The 10 Best Markets for Your First House Hack

In This Article

Key Takeaways

Fayetteville, Arkansas, has skilled robust job market progress and value appreciation, whereas nonetheless having a median value under the nationwide common.Indianapolis’ job market grew barely greater than the nationwide common over the previous 12 months and continues to slowly respect 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 dwelling in case you’d wish to dwell 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 changing into tougher to search out for a lot of younger professionals, particularly those that lately graduated from school with a pile of pupil 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 lease out a part of your predominant residence to cowl housing prices, equivalent to mortgage funds. This is a good technique buyers can use to afford their first properties, particularly if they’ve the liberty to dwell wherever within the nation. 

With that in thoughts, I wished to spotlight a handful of prime entry markets the place home hacking can result in homeownership and actual property earnings. These markets are nonetheless inexpensive—with median dwelling costs lower than the nationwide common—and are additionally experiencing strong job progress and value appreciation. In spite of everything, simply because a market is inexpensive doesn’t imply it’s a great place to your first funding. 

Choosing the Greatest Markets for Your First Home Hack

For this evaluation, I included median dwelling costs and rental knowledge from Zillow. I additionally retrieved job progress knowledge from the Bureau of Labor Statistics. 

I’ve seen loads of different information sources talk about “affordability” with out taking property taxes and rising insurance coverage prices under consideration. So, I included knowledge 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 under the nationwide common, I’m left with the 44 markets under. 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 perfect fundamentals for getting your first home hack. They aren’t as properly often called others. However except you come up with the money for for the big down cost required for these enticing high-appreciation or faster-growing markets, you might wish to contemplate these “underdog” markets as an alternative.

From this listing, I highlighted 10 cities that supply unbelievable funding alternatives for younger professionals on the lookout for their first home hack. They’re introduced under in no specific order.

Chattanooga, TN-GA

Chattanooga constructed a citywide fiber-optic “smart-grid” community, which provides a few of the quickest citywide web velocity to properties and companies in America. The grid has additionally undoubtedly helped Chattanooga turn into a great place for startups as properly, as famous by the VC companies 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 strategy 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. When you like the expansion and facilities that Tennessee has to supply however can’t afford Nashville, Chattanooga can be a high quality decide.

1-Yr Job Progress: 2.33% (Nationwide: 1.48%)
Median Worth: $309,819 (Nationwide: $420,800)
1-Yr Worth Progress: 5.47% (Nationwide: 4.28%)
Median Lease: $1,596 (Nationwide: $1,462)
1-Yr Lease Progress: 4.80% (Nationwide: 4.49%)
Median Days on Market: 45 (Nationwide: 45)
Estimated Month-to-month PITI: $2,101 (Calculated utilizing a 20% down cost, 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 most important 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 high 10 listing. 

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

1-Yr Job Progress: 3.41% (Nationwide: 1.48%)
Median Worth: $253,466 (Nationwide: $420,800)
1-Yr Worth Progress: 4.06% (Nationwide: 4.28%)
Median Lease: $1,553 (Nationwide: $1,462)
1-Yr Lease Progress: 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 corporations: Walmart, Tyson Meals, and J.B. Hunt Transportation Providers.

Whereas I don’t choose metros with primarily one or two giant employers (what occurs in the event that they depart?), 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 have to dwell close to HQ.

1-Yr Job Progress: 3.31% (Nationwide: 1.48%)
Median Worth: $342,579 (Nationwide: $420,800)
1-Yr Worth Progress: 4.74% (Nationwide: 4.28%)
Median Lease: $1,631 (Nationwide: $1,462)
1-Yr Lease Progress: 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-Yr Job Progress: 2.80% (Nationwide: 1.48%)
Median Worth: $299,908 (Nationwide: $420,800)
1-Yr Worth Progress: 3.69% (Nationwide: 4.28%)
Median Lease: $1,585 (Nationwide: $1,462)
1-Yr Lease Progress: 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 12 months (for comparability, the nationwide common was 1.49%). The metro space had a five-year % value progress of 56.29% (nationwide: 49.49%) and a one-year % value progress of three.3% (nationwide: 4.28%). I want the appreciation have been a little bit greater, however Indianapolis stays one of many final inexpensive but still-growing cities within the nation.

