In This Article
Key Takeaways
Fayetteville, Arkansas, has skilled robust job market progress and value appreciation, whereas nonetheless having a median value beneath the nationwide common.Indianapolis’ job market grew barely greater than the nationwide common over the previous yr and continues to slowly recognize in value, whereas having a median value even cheaper than Fayetteville.Chattanooga, Tennessee, and Greenville, South Carolina, could be good locations to purchase your first residence in case you’d wish to stay in an MSA centered on manufacturing and logistics. These are blue-collar markets which have skilled regular progress in jobs and value.
It’s no secret that inexpensive housing is turning into tougher to search out for a lot of younger professionals, particularly those that lately graduated from school with a pile of scholar mortgage debt. Nonetheless, extra younger professionals are discovering a path to homeownership whereas kick-starting their actual property investing portfolio: home hacking.
Home hacking is an actual property funding technique the place you lease out a part of your principal residence to cowl housing prices, resembling mortgage funds. This is a superb technique buyers can use to afford their first properties, particularly if they’ve the liberty to stay wherever within the nation.
With that in thoughts, I needed to focus on a handful of prime entry markets the place home hacking can result in homeownership and actual property revenue. These markets are nonetheless inexpensive—with median residence costs lower than the nationwide common—and are additionally experiencing stable job progress and value appreciation. In spite of everything, simply because a market is inexpensive doesn’t imply it’s place in your first funding.
Choosing the Finest Markets for Your First Home Hack
For this evaluation, I included median residence costs and rental information from Zillow. I additionally retrieved job progress information from the Bureau of Labor Statistics.
I’ve seen a whole lot of different information sources talk about “affordability” with out taking property taxes and rising insurance coverage prices under consideration. So, I included information from the Tax Basis and Insurance coverage.com, respectively. (Goodbye, most cities in Texas and Florida.)
After filtering out probably the most unaffordable markets and areas the place job progress was beneath the nationwide common, I’m left with the 44 markets beneath. I selected to visualise these by one-year job progress because it’s a key metric I evaluated for this particular evaluation.
From the 44, I selected 10 cities which have the very best fundamentals for getting your first home hack. They aren’t as nicely often known as others. However except you come up with the money for for the big down fee required for these enticing high-appreciation or faster-growing markets, it’s possible you’ll wish to think about these “underdog” markets as an alternative.
From this record, I highlighted 10 cities that supply unimaginable funding alternatives for younger professionals searching for their first home hack. They’re offered beneath in no explicit order.
Chattanooga, TN-GA
Chattanooga constructed a citywide fiber-optic “smart-grid” community, which gives a number of the quickest citywide web pace to properties and companies in America. The grid has additionally undoubtedly helped Chattanooga turn out to be place for startups as nicely, as famous by the VC corporations with a presence within the metropolis.
The Chattanooga metro space is a primarily blue-collar economic system largely centered on manufacturing and logistics, with a good-sized presence of healthcare and banking jobs. Town additionally advantages from its forward-thinking strategy to its good grid.
The job market has steadily grown over the previous few years and is constant to see wholesome value appreciation as nicely. In the event you like the expansion and facilities that Tennessee has to supply however can’t afford Nashville, Chattanooga could be a positive choose.
1-12 months Job Development: 2.33% (Nationwide: 1.48%)
Median Worth: $309,819 (Nationwide: $420,800)
1-12 months Worth Development: 5.47% (Nationwide: 4.28%)
Median Hire: $1,596 (Nationwide: $1,462)
1-12 months Hire Development: 4.80% (Nationwide: 4.49%)
Median Days on Market: 45 (Nationwide: 45)
Estimated Month-to-month PITI: $2,101 (Calculated utilizing a 20% down fee, 7% rate of interest, statewide common insurance coverage, and countywide median property taxes)
Columbia, SC
Columbia is the capital of South Carolina and residential to the biggest school within the state, the College of South Carolina, in addition to Fort Jackson, the U.S. Military’s largest preliminary entry coaching set up. That makes roughly 20% of the workforce employed by the federal government.
This means extra stability however total much less progress than its Charlotte, North Carolina, and Charleston, South Carolina, counterparts. Columbia additionally has the bottom median value out of this text’s prime 10 record.
If affordability is most necessary to you, this can be a stable alternative. However so far as financial progress goes, there are higher markets on this record.
1-12 months Job Development: 3.41% (Nationwide: 1.48%)
Median Worth: $253,466 (Nationwide: $420,800)
1-12 months Worth Development: 4.06% (Nationwide: 4.28%)
Median Hire: $1,553 (Nationwide: $1,462)
1-12 months Hire Development: 4.76% (Nationwide: 4.49%)
Median Days on Market: 51 (Nationwide: 45)
Estimated Month-to-month PITI: $1,733
Fayetteville-Springdale-Rogers, AR-MO
The Fayetteville, Arkansas MSA, additionally known as Northwest Arkansas (NWA), includes Fayetteville, Springdale, Rogers, Bentonville, and some smaller surrounding cities. Its progress is pushed by three Fortune 500 firms: Walmart, Tyson Meals, and J.B. Hunt Transportation Providers.
