All posts by Doran

US commercial real estate prices have fallen this year for the first time in more than a decade, according to Moody’s Analytics, heightening the risk of more financial stress in the banking industry.  What property types are declining? (hint not just office properties).  What is the only property type that held in positive territory?  Is the recent drop in prices just a blip or the start of a bigger trend?  Why are prices falling now while the economy continues humming along?

What was in the most recent commercial data?

The recent CoStar report, the leading aggregator of commercial data,  showed declines in Office, retail, and apartments.  CoStar has some of the best insight into commercial property values as they also track heavily via Loopnet (largest commercial MLS)

1. THE PRIME INDUSTRIAL INDEX LED GROWTH AMONG THE FOUR MAJOR PROPERTY TYPES. The Prime U.S. Industrial Index was up 2.5% in the first quarter of 2023 and 10.8% in the 12 months ending in March 2023. The equal-weighted U.S. Industrial Index, including a broader mix of asset qualities, underperformed the Prime Index with a modest decline of 0.1% in the quarter. The Prime Industrial Index was the only Prime property type index to hold in positive territory in the first quarter. 
2. MULTIFAMILY INDEX DECLINES. The equal-weighted U.S. Multifamily Index fell by 2.4% in the first quarter of 2023 and dropped 2.2% in the 12 months ending in March 2023. The U.S. Multifamily Index showed the sharpest annual decline in values since the interest rate hiking cycle began in the first quarter of 2022. Debt for multifamily transactions was plentiful and drove investor demand in the sector. The index appreciated by 2.8% in the 12 months ending in March 2023 in Prime Multifamily markets but fell 2.8% in the quarter.
3. OFFICE PRICE DECLINES CONTINUED IN THE FIRST QUARTER. The U.S. Office Index sagged 2.4% in the first quarter of 2023, taking its cumulative decline to minus 5% during the previous three quarters. Office prices were down 1.4% in the 12 months ending in March 2023, marking the first annual decline since the second quarter of 2012. In addition, pricing growth in the Prime Office Index advanced at a negligible pace of 0.4% in the 12 months ending in March 2023 while slumping 2.8% in the quarter.
4. RETAIL PRICING FOOTED SIDEWAYS IN THE FIRST QUARTER. The U.S. Retail Index rose just 0.2% in the first quarter of 2023 and 3.3% in the 12 months ending in March 2023. The tendency of high-profile pair trends to swing the data around at the top end of retail space can lead to strong quarterly fluctuations. The U.S. Prime Retail Index dipped 2.6% in the first quarter while appreciating 12.3% over the year prior. The three-quarter trend in the Prime Retail Index saw values surge 9.9% in the third quarter of 2022 before giving back 2.8% and 2.6% in the fourth quarter of 2022 and the first quarter of 2023, respectively.

Why is multifamily declining as rents are staying high?

Below I put together a hypothetical analysis of what is occurring in the multifamily sector.  Multifamily was trading at insanely low cap rates while at the same time banking on appreciating rents.  As rents have stagnated or even declined in some markets and interest rates have basically doubled, many apartment deals no longer cash flow and are in trouble.  Furthermore, it is more than likely that a bank holds the note below and that note is now a  big problem for them.  Here is a great article in the Wall Street Journal that shows how this is playing out in real life.

Remember most commercial loans are fixed for 3-5 years and then the rate resets to the market rate (typically 10 year treasury +).  This scenario below is especially difficult:

1. LTV using new cap rate is radically different: No lender today would provide a new loan with the cash flow basically at break even due to the higher rate.
2. Cash flow underwater based on new rate: Assuming the note is current and the lender sold the note, a substantial discount would have to be given to compensate for the ultra-low rate.
3. Even if note is held and renewed a substantial loss would have to be taken by the bank for impairment

Pre Covid
Net Operating Income	$    300,000.00
Value	$ 7,500,000.00	assume a 4 cap
Debt service	$         210,000	5.25m (70% LTV at 4%)
Net Cash Flow	$      90,000.00
Today
Net Operating Income	$    300,000.00
Value	$ 5,454,545.45	assume a 5.5 cap
Debt service	$         315,000	5.25m (70% LTV at 6%)
Net Cash Flow	$    (15,000.00)

Is the recent decline in commercial property values a blip or a trend?

