Investing in real estate is hot right now. Everyone wants to buy a house, and there isn't enough supply, which makes for favorable conditions -- if you can make a deal happen now -- to either flip homes or to buy and hold.

While keeping abreast of general trends like this is important for any real estate investor, remember that in real estate, location rules. Knowing where to buy property can often make the difference in whether you make money.

Two children with beagle by a riverbank.

Image source: Getty Images.

Studying migration trends can be eye-opening

Buying real estate where people are moving to benefits both house flippers and landlords in two ways:

  • All these new residents are looking to buy or rent, and you can provide that product.
  • People usually move to states that have good economic prospects and that offer a high quality of life, and those are the types of places that usually make the best investments.

Net migration trends

Net migration trends are a good starting point when choosing a locale in which to invest. Fannie Mae's Economic and Housing Outlook shows the 2021 one-way migration trends, as reported by U-Haul. The No. 1 state people moved to in 2021, according to U-Haul, was Texas. The state people moved out of the most was California (something my family reluctantly did as well many years ago when we chose to move to Georgia).

Here is the list. (No. 1 is the state with the highest net migration gain, and No. 48 is the largest net migration loss. Note that Alaska and Hawaii are not listed here.)

  1. Texas
  2. Florida
  3. Tennessee
  4. South Carolina
  5. Arizona
  6. Indiana
  7. Colorado
  8. Maine
  9. Idaho
  10. New Mexico
  11. South Dakota
  12. Vermont
  13. Wisconsin
  14. Oregon
  15. Washington
  16. Minnesota
  17. Connecticut
  18. North Carolina
  19. Nebraska
  20. Wyoming
  21. Montana
  22. Georgia
  23. Ohio
  24. New Hampshire
  25. West Virginia
  26. Iowa
  27. Utah
  28. Nevada
  29. Delaware
  30. Virginia
  31. Rhode Island
  32. North Dakota
  33. Maryland
  34. New Jersey
  35. Mississippi
  36. Kentucky
  37. Missouri
  38. Kansas
  39. Arkansas
  40. Michigan
  41. Louisiana
  42. Oklahoma
  43. New York
  44. Alabama
  45. Massachusetts
  46. Pennsylvania
  47. Illinois
  48. California

Hot cities

Let's now do a deeper dive by considering other factors that might make a state attractive for real estate investors. Zillow predicts the following cities will see the most appreciation in 2022 based on generational demographics, migratory patterns, and income/job growth.

  1. Tampa, Florida
  2. Jacksonville, Florida
  3. Raleigh, North Carolina
  4. San Antonio, Texas
  5. Charlotte, North Carolina
  6. Nashville, Tennessee
  7. Atlanta
  8. Phoenix
  9. Orlando, Florida
  10. Austin, Texas

When you take those cities and plug them into the states that saw net migration gains, here's what you have:

  • No. 1 net migration gain state, Texas, has two hot cities (San Antonio and Austin).
  • No. 2 net migration gain state, Florida, has three hot cities (Tampa, Jacksonville, and Orlando).
  • No. 3 net migration gain state, Tennessee, has one hot city (Nashville).
  • No. 5 net migration gain state, Arizona, has one hot city (Phoenix).
  • No. 18 net migration gain state, North Carolina, has two hot cities (Raleigh and Charlotte).
  • No. 22 net migration gain state, Georgia, has one hot city (Atlanta).

If you happen to live in or near any of these hot investing areas, you might want to seriously think about investing there now. If you live in an area people are leaving, you can still invest in the hot spots. If you'll be investing from afar, it's best to visit the area to get a feel for it, and you'll also probably need to use a property manager.