas | 871,323 | 0.71% |
jackson, mississippi | 580,661 | 0.70% |
new orleans louisiana | 1,246,176 | 0.69% |
McAllen, Texas | 888,367 | 0.63% |
memphis tennessee | 1,330,954 | 0.62% |
columbia south carolina | 847,804 | 0.61% |
Augusta, Georgia | 622,829 | 0.61% |
Lakeland, Florida | 787,404 | 0.60% |
greensboro, north carolina | 784,101 | 0.60% |
Tulsa, Oklahoma | 1,033,157 | 0.60% |
Fayetteville, North Carolina | 529,318 | 0.58% |
Pensacola, Florida | 523,146 | 0.58% |
Baton Rouge, Louisiana | 873,060 | 0.58% |
Oklahoma City, Oklahoma | 1,459,380 | 0.58% |
little rock, arkansas | 757,945 | 0.57% |
Miami, Florida – Fort Lauderdale | 6,139,340 | 0.57% |
melbourne, florida | 630,693 | 0.57% |
tampa, florida | 3,290,730 | 0.56% |
birmingham alabama | 1,116,857 | 0.56% |
Daytona Beach, Florida | 705,897 | 0.55% |
Fort Myers, Florida | 822,453 | 0.55% |
knoxville, tennessee | 906,674 | 0.55% |
houston texas | 7,340,118 | 0.54% |
Greenville, South Carolina | 958,958 | 0.54% |
Myrtle Beach, South Carolina | 536,165 | 0.54% |
Above is a dataset of the top 25 markets with a population of over 500,000 people. As you can see, El Paso tops the list with his RTP of 0.71%. Below is a visualization that allows you to better understand the relationship between RTP values and population size. In reality, once the population exceeds 500,000 people, the relationship becomes less strong. Regions with a population size of less than 1 million people are most volatile, with both regions likely to have either strong cash flow or no cash flow at all. But what we can say is that as the population increases, cash flows appear to decrease. We’re using a small sample size here, so we can’t say with absolute confidence what the actual relationship is, but we can get an idea based on the results.
A closer look at the top 4 RTP markets
El Paso, Texas
El Paso is the sixth largest city in Texas and the largest metropolitan area along the Texas-Mexico border. Its border location and bilingual and cross-cultural workforce have fueled recent business growth, making it one of the largest manufacturing centers in North America.
according to el paso texas state governmentIn 2021, the Borderplex region was the fifth-highest-employing manufacturing hub in North America, accounting for 17% of all trade with Mexico. The region generated $94.2 billion worth of trade with Mexico in 2020, and was home to more than 495 manufacturing businesses and 75 related facilities in El Paso and nearby Las Cruces.
The military is also a major employment driver.r—1 16 jobs here are military relatedthanks to Fort Bliss. Government, education, and health care are also important employers.
according to us census Median household income in 2022 was a modest $55,170, and per capita income was $27,434, according to the data. However, this is probably not indicative of new jobs in the area. Realtor.com The latest numbers tell a different picture, with the median listed home price just under $300,000, up 1.4% last year.
The median rental price is $1,650, giving tenants a spacious suburban ranch-style home. In several regions, prices range from just over $100,000 to $600,000.
If you’re interested in investing in El Paso, there are currently around 4,000 properties available, with plenty of affordable duplexes/triplexes and 1-2 bedroom homes in decent neighborhoods. These are suitable for both blue-collar and white-collar workers and generate decent cash flow for homeowners.
jackson, mississippi
Jackson has received little buzz in real estate investing, but its indicators suggest it could be a good investment for smart investors.
Jackson’s average salary is $42,193 As with El Paso, this is not surprising, but it probably doesn’t tell the whole story.urban middle class provided High-wage industrial jobs in metal fabrication, electrical and electronic equipment, automobiles (Nissan has a factory here), related auto parts, apparel, food, furniture, rubber and plastic products, wood products, aircraft parts, etc. It is.
Median home prices are generally affordable. $130,000median rental price $1,200 (Suburban ranch homes are up for grabs), and very few homes sell for more than $500,000. With low real estate prices and an influx of new, higher-paying jobs, Jackson, Mississippi very good Where to invest.
new orleans
One of the major cities in the American South, New Orleans has rebuilt itself both emotionally and economically since Hurricane Katrina devastated it in August 2005. largest employer It spans modern businesses such as energy, manufacturing, technology, healthcare, education, and government.
by 2022 US CensusThe median household income in New Orleans is $51,116, which differs from other reports that state the median income is approximately. $70,000. The city has a wide range of employment types, and rising income from new businesses skews the numbers.
according to realtor.com, with a median home listing price of $354,900 and a median rental price of $1,775, residents have the choice of a single-family home or a new apartment in a positive neighborhood. Every year, the range of house prices, rents and incomes driven by modern business and tourism increases. short term rental Areas within the city, and more 130 festivals a year At the home of Mardi Gras.
McAllen, Texas
Another fast-growing border town in South Texas, McAllen residents enjoy employment in manufacturing, health care, and education.and realtor.com evaluation Ranked 5th among the top 10 homes purchased by middle-income Americans in 2022 and Kiplinger’s ranking By 2024, it will be the fourth most livable city in the United States.
realtor.com According to , the median listed home price in the city as of March 2024 was $315,000. The average sales price is significantly lower at $222,600, demonstrating the listing agent’s enthusiasm and optimism about the city’s upward trajectory. The median rental price is $1,450, which one get Stay in modern 3-bedroom apartments or spacious contemporary detached homes.
final thoughts
One obvious advantage for many Sunbelt cities is the affordability of real estate. Combine this with a healthy job market in a modern growing industry, and you have A recipe for long-term cash flow investing. Financially, low or no state income taxes and a business-friendly environment are also big attractions.
The warmer climate is also a plus, with less wear and tear on homes than in colder northern states, lower maintenance costs, and lower utility costs for homeowners. housing complex.
However, investors also need to be wary of an oversupply of housing in Sunbelt cities. A historic number of new rental apartments are now being built there. In many of these cities, including Atlanta, Austin, Phoenix and Las Vegas, rents are starting to level off. Investors should be selective about investing in cities where employment is growing but construction of new rental units is limited.
Exclusive breakdown and data analysis of the hottest regions for investors
It’s no secret that the Sunbelt has been a major focus for investors for years due to rising prices and rents. But which markets offer the greatest opportunities for cash flow?
download sunbelt market worksheet For an overview of the most popular metropolises and states for investors, Complete data for all states and markets Found in the included Sunbelt Market Intel spreadsheet.
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