Jazz icon and Los Angeles native Roy Ayers once famously sang “Everybody Likes Sunshine.”
there has never been More real Character been said. Sunbelt states are enjoying their (ahem) moment in the sun, with hordes of new residents taking off from colder or more expensive northern and coastal states like migratory birds in early fall. For real estate investors looking to purchase rental properties in the Sunbelt, tracking their flight patterns is a valuable tool. cash flow.
For reference, these states are known as the “Sunbelt.”
United States Census Data shows southern states are driving population shifts. By 2023, the South will account for 87% of the country’s economic growth and its total population will increase by 1.4 million, including an increase of 706,266 in net domestic migration. The Northeast—primarily New York and Pennsylvania—is the epicenter of the movement, Which one is lost Number of residents in 2023: 43,330, down from 216,576 in 2022 and In 2021, there will be a decrease of 187,054 people.
However, the heat of the Sun Belt does not only Being fueled Its lower cost of living, mild temperatures, and tendency to telecommute. Jobs is also fanning the flames, and three Florida cities top the list 10 Hottest Job Markets in 2023, as well as Austin and Dallas, Texas. Nashville tops 2022 list hottest job marketsfollowed by Austin and Jacksonville, Florida.
BiggerPockets decided to investigate the numbers, scouring an extensive housing market database that ranks Sunbelt cities with more than 500,000 residents by rent-to-price ratio (RTP). Common A scale used to measure cash flow capabilities. For example, an RTP ratio close to 1 is best for cash flow. Given today’s market conditions and the lack of good cash flow options, pubs yes put The ideal target is around 0.60-0.70%.
Sunbelt markets with a population of more than 500,000 have the highest rent-to-price ratios
| metropolitan area | population | response rate(%) |
|---|---|---|
| El Paso, Texas | 871,323 | 0.71% |
| Jackson, MS | 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-Fort Lauderdale, Florida | 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 collection of data for the top 25 markets with populations over 500,000. As you can see, El Paso tops the list with an RTP of 0.71%. The following visualization can give you a better understanding of the relationship between RTP values and population size. The reality is that when the population exceeds 500,000, the relationship is less strong. It seems that the population size under 1 million varies the most, with both ends offering steady cash flow, or not much cash flow at all. However, we can see that as the population increases, the cash flow appears to be decreasing. Because we used 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.
A closer look at the four major RTP markets
El Paso, Texas
El Paso is the sixth largest city in Texas and the largest metropolitan area on the Texas-Mexico border. Due to its border location and bilingual and bicultural workforce, it has recently fostered business growth and is one of the largest manufacturing centers in North America.
according to elpasotexas.govIn 2021, the Borderplex region was the fifth-highest employment manufacturing hub in North America and accounted for 17% of total trade with Mexico. The region, which had $94.2 billion in trade with Mexico in 2020, has more than 495 manufacturing plants and more than 75 related facilities in El Paso and neighboring Las Cruces.
The military is another big employment driverr—1 Here are 16 jobs related to the Armed Forcesthanks to Fort Bliss. Government, education and health care are also important employers.
according to United States Census The data shows that the median household income in 2022 is $55,170, and the per capita income is $27,434. However, this may not represent new jobs in the area; real estate agent website The latest data tells a different story, with the median listing price just under $300,000, up 1.4% in the past year.
The median rent is $1,650, providing renters with spacious suburban ranch-style homes. Home prices in several communities range from more than $100,000 to $600,000.
If you’re interested in investing in El Paso, among the nearly 4,000 currently listed properties, there are many affordable duplexes/triples and one- to two-bedroom homes in decent neighborhoods. These suit both blue and white collar workers and generate significant cash flow for landlords.
jackson mississippi
Jackson barely makes the headlines for real estate investing, but its indicators suggest it could be a good investment for savvy investors.
Although Jackson’s average salary is $42,193 As with El Paso, this isn’t shocking, but it probably doesn’t tell the whole story. The city’s middle class arrived High-paying industrial jobs are found in metal products, electrical and electronic equipment, automobiles (Nissan has a factory here) and related auto parts, clothing, food, furniture, rubber and plastic products, wood products and aircraft parts.
Homes are generally affordable, with the median listing price being approximately $130,000the median rental price is $1,200 (That would get you a suburban ranch home), and few homes sell for more than $500,000. Low real estate costs and an influx of newer, higher-paying jobs have made Jackson, Mississippi a very good one Investment location.
new orleans
New Orleans, one of the major cities in the American South, has been rebuilding emotionally and economically since Hurricane Katrina devastated it in August 2005. largest employer Covering modern enterprises in energy, manufacturing, technology, healthcare, education and government.
according to 2022 U.S. Censusthe median household income in New Orleans is $51,116, which differs from other reports where the median household income is approximately $51,116. $70,000. The city has a variety of employment types, with new businesses generating higher incomes, leading to an increase in employment.
according to real estate agent network, the median listing price is $354,900 and the median rent is $1,775, giving renters the choice of a single-family home or a new apartment in a good neighborhood. The range of house prices, rents and income generated by modern business and tourism means that each year and short term rental In areas within the city, there are more than 130 annual festivals At home on carnival.
McAllen, Texas
McAllen is another booming border town in South Texas, where residents enjoy employment opportunities in manufacturing, health care, and educationand real estate agent network score Ranked #5 among the top 10 places to buy a home for middle-income homebuyers in the U.S. in 2022 and kiplinger ranking By 2024, it will be ranked fourth among the least expensive cities in the United States.
real estate agent network It said the median listing price in the city as of March 2024 was $315,000. The average sales price dropped significantly to $222,600, indicating listing agents are enthusiastic and optimistic about the city’s upward trajectory. The median rent is $1,450, this will get Tenants live in modern three-bedroom apartments or spacious modern single-family homes.
final thoughts
One distinct advantage of many Sun Belt cities is the low cost of real estate. Combined with a healthy job market in a modern, growing industry, and You have The secret to long-term cash flow investing. From an economic perspective, low or no state income taxes and a business-friendly environment are also big draws.
Warmer weather is another positive, meaning homes will see less wear and tear, require less maintenance, and, for homeowners, lower utility bills than in colder northern states. multi-unit building.
However, investors should also be wary of an oversupply of homes in Sun Belt cities. A record number of new rental apartments are currently being built there. In many of these cities, such as Atlanta, Austin, Phoenix and Las Vegas, rents have begun to stabilize. Investors should be careful about choosing to invest in cities where job growth is happening but where construction of new rental units is limited.
Exclusive segmentation and data analysis of the most popular areas for investors
It’s no secret that the Sun Belt has been a major focus for investors for years due to appreciation and rental growth. But which markets offer the best cash flow opportunities?
Download our Sun Belt Market Worksheet Get a rundown of the most popular metro areas and states for investors and get Complete data for all states and markets In our accompanying Sunbelt Market Intel spreadsheet.
Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.
