Intro
We’ve all read the articles on the best markets to invest in or the markets offering the highest return. Personally I’ve read dozens of articles and talked with multiple experts on the highest cash flow markets around the country.
If you google the highest cash flow markets and read through a handful of articles you’ll see a wide variety of markets. We’ve consolidated a list of the absolute best cash flow markets for 2022-2023 in the US.
We’ve also included our pick for the top 5 growth markets to invest in for 2022 and beyond.
What is a Cash Flow Market?
A cash flow market is one which has a consistent high cash on cash return. Typically these are stable markets, although we’ve included a couple growth markets that currently have great cash flow.
In our analysis we actually don’t include some of the most popular ‘cash flow markets’ that almost all the other lists include. For example, we used to recommend a few markets in Ohio (Cleveland, Akron, and Cincinnati), but after working there for a bit the unfriendly landlord laws combined with a declining population have changed our outlook on the long-term rental market in Ohio.
Detroit is another one that many consider the BEST cash flow market in the entire US. The problem is that the population has been declining rapidly for decades from a peak of 1.8 M people in the 1950’s it is home to just 630,000 in 2022 and that number is still declining.
Most lists of the best cash flow markets will contain multiple cities like Detroit. Places where you can buy properties really cheap and where the rent is still relatively high, but places that don’t have a good long-term outlook. We’ve eliminated those places from our list (Detroit, Birmingham, Cleveland, St. Louise, etc).
The other problem you’ll find with most of these lists is that they look mainly at the rent to purchase price ratios which makes a lot of small towns look like great investment opportunities (which in all fairness they can be), but these analysis fail to look at vacancies and the difficulty of exiting a rental in these smaller markets.
Most of the places on our list are smaller cities and suburbs, but we’ve avoided the super small towns like Orland Park, IL and Macon GA even if they have growing populations and good rent to price ratios.
While we have chosen not to include declining markets and smaller markets on this list of our top recommendations it doesn’t mean those markets don’t have great opportunities. It just means that the great opportunities are typically harder to find. There are growing areas of Detroit and investing in smaller markets can pay off big time. It just takes a little more due diligence and knowledge of the market.
Our Top Cash Flow Markets
Des Moines, IA
Population growth is steady showing between 1-1.5% growth YOY for the past two decades.
The average rent: $982
The average home value: $194,461
An estimated 40% of the population in Des Moines rent.
Memphis, TN
Population growth is slow showing between 0.5-1% growth YOY for the past two decades.
The average rent: $1,052
The average home value: $205,500
An estimated 54% of the population in Memphis rent.
Indianapolis, IN
Population growth is steady showing between 1.3-2% growth YOY for the past two decades.
The average rent: $1,108
The average home value: $230,307
An estimated 46% of the population in Indianapolis rent.
Oklahoma City, OK
Population growth is slow showing between 0.3-1.3% growth YOY for the past two decades.
The average rent: $950
The average home value: $188,707
An estimated 41% of the population in Oklahoma rent.
Louisville, KY
Population growth is steady showing between 0.7-1.5% growth YOY for the past two decades.
The average rent: $1,158
The average home value: $233,244
An estimated 38% of the population in Des Moines rent.
What is a Growth Market
A growth market is different from a cash flow market. Typically, these markets will have much lower cash flow upfront. However, growth markets more than make up for the lower upfront return with a much higher return in the long-term.
Growth markets obviously experience more growth and as a result appreciation and rental rates tend to rise much faster leading to a better long-term return. These markets are also usually more expensive to invest in up front.
You’ll see our list doesn’t include the popular growth markets of Austin, Dallas, or San Antonio. We agree there are great investment opportunities in Texas, but we really don’t like the higher property taxes that they charge there. With the growth they’ve experienced despite the high taxes we don’t see those taxes coming down anytime soon. So, we’ve chosen to keep them off our top 5 list, but we admit there are great opportunities to be found there, you just need to make sure you account for the much higher property taxes.
Our Top Growth Markets
Salt Lake City, UT
We’re a little biased with this one, but we seriously love the outlook for the Utah market. This is where we have most of our rentals and we love it.
Population growth is steady showing between 0.96-1.46% growth YOY for the past two decades.
The average rent: $1,651
YOY rent growth: 6.2%
The average home value: $594,335
YOY home price increase: 9.71%
An estimated 52% of the population in Salt Lake City rent.
Atlanta, GA
Population growth is steady showing between 1.73-2.6% growth YOY for the past two decades.
The average rent: $1,861
YOY rent growth: 1.4%
The average home value: $399,000
YOY home price increase: 10.8%
An estimated 55% of the population in Atlanta rent.
Charlotte, NC
Population growth is steady showing between 3.38-5.2% growth YOY for the past two decades.
The average rent: $1,639
YOY rent growth: 7.7%
The average home value: $400,138
YOY home price increase: 12.9%
An estimated 47% of the population in Charlotte rent.
Phoenix, AZ
Population growth is steady showing between 1.48-3.4% growth YOY for the past two decades.
The average rent: $1,590
YOY rent growth: 0.7%
The average home value: $460,000
YOY home price increase: 7.2%
An estimated 44% of the population in Salt Lake City rent.
Nashville, TN
Population growth is steady showing between 1.7-2.5% growth YOY for the past two decades.
The average rent: $1,819
YOY rent growth: 6.8%
The average home value: $455,157
YOY home price increase: 22.2%
An estimated 47% of the population in Salt Lake City rent.
Conclusion
We could put more places on these lists, but we wanted to give a small list of what we see as the best places to invest in the US. If you’re looking at one or more of these markets, great. If you’re looking at a market outside of these 10 reach out to us and let’s chat about it. Just because a market isn’t on our top 10 list doesn’t mean it’s a bad market!
