The 10 Best Markets for Your First House Hack

In This Article

Key Takeaways

Fayetteville, Arkansas, has skilled sturdy 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 respect in value, whereas having a median value even cheaper than Fayetteville.Chattanooga, Tennessee, and Greenville, South Carolina, is perhaps good locations to purchase your first residence when 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 reasonably priced housing is changing into tougher to seek out for a lot of younger professionals, particularly those that just lately graduated from faculty with a pile of scholar mortgage debt. Nevertheless, 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 hire out a part of your primary residence to cowl housing prices, reminiscent of mortgage funds. This is a good technique buyers can use to afford their first properties, particularly if they’ve the liberty to stay anyplace within the nation. 

With that in thoughts, I needed to spotlight a handful of prime entry markets the place home hacking can result in homeownership and actual property revenue. These markets are nonetheless reasonably priced—with median residence costs lower than the nationwide common—and are additionally experiencing stable job progress and value appreciation. In any case, simply because a market is reasonably priced doesn’t imply it’s an excellent place to your first funding. 

Choosing the Greatest 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 plenty of different information sources talk about “affordability” with out taking property taxes and rising insurance coverage prices into 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 properly referred to as others. However except you come up with the money for for the massive down fee required for these engaging high-appreciation or faster-growing markets, you might need to think about these “underdog” markets as an alternative.

From this checklist, I highlighted 10 cities that provide unimaginable funding alternatives for younger professionals in search of their first home hack. They’re introduced beneath in no explicit order.

Chattanooga, TN-GA

Chattanooga constructed a citywide fiber-optic “smart-grid” community, which gives a few of the quickest citywide web velocity to houses and companies in America. The grid has additionally undoubtedly helped Chattanooga change into an excellent place for startups as properly, as famous by the VC corporations with a presence within the metropolis.

The Chattanooga metro space is a primarily blue-collar financial system largely centered on manufacturing and logistics, with a good-sized presence of healthcare and banking jobs. The town additionally advantages from its forward-thinking method to its sensible grid.

The job market has steadily grown over the previous few years and is constant to see wholesome value appreciation as properly. Should you like the expansion and facilities that Tennessee has to supply however can’t afford Nashville, Chattanooga can be a positive choose.

1-12 months Job Development: 2.33% (Nationwide: 1.48%)
Median Value: $309,819 (Nationwide: $420,800)
1-12 months Value Development: 5.47% (Nationwide: 4.28%)
Median Lease: $1,596 (Nationwide: $1,462)
1-12 months Lease 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 faculty 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 general 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 high 10 checklist. 

If affordability is most necessary to you, this can be a stable selection. However so far as financial progress goes, there are higher markets on this checklist.

1-12 months Job Development: 3.41% (Nationwide: 1.48%)
Median Value: $253,466 (Nationwide: $420,800)
1-12 months Value Development: 4.06% (Nationwide: 4.28%)
Median Lease: $1,553 (Nationwide: $1,462)
1-12 months Lease 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), contains Fayetteville, Springdale, Rogers, Bentonville, and some smaller surrounding cities. Its progress is pushed by three Fortune 500 corporations: Walmart, Tyson Meals, and J.B. Hunt Transportation Companies.

Whereas I don’t choose 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 big progress within the space, as most white-collar Walmart workplace staff will now have to stay close to HQ.

1-12 months Job Development: 3.31% (Nationwide: 1.48%)
Median Value: $342,579 (Nationwide: $420,800)
1-12 months Value Development: 4.74% (Nationwide: 4.28%)
Median Lease: $1,631 (Nationwide: $1,462)
1-12 months Lease 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 financial 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 Value: $299,908 (Nationwide: $420,800)
1-12 months Value Development: 3.69% (Nationwide: 4.28%)
Median Lease: $1,585 (Nationwide: $1,462)
1-12 months Lease 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 fee (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 increased, however Indianapolis stays one of many final reasonably priced but still-growing cities within the nation.

You may additionally like

Indianapolis additionally has a wholesome transportation and life sciences financial system (and in reality, has one of many largest life science clusters within the nation), with its main exports being prescribed drugs, motorcar elements, and medical tools and provides.