“Lots more price declines are coming,” Mark Zandi, Moody’s Analytics chief economist, said.

The danger is that will compound the difficulties confronting many banks at a time when they are fighting to retain deposits in the face of a steep rise in interest rates over the past year.

Excluding farms and residential properties, banks accounted for more than 60% of the $3.6 trillion in commercial real estate loans outstanding in the fourth quarter of 2022, with smaller institutions particularly exposed, according to the Federal Reserve’s semi-annual Financial Stability Report published last week.

“The magnitude of a correction in property values could be sizable and therefore could lead to credit losses” at banks, the report said.

Summary

The recent declines in commercial properties are not a blip.  They are the beginning of an upcoming cycle with huge resets in prices.  These prices will be most profound in office with big impacts also being felt in larger multifamily.

Based on the current federal reserve predictions, rates will remain elevated at least until around mid-year 2024.  This will exasperate the issue new group of office and multifamily notes come due for a reset leading to cash flow issues in many cases.

The overwhelming majority of commercial loans are held by banks so at the end of the day someone will be taking a haircut that will become self-fulfilling as lenders sit out on new deals due to their own cash flow issues caused by commercial property.  I’m already seeing the credit crunch which will get amplified over the next year with higher rates.

So, you want to find the best rental property deal and invest some hard-earned money.

This is a common query from my readers.

What about the potential to make some serious shekels by becoming the mortgage bank instead of the landlord? Where else besides private mortgages or so-called “hard-money lending” can you find a 10% rate of return in a term of three years?

Hard-money lending is a close cousin to more direct rental investing. It’s worth considering. Why? Certain property owners will pay handsomely because, for one reason or another, they can’t qualify for cheaper institutional financing from commercial banks, Fannie, Freddie and the like.

Typically a hard money loan is arranged and funded for one- to four-unit complexes, small apartment buildings and retail strip malls. An appraisal may be required, and title insurance will always be required to protect all concerned.

“The going market rate is around 10% to 11%,” said Ken Thayer, president of Newport Beach-based Residential First Capital. “Up to 10 people can invest in one fractionalized note. Ten people each put up $100,000 on a $1 million note as an example.”

Thayer, who’s been in the lending business since 1986, said 90% of his deals are for one to four units. Half the deals are seconds with an average loan amount of $300,000 or $600,000 for first mortgages. He typically stays under $3.5 million for any deal.

Private money mortgages, called a deed of trust in California, can be in first, second or third position as a lien against real property.

Thayer’s investment customers pay 1.25% of the balance to service the notes. Servicing fees such as Thayer’s are all over the map. You can find servicers charging less or even a lot less. And, of course, some servicers charge more than 1.25%. For example, if the note to the property owner is 11% and the servicer charges 1%, then the investor would receive a net 10% return excluding ordinary income taxes.

Let’s say five investors are investing $200,000 in a $1 million hard-money loan. If the note rate is 10% and Thayer charges each investor 1.25% to service, each investor would earn 8.75%. Or look at it this way: $200,000 x 8.75% =  $17,500 divided by 12 months $1,458.33 to each investor each month as an interest-only payment.

Even though Thayer services $110 million in hard money loans, he thinks real estate rentals are still a better deal. “I would have made more money sticking it out in real estate,” he told me.

Thayer makes a good point. California homes, even with prices softening, are still riding 25-35% appreciation, which for long-term investors tops most hard-money profits.

My advice: Your best protection against the borrower who is willing to pay you a lot more because he or she can’t get a bank loan is the property’s remaining equity. If there is 50% remaining equity, the investor is relatively safe even if the borrower should default and property values continue to soften. Nobody wants to foreclose, but that offers a measure of protection.

In the current market, I think you’d be better off investing in hard-money loans than an actual rental property for the following reasons:

1) Real estate values are falling. (Nobody wants to catch a falling knife)

2) Carrying costs (mortgage payment of principal, interest, taxes, insurance and any HOA) are currently high.