Whereas I don’t want metros with primarily one or two massive employers (what occurs in the event that they go away?), Walmart HQ might be right here to keep, and has additionally issued a strict work-from-office coverage. This is driving comparatively enormous progress within the space, as most white-collar Walmart workplace staff will now must stay close to HQ.
1-12 months Job Development: 3.31% (Nationwide: 1.48%)
Median Worth: $342,579 (Nationwide: $420,800)
1-12 months Worth Development: 4.74% (Nationwide: 4.28%)
Median Hire: $1,631 (Nationwide: $1,462)
1-12 months Hire Development: 3.75% (Nationwide: 4.49%)
Median Days on Market: 57 (Nationwide: 45)
Estimated Month-to-month PITI: $2,333
Greenville–Anderson–Greer, SC
Greenville has a powerful manufacturing, distribution, and healthcare economic system and may proceed to see wholesome progress for the foreseeable future. However I’m not satisfied this market has extra potential than Fayetteville, Arkansas, or Chattanooga, Tennessee, for an outsized return on funding.
1-12 months Job Development: 2.80% (Nationwide: 1.48%)
Median Worth: $299,908 (Nationwide: $420,800)
1-12 months Worth Development: 3.69% (Nationwide: 4.28%)
Median Hire: $1,585 (Nationwide: $1,462)
1-12 months Hire Development: 4.38% (Nationwide: 4.49%)
Median Days on Market: 50 (Nationwide: 45)
Estimated Month-to-month PITI: $1,973
Indianapolis–Carmel–Greenwood, IN
Indianapolis has a low unemployment charge (3.6% as of June 2024), and its job market grew by 2.49% over the previous yr (for comparability, the nationwide common was 1.49%). The metro space had a five-year p.c value progress of 56.29% (nationwide: 49.49%) and a one-year p.c value progress of three.3% (nationwide: 4.28%). I want the appreciation had been somewhat greater, however Indianapolis stays one of many final inexpensive but still-growing cities within the nation.
You may additionally like
Indianapolis additionally has a wholesome transportation and life sciences economic system (and in truth, has one of many largest life science clusters within the nation), with its main exports being prescribed drugs, motorized vehicle components, and medical gear and provides.
Indianapolis has the good thing about being the one metro with greater than 1 million jobs on this prime 10 record. And whereas the town has technically seen a small decline in inhabitants, many individuals have been shifting to the outer suburbs, giving the MSA a complete constructive enhance in inhabitants.
In conclusion, the various economic system and low value of residing might proceed to drive progress (albeit slower progress than standard metros like Austin, Texas; Boise, Idaho; and Nashville, Tennessee) into Indianapolis. This metropolis might be a positive place to develop your profession in case you’re in the correct business and purchase your first property.
1-12 months Job Development: 2.49% (Nationwide: 1.48%)
Median Worth: $284,630 (Nationwide: $420,800)
1-12 months Worth Development: 3.30% (Nationwide: 4.28%)
Median Hire: $1,588 (Nationwide: $1,462)
1-12 months Hire Development: 4.13% (Nationwide: 4.49%)
Median Days on Market: 39 (Nationwide: 45)
Estimated Month-to-month PITI: $2,057
Lafayette–West Lafayette–Frankfort, IN
Lafayette sits one hour north of Indianapolis and two hours south of Chicago and is residence to Purdue College, which is identified for its engineering, know-how, and agriculture applications. Purdue has produced Nobel Prize winners in addition to a number of astronauts, together with Neil Armstrong. Subsequent to Purdue is the West Lafayette Purdue Analysis Park, the place know-how and well being science firms make use of over 3,000 individuals.
Lafayette additionally ranked No. 1 on Realtor.com’s winter 2023 housing affordability index, which additionally took native economic system, value appreciation, and life-style facilities under consideration (just like what we’ve performed right here).
Nonetheless, as a result of Lafayette is such a small market, the winter and summer season breaks of the school have a comparatively massive impression on the variety of jobs within the MSA, and it truly isn’t rising as quick as different similarly-sized cities (like St. George, Utah).
1-12 months Job Development: 3.23% (Nationwide: 1.48%)
Median Worth: $266,785 (Nationwide: $420,800)
1-12 months Worth Development: 8.45% (Nationwide: 4.28%)
Median Hire: $1,429 (Nationwide: $1,462)
1-12 months Hire Development: 7.22% (Nationwide: 4.49%)
Median Days on Market: 32 (Nationwide: 45)
Estimated Month-to-month PITI: $1,820
Lexington-Fayette, KY
Lexington seems to have a stable healthcare, manufacturing, and logistics-based economic system. Its job progress has been pretty wholesome, alongside with its value appreciation and lease progress.
