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As we all know, real estate is all about location. And while booming urban centers can certainly be smart places to invest, they're not the be-all and end-all when it comes to making a dollar.
In fact, according to our most recent research here at Millionacres, some of the nation's best investment markets are actually on the smaller side. Think towns on the outskirts of big cities -- ones with a few hundred thousand residents, growing employment and population numbers, and a surging demand for rentals that hasn't yet been sated.
Are you looking for the top spots to put your investment dollars this year? Here are seven small American markets worth a look:
1. Fayetteville / Springdale / Rogers, Arkansas
Little old Fayetteville-Springdale-Rogers clocked in as our No. 2 rental investment market in the entire country this year -- and for good reason. Though the metro's population sits just under 550,000, with employment up nearly 24% in the last five years it probably won't stay that way for long.
The area's home prices have also been on the rise, sending the local price-to-rent ratio up to 20 this year. That means more new residents will be looking to rent rather than buy -- leaving plenty of opportunity for savvy investors to hit the ground running.
2. Crestview / Fort Walton Beach / Destin, Florida
Florida's Crestview-Fort Walton Beach-Destin is another small market worth a peek. Employment has increased a whopping 46.1% in the last five years, sending new residents flocking to the area. The only problem? Developers haven't yet caught up. Permits are actually down 3.5% (meaning no competition!), and with the price-to-rent ratio topping 22, there's a desperate need for affordable rentals on the market.
In fact, according to the Department of Housing and Urban Development, the market needs nearly 2,000 new rental units in the next two years to satisfy demand.
3. Salisbury, Maryland
The Salisbury metro has seen downright shocking employment growth in the last five years, with jobs up just under 200% in that time period. As in Crestview’s market, developers are way behind in meeting the subsequent demand for housing, with just a 1% jump in permits since 2017. Throw in that the area's price-to-rent ratio is just above 20, and residents are chomping at the bit for new rentals in the region.
4. Fort Collins, Colorado
The Fort Collins area market is only home to a mere 350,000 residents, but with employment up nearly 19% and permits basically holding steady, they're facing a shortage of rentals as we head further into 2020.
To add insult to injury, home prices are on the high end in the area, with the price-to-rent ratio sitting at 20.2. That means the majority of incomers will be on the hunt to rent -- not buy -- when they join the market's ranks.
5. Huntsville, Alabama
Alabama's Huntsville metro is another up-and-coming employment hub where developers just can't seem to keep up. Jobs have jumped 13.4% over the last five years, but building permits? They're actually down since 2018. Given the market's high price-to-rent ratio, it's left many of Huntsville's 460,000-plus residents scrambling for affordable housing.
A nice little perk with Huntsville: It's home to Alabama A&M and The University of Alabama-Huntsville, making it a great spot to invest in student housing, if that's your thing.
6 Stockton, California
At over 750,000 residents, the Stockton area is the biggest market on our "small towns" list, but that doesn't make it any less worthy. The metro has seen employment jump 18.1% in the last five years, sending new residents flocking to the area. The only problem? Stockton's home prices have risen in step, jumping 12.5% since just 2019. For many of these new residents, renting is their only choice -- there just aren't enough properties to go around.
7. Greeley, Colorado
A second Colorado metro makes the list in Greeley, which has seen employment rise 17.2% and a population increase of 3% since 2017. As with most of the markets on this list, its price-to-rent ratio is on the high end, making it hard for Greeley residents to buy a home. Though developers have responded with a slew of new rental developments (permits were up 12.6% last year), it's likely not enough to satisfy the oncoming demand the strong local economy has spurred.
The bottom line
Big cities aren't your only option when investing in real estate. As long as the conditions are right and demand for rentals is strong, any place can make a smart location for investment -- no matter how small its population may be.
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