3) Utility costs are ginormous, cutting into profit

4) California rent forbearances still lurk in these post-COVID days

5) There is talk of national rent “protections”

Back to the money. What about the staying power of these lofty 10% returns on hard-money investing? Can you get an even higher yield if we see more inflation?

Conventional mortgage rates hit an all-time low of 2.65% in January 2021, according to Freddie Mac. Even though rates have much improved over the past few months they are still very high at 6.09% as of Feb. 2.

The prime rate hit a low of 3.25% in March 2020. (December 2008 was the last time the prime rate was this low). On Feb. 1, Wall Street’s prime rate climbed to 7.75%. It hasn’t been that high since September 2007. And it’s all but certain short-term borrowing costs are going to rise more in the near term.

The typical private money loan is two to three years with a balloon payment owed by the property owner at the end, according to attorney Dennis Doss of Doss Law, an expert on private money mortgages.

As Thayer explained, Wall Street money swooped in during the COVID days, bringing cheaper alternatives for borrowers needing hard money, maybe in the 9% range. But that train has left the station. Rates have moved back up.

So, how much more can you get?

“There is no maximum rate (statutory maximum) for brokered-arranged loans,” said Doss. “The rate is market dependent.”

So why not just stick with buying a rental property? Private mortgages require little to no effort on the investor’s part while rental properties require a ton of effort to manage.

How do you know who to invest your money with? Scammers are everywhere.

“For consumers trying to ensure they are working with a good private money broker, we’d suggest they check the broker’s license, talk to references, read online reviews, and get information from Better Business Bureau, chamber of commerce and other community groups,” said Rick Lopes, assistant commissioner with the California Department of Real Estate.

Doss tells investors they should figure out how aggressive the private money broker is when it comes to finding and evaluating properties on which to issue loans. Ask for a copy of the broker’s most recent business activities reports. Check for their borrowers’ delinquency rates, which ideally “should be 5% to 7% or less (60-90 days late or more),” he said.

California law requires a brokerage to review any investor’s suitability to invest in the trust deed based on a questionnaire (California Department of Real Estate form RE870). It looks at the investors’ net worth, income and investment background. The investment does not exceed 10% of the investors’ net worth minus home, furnishings, autos or 10% of their income.

Freddie Mac rate news

The 30-year fixed rate averaged 6.09%, 4 basis points lower than last week. The 15-year fixed rate averaged 5.14%, 3 basis points lower than last week.

The Mortgage Bankers Association reported a 9% mortgage application decrease from last week.

Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $726,200 loan, last year’s payment was $1,115 less than this week’s payment of $4,396.

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 4.875%, a 15-year conventional at 4.5%, a 30-year conventional at 5.25%, a 15-year conventional high balance at 4.99% ($726,201 to $1,089,300), a 30-year high balance conventional at 5.625% and a jumbo 30-year fixed at 6.125%.

Note: The 30-year FHA conforming loan is limited to loans of $644,000 in the Inland Empire and $726,200 in LA and Orange counties.

Eye catcher loan program of the week: A 30-year VA fixed rate at 4.875% with 1 point cost.

Fed raises rates 2200% The floor on housing prices drops

The real estate party cannot go on forever.  We are in a goldilocks scenario where prices are staying high even in the face of doubling mortgage rates.  Unfortunately, eventually the porridge cools off!    It is not possible with the steep rise in interest rates that there is not a misstep in the economy.    Will the billions in Wall Street money sitting on the sideline waiting for a reset keep housing prices high?  Why is the “floor” on real estate prices dropping?

This real estate cycle is radically different than 2008

This real estate cycle has some stark differences with 2008 and other prior cycles.  Typically the federal reserve raises rates quickly to contain runaway growth and inflation.  In this cycle, the federal reserve waited about a year too late before tapping the brakes which has allowed inflation and consumer spending to become entrenched.

Even as the federal has raised rates from .25% to 5.5% consumers keep buying cars, trips, etc…. keeping inflation well above the federal reserve target.  This strong consumer spending and high inflation changes this real estate cycle.