Referred to as the “Horse Capital of the World,” the town has limits on homebuilding in order to not encroach on the various horse ranches within the space. This has created synthetic upward strain on residence costs, as provide is proscribed. This market could also be price extra investigation.
1-12 months Job Development: 2.26% (Nationwide: 1.48%)
Median Worth: $299,845 (Nationwide: $420,800)
1-12 months Worth Development: 6.52% (Nationwide: 4.28%)
Median Hire: $1,415 (Nationwide: $1,462)
1-12 months Hire Development: 5.50% (Nationwide: 4.49%)
Median Days on Market: 44 (Nationwide: 45)
Estimated Month-to-month PITI: $2,111
Myrtle Seashore-Conway-North Myrtle Seashore, SC-NC
Myrtle Seashore is a resort metropolis that has seen massive progress over the previous few years, and the encircling metropolitan space has seen appreciable progress. Town can also be visited by an estimated 20 million vacationers per yr, making it some of the visited cities within the nation.
Based on the Bureau of Labor Statistics, Myrtle Seashore has seen a massive enhance in the variety of commerce, transportation, and utilities jobs over the previous yr. Nonetheless, the median age is 50.9 years previous. This might flip off younger professionals from relocating to the realm.
1-12 months Job Development: 3.53% (Nationwide: 1.48%)
Median Worth: $338,480 (Nationwide: $420,800)
1-12 months Worth Development: 1.80% (Nationwide: 4.28%)
Median Hire: $1,881 (Nationwide: $1,462)
1-12 months Hire Development: 2.88% (Nationwide: 4.49%)
Median Days on Market: 75 (Nationwide: 45)
Estimated Month-to-month PITI: $2,130
Springfield, MO
Springfield is the third-largest metropolis in Missouri, and its economic system relies on healthcare, manufacturing, retail, schooling, and tourism. It’s additionally residence to the company headquarters of Bass Professional Outlets and O’Reilly Auto Components.
Low value of residing, high quality healthcare, and outside actions appear to be the driving drive for this MSA. It seems to have a rising job market, however I’m not satisfied there’s any explicit good motive an organization ought to transfer right here once they might merely transfer 90 minutes south to Northwest Arkansas and benefit from the expansion taking place there.
I’d choose Fayetteville, Arkansas, over Springfield, though it’s price noting the median residence value in Springfield is roughly $84,000 cheaper.
1-12 months Job Development: 2.39% (Nationwide: 1.48%)
Median Worth: $257,747 (Nationwide: $420,800)
1-12 months Worth Development: 3.53% (Nationwide: 4.28%)
Median Hire: $1,288 (Nationwide: $1,462)
1-12 months Hire Development: 4.48% (Nationwide: 4.49%)
Median Days on Market: 44 (Nationwide: 45)
Estimated Month-to-month PITI: $1,843
Waco, TX
Waco is centered midway between Austin and Dallas and is about an hour-and-40-minute drive from each of them. Baylor College is the biggest employer, and the MSA has seen comparatively large beneficial properties in employment lately. However I don’t assume the expansion is nice sufficient to endure Texas’s excessive property taxes and insurance coverage charges.
1-12 months Job Development: 4.06% (Nationwide: 1.48%)
Median Worth: $261,013 (Nationwide: $420,800)
1-12 months Worth Development: 0.81% (Nationwide: 4.28%)
Median Hire: $1,563 (Nationwide: $1,462)
1-12 months Hire Development: 4.46% (Nationwide: 4.49%)
Median Days on Market: 34 (Nationwide: 45)
Estimated Month-to-month PITI: $2,010
Closing Ideas
Whereas discovering inexpensive housing is more and more difficult for younger professionals, the technique of home hacking presents a viable pathway to each homeownership and actual property funding. By focusing on much less mainstream but promising markets, new buyers can discover alternatives that align with their monetary realities and profession targets.
The markets highlighted on this evaluation supply a mixture of affordability, job progress, and potential for appreciation—key elements for these trying to make their first funding. A few of these markets is probably not probably the most glamorous, however they supply a stable basis for constructing wealth by actual property.
Younger professionals prepared to discover these underdog markets might discover that home hacking in these areas not solely makes homeownership achievable but in addition units the stage for long-term monetary success.
Prepared to reach actual property investing? Create a free BiggerPockets account to find out about funding methods; ask questions and get solutions from our neighborhood of +2 million members; join with investor-friendly brokers; and a lot extra.
Word By BiggerPockets: These are opinions written by the creator and don’t essentially symbolize the opinions of BiggerPockets.