Indianapolis has the advantage of being the one metro with greater than 1 million jobs on this high 10 checklist. And whereas town has technically seen a small decline in inhabitants, many individuals have been transferring to the outer suburbs, giving the MSA a complete optimistic improve in inhabitants. 

In conclusion, the varied financial system and low price of dwelling may proceed to drive progress (albeit slower progress than common metros like Austin, Texas; Boise, Idaho; and Nashville, Tennessee) into Indianapolis. This metropolis may very well be a positive place to develop your profession when you’re in the precise trade and purchase your first property.

1-12 months Job Development: 2.49% (Nationwide: 1.48%)
Median Value: $284,630 (Nationwide: $420,800)
1-12 months Value Development: 3.30% (Nationwide: 4.28%)
Median Lease: $1,588 (Nationwide: $1,462)
1-12 months Lease 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, expertise, and agriculture packages. 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 expertise and well being science corporations make use of over 3,000 folks.

Lafayette additionally ranked No. 1 on Realtor.com’s winter 2023 housing affordability index, which additionally took native financial system, value appreciation, and way of life facilities into consideration (much like what we’ve executed right here).

Nevertheless, 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 really 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 Value: $266,785 (Nationwide: $420,800)
1-12 months Value Development: 8.45% (Nationwide: 4.28%)
Median Lease: $1,429 (Nationwide: $1,462)
1-12 months Lease 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 financial system. Its job progress has been pretty wholesome, alongside with its value appreciation and hire progress. 

Often called the “Horse Capital of the World,” town has limits on homebuilding in order to not encroach on the numerous horse ranches within the space. This has created synthetic upward stress 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 Value: $299,845 (Nationwide: $420,800)
1-12 months Value Development: 6.52% (Nationwide: 4.28%)
Median Lease: $1,415 (Nationwide: $1,462)
1-12 months Lease 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. The town can also be visited by an estimated 20 million vacationers per yr, making it one of the visited cities within the nation.

In keeping with the Bureau of Labor Statistics, Myrtle Seashore has seen a massive improve in the variety of commerce, transportation, and utilities jobs over the previous yr. Nevertheless, the median age is 50.9 years outdated. This might flip off younger professionals from relocating to the world.

1-12 months Job Development: 3.53% (Nationwide: 1.48%)
Median Value: $338,480 (Nationwide: $420,800)
1-12 months Value Development: 1.80% (Nationwide: 4.28%)
Median Lease: $1,881 (Nationwide: $1,462)
1-12 months Lease 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 financial system relies on healthcare, manufacturing, retail, schooling, and tourism. It’s additionally residence to the company headquarters of Bass Professional Retailers and O’Reilly Auto Elements. 

Low price of dwelling, 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 cause an organization ought to transfer right here once they may 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 Value: $257,747 (Nationwide: $420,800)
1-12 months Value Development: 3.53% (Nationwide: 4.28%)
Median Lease: $1,288 (Nationwide: $1,462)
1-12 months Lease 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 huge positive aspects in employment in recent times. However I don’t assume the expansion is sweet sufficient to endure Texas’s excessive property taxes and insurance coverage charges.

1-12 months Job Development: 4.06% (Nationwide: 1.48%)
Median Value: $261,013 (Nationwide: $420,800)
1-12 months Value Development: 0.81% (Nationwide: 4.28%)
Median Lease: $1,563 (Nationwide: $1,462)
1-12 months Lease Development: 4.46% (Nationwide: 4.49%)
Median Days on Market: 34 (Nationwide: 45)
Estimated Month-to-month PITI: $2,010

Ultimate Ideas

Whereas discovering reasonably priced 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 concentrating 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 provide a mix of affordability, job progress, and potential for appreciation—key components for these seeking 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 via 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.

Discover the Proper Agent, Shut the Greatest Deal

Step #1: Use Agent Finder to match with high investor-friendly actual property brokers that will help you discover, analyze, and shut your subsequent deal.

Observe By BiggerPockets: These are opinions written by the writer and don’t essentially characterize the opinions of BiggerPockets.