If we rewind to 2008 along with prior cycles, there was typically some event that led to a reset in prices.  In 2008, the raising of interest rates and large quantities of adjustable rate mortgages led to an enormous drop in real estate prices and a subsequent decline in employment.  The Federal reserve was then able to drop interest rates to help the economy recover.

In this cycle, with inflation running well above targets, dropping rates quickly is not in the cards as the goal is a “soft landing” where employment stays high and consumer spending does not pull back enormously.  Under this scenario interest rates stay much higher for considerably longer as the federal reserve will be hesitant to drop rates to early as inflation could reaccelerate.

Wall Street money puts a floor under real estate

I’ve said for a while that wall street buyers in this real estate cycle would put a “floor” under real estate prices as they deploy billions in capital.  Essentially the theory is that as real estate prices fall, big investment firms like Blackstone and countless others will “feast” on lowered real estate prices as they can buy huge quantities of single family homes for long term rentals.  As they deploy capital this will put a “floor” under real estate prices as their demand will halt too far of a drop in prices.

Federal reserve has changed where the floor is

As mentioned above, in this cycle we will not see a huge drop in interest rates quickly.  As interest rates remain high, the return on Capital that is required also remains high.  For example, if the federal funds rate stays at 5%, basically the risk free rate of investing, then investors will demand a higher rate of return for taking risks.  In this case an investor will require a higher return.  For example they would require a 6 % return or they could invest in other assets like the mortgage market with interest rates on 30 year loans north of 8% (as of this writing).

This rate of return is also known as the capitalization rate (cap rate) in commercial properties.  As wall street firms buy properties they are analyzing them based on their rate of return.

Remember the higher the cap rate the lower the price of the property is (inverse). We are seeing this play out in real life. Invitation, which owns about 83,000 houses, has been selling properties that have appreciated to the point that they are yielding less than 4% and putting the proceeds in the bank, where the cash is earning more than 5%.  (Wall Street Journal)

Prices have to fall substantially more in order to hit the floor

With rising interest rates this means cap rates have increased substantially.  As cap rates remain high the only solution to hit the rate of return is for prices to fall.  Below is an example of of how prices will for a single family home will be impacted by rising cap rates.

As you can see it will take a big price adjustment to get wall street money to move off the sidelines with interest rates remaining high.

Will prices really fall as much as the model above predicts?

I find it highly unlikely that we will see retail prices of homes fall 46% as this would put us on par with 2008 which is not in the cards at this point.  But, there will still be a drop in the 5-15% range is most probable.  At the same time large investors will focus on buying huge pools from banks, the FDIC, etc… as the financial sector hits headwinds.

Summary

Before this recession, I thought that Wall street would put a floor under prices so that they didn’t fall too far.  Unfortunately in a high rate environment this assumption has been turned on its head.  Based on interest rates staying higher for longer this means that Wall Street will not bail out the housing market until prices fall considerably (40% or so to make the returns work).  Although I don’t foresee a drop this steep, it does portend that the market will be able to fall quite a way before Wall street comes to the rescue.

Currently my base case is a 5-15% drop depending on market, price point, etc… but I don’t see a 2008 repeat in the near future.  The wild card is how high the federal reserve needs to take rates and how long they have to hold them high before something bad breaks in the economy.  So far, it looks like a moderate recession, but as with anything in economics, there are a ton of variables that could radically alter this assumption.  In the meantime, I’m confident prices will have a reset in early 2024 due to higher rates so plan accordingly.

Renters looking for new digs may be in luck. Rents have fallen for the fifth month in a row thanks to an uptick in home and mortgage prices which continue to bend the housing market in favor of tenants.  

That’s according to Realtor.com’s September Rental Report, which shows median rents for 0-2 bedroom apartments fell by as much as .7% year-over-year. The median asking rent across the 50 largest metropolitan areas in the U.S. hit $1,747 in September, which is $5 less than it was in August, and $29 less than its peak in July 2022. 

“September marked the fifth month with year-over-year declines in median asking rents,” according to the report. “An important factor contributing to the softness in the rental market is the increase of multi-family construction which keeps working its way through the pipeline to boost the supply.”