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Indianapolis additionally has a wholesome transportation and life sciences financial system (and in truth, has one of many largest life science clusters within the nation), with its main exports being prescription 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 listing. And whereas town has technically seen a small decline in inhabitants, many individuals have been shifting to the outer suburbs, giving the MSA a complete optimistic improve in inhabitants. 

In conclusion, the varied financial system and low value of dwelling may proceed to drive progress (albeit slower progress than in style metros like Austin, Texas; Boise, Idaho; and Nashville, Tennessee) into Indianapolis. This metropolis could possibly be a high quality place to develop your profession in case you’re in the proper business and purchase your first property.

1-Yr Job Progress: 2.49% (Nationwide: 1.48%)
Median Worth: $284,630 (Nationwide: $420,800)
1-Yr Worth Progress: 3.30% (Nationwide: 4.28%)
Median Lease: $1,588 (Nationwide: $1,462)
1-Yr Lease Progress: 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 dwelling to Purdue College, which is identified for its engineering, expertise, 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 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 under consideration (much like what we’ve performed right here).

Nevertheless, as a result of Lafayette is such a small market, the winter and summer time breaks of the faculty have a comparatively giant 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-Yr Job Progress: 3.23% (Nationwide: 1.48%)
Median Worth: $266,785 (Nationwide: $420,800)
1-Yr Worth Progress: 8.45% (Nationwide: 4.28%)
Median Lease: $1,429 (Nationwide: $1,462)
1-Yr Lease Progress: 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 strong healthcare, manufacturing, and logistics-based financial system. Its job progress has been pretty wholesome, alongside with its value appreciation and lease 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 strain on dwelling costs, as provide is restricted. This market could also be price extra investigation.

1-Yr Job Progress: 2.26% (Nationwide: 1.48%)
Median Worth: $299,845 (Nationwide: $420,800)
1-Yr Worth Progress: 6.52% (Nationwide: 4.28%)
Median Lease: $1,415 (Nationwide: $1,462)
1-Yr Lease Progress: 5.50% (Nationwide: 4.49%)
Median Days on Market: 44 (Nationwide: 45)
Estimated Month-to-month PITI: $2,111

Myrtle Seaside-Conway-North Myrtle Seaside, SC-NC 

Myrtle Seaside is a resort metropolis that has seen giant progress over the previous few years, and the encompassing metropolitan space has seen appreciable progress. The town can be visited by an estimated 20 million vacationers per 12 months, making it probably the most visited cities within the nation.

Based on the Bureau of Labor Statistics, Myrtle Seaside has seen a giant improve in the variety of commerce, transportation, and utilities jobs over the previous 12 months. Nevertheless, the median age is 50.9 years outdated. This might flip off younger professionals from relocating to the realm.

1-Yr Job Progress: 3.53% (Nationwide: 1.48%)
Median Worth: $338,480 (Nationwide: $420,800)
1-Yr Worth Progress: 1.80% (Nationwide: 4.28%)
Median Lease: $1,881 (Nationwide: $1,462)
1-Yr Lease Progress: 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 is predicated on healthcare, manufacturing, retail, schooling, and tourism. It’s additionally dwelling to the company headquarters of Bass Professional Retailers and O’Reilly Auto Elements. 

Low value of dwelling, high quality healthcare, and outside actions appear to be the driving power for this MSA. It seems to have a rising job market, however I’m not satisfied there’s any specific 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 decide Fayetteville, Arkansas, over Springfield, though it’s price noting the median dwelling value in Springfield is roughly $84,000 cheaper.

1-Yr Job Progress: 2.39% (Nationwide: 1.48%)
Median Worth: $257,747 (Nationwide: $420,800)
1-Yr Worth Progress: 3.53% (Nationwide: 4.28%)
Median Lease: $1,288 (Nationwide: $1,462)
1-Yr Lease Progress: 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 most important employer, and the MSA has seen comparatively massive good points in employment lately. However I don’t suppose the expansion is nice sufficient to endure Texas’s excessive property taxes and insurance coverage charges.

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

Remaining 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 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 supply a mix of affordability, job progress, and potential for appreciation—key components for these trying to make their first funding. A few of these markets is probably not probably the most glamorous, however they supply a strong basis for constructing wealth by means of actual property. 

Younger professionals keen 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.

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Be aware By BiggerPockets: These are opinions written by the creator and don’t essentially signify the opinions of BiggerPockets.