Rents fell the most in the Austin, Texas (-7.3%); Dallas (-6.2%) and Orlando, Forida (-5.4%), despite recent growth in those areas, particularly Austin, as emerging tech hubs

Demand remains strong

In September, the number of multi-family buildings with five or more units completed was 445,000, a 10.1% increase from the previous month and a 15% increase from the year prior, according to Rental.com. Meanwhile, 82,310 apartments were completed in buildings featuring five or more units during the first quarter of 2023, the Census Survey of Market Absorption of New Multifamily Units (SOMA) shows. 

Rental.com’s report also reveals that recently completed housing units have been quickly absorbed into the housing market, signaling that demand for affordable rentals remains strong. Within the initial three months following completion, 61% of newly finished apartments had renters. 

Not all cities saw rental prices fall. Here are the 24 metro areas where median rent are lower than they were a year ago, according to Realtor.com’s data.

Metro area	Median Rent (0-2 Bedrooms)	YOY (0-2 Bedrooms)
Austin-Round Rock, TX	$1,638	-7.3%
Dallas-Fort Worth-Arlington, TX	$1,530	-6.2%
Orlando-Kissimmee-Sanford, FL	$1,710	-5.4%
Portland-Vancouver-Hillsboro, OR-WA	$1,681	-5.4%
Phoenix-Mesa-Scottsdale, AZ	$1,563	-5.2%
Atlanta-Sandy Springs-Roswell, GA	$1,659	-4.9%
San Francisco-Oakland-Hayward, CA	$2,925	-4.8%
Raleigh, NC	$1,562	-4.3%
Seattle-Tacoma-Bellevue, WA	$2,058	-3.9%
Tampa-St. Petersburg-Clearwater, FL	$1,720	-3.9%
Los Angeles-Long Beach-Anaheim, CA	$2,887	-3.4%
Las Vegas-Henderson-Paradise, NV	$1,509	-3.3%
Memphis, TN-MS-AR	$1,293	-3.3%
Sacramento–Roseville–Arden-Arcade, CA	$1,864	-3.3%
Miami-Fort Lauderdale-West Palm Beach, FL	$2,486	-2.4%
San Antonio-New Braunfels, TX	$1,279	-2.4%
Charlotte-Concord-Gastonia, NC-SC	$1,604	-2.2%
San Diego-Carlsbad, CA	$2,891	-2.0%
Riverside-San Bernardino-Ontario, CA	$2,316	-1.6%
Denver-Aurora-Lakewood, CO	$1,957	-1.0%
Chicago-Naperville-Elgin, IL-IN-WI	$1,801	-0.6%
San Jose-Sunnyvale-Santa Clara, CA	$3,305	-0.6%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD	$1,790	-0.4%
Nashville-Davidson–Murfreesboro–Franklin, TN	$1,649	-0.2%

https://www.cbsnews.com/news/rents-falling-cheaper-18-cities-pay-less-relator-com-september-rental-report/

Ever stumbled upon a quaint café in an unexpected place and thought, “How did I not know about this?” The world of real estate has its own hidden cafes—secondary and tertiary markets. But why are they like hidden gems, and how can you, as an investor, benefit from them? Let’s unpack it:

• Primary Markets: These are big players such as Dallas, LA, or Chicago.
• Secondary Markets: Cities like Austin, Nashville, and Portland, which have been gaining traction.
• Tertiary Markets: Think of areas like Bend, Oregon, or Macon, Georgia. They may be talked about less, but they’re brimming with potential.

Considering a fix-and-flip project or rental investment properties in these lesser-sung regions? Let’s weigh some of the pros and cons.

Upsides of investing in secondary and tertiary markets

Cost-efficient entry

These markets are often in regions that haven’t experienced the rapid urbanization and commercialization in primary cities. Without the hype and media attention driving up property prices, entry costs remain relatively low. This allows investors to make strategic, calculated investments without the heavy financial weight that prime markets often demand. A savvy investor can view this as an opportunity to diversify their portfolio, leveraging the affordability of these markets.

Less crowd, more space

Most often in the limelight, primary markets attract domestic and international investors. In contrast, secondary and tertiary markets remain relatively under the radar.

The charm of this understated focus is the freedom it offers. Real estate investors can take their time to understand a property, negotiate without the pressure of multiple counter-offers, and finalize deals in a less aggressive environment. This space for deliberation can lead to more informed and, ultimately, profitable decisions.

Promising returns

The untapped nature of these markets means there’s substantial room for growth. The ROI here isn’t just about immediate profits. It’s also about long-term appreciation.

As these markets mature and attract more attention, early investors can see substantial returns on their initial investments. To succeed in these markets, look for properties that can increase in value over time as the market changes.

Steady growth

Primary markets are influenced by global trends and international investments. On the other hand, secondary and tertiary markets typically experience growth as a result of local factors.

This means growth is often steadier and more predictable, grounded in local economic and infrastructural developments. For an investor, this translates to more sustainable, organic appreciation. Monitoring local news, understanding community plans, and keeping an ear to the ground can provide valuable insights into potential growth trajectories.

Challenges of investing in secondary and tertiary markets

Potentially more demanding research

The relatively low-profile nature of these markets means that traditional real estate research tools might not always offer comprehensive data. This challenge, however, is also an invitation for investors to innovate. Engaging with local realtors, joining community forums, and even connecting with residents can offer invaluable insights. Immersive research helps choose properties and understand local culture, preferences, and long-term investment viability.

More gradual appreciation

These markets are influenced by local factors. So, the speed of growth may not be as fast as the rapid increases seen in top markets.

However, slow and steady growth can be a blessing in disguise. It gives investors the time to adapt, make further investments, or even exit if they foresee a plateau. Recognizing the steady nature of these markets is essential to setting realistic expectations and crafting a strategic investment plan.

Networking nuances

The bustling real estate events and seminars are less frequent here, but that shouldn’t deter the passionate investor. Embrace this as an opportunity to pioneer. Host local meetups, collaborate with community leaders, or even establish digital forums for like-minded investors targeting these markets. By taking the initiative, you not only build a network but potentially position yourself as a thought leader in the space.

Market variability

These markets can be sensitive to local economic shifts. A significant employer downsizing or a local industry experiencing a downturn can have palpable effects.

But with challenge comes opportunity. Staying informed about local happenings can allow proactive investors to pivot strategies, hedge risks, and even identify new avenues for investment. Regular engagement with local businesses and economic forums can be invaluable.

Taking the plunge: Market research and tips for new local market investments

It’s pivotal to acknowledge the importance of thorough market research when considering investments in secondary and tertiary markets. Venturing into these lesser-known territories requires a tailored approach. So, where should you start?

• Local Expertise: Building relationships with local real estate agents or brokers can offer unique insights that standard market reports might miss. They have their fingers on the pulse of the local community, understanding the intricacies and trends that define these markets.
• Community Forums & Social Media: Engage in local online forums or social media groups. These platforms have valuable information about neighborhood developments, upcoming projects, and local events that can affect property values.
• Visit In-Person: Nothing beats an on-ground visit. Walk the neighborhoods, visit local businesses, and strike up conversations with residents. This will show you the community spirit and help you understand how many people want to rent or buy renovated properties.
• Assess Local Amenities: Look for signs of growth. Are new schools being built? Are there parks and recreational areas? What about public transport facilities? These can be indicators of a budding community, which can be especially attractive for rental investments.
• Stay Updated: Once you’ve gathered your initial insights, it’s essential to keep updating your knowledge. Markets evolve, and what’s true today might change in a few months. Set up Google alerts, subscribe to local news outlets, and keep in touch with your local connections.

Venturing into a new market also means adapting your investment strategies to align with local demands. For fix-and-flip projects, understanding the local architectural preferences, popular home features, or even favored color palettes can be the difference between a property that sells instantly and one that lingers on the market.

For rentals, it’s about understanding the demographics. Are potential tenants young professionals, families, or perhaps retirees? Each group has unique needs, from proximity to schools to easy access to nightlife.

Aside from conducting market research, it is crucial to find a reliable lending partner. One that has a proven track record and expertise in the local market.

That’s where Muevo comes in

At Muevo, we’re changing the real estate financing game. Our presence in 50 states plus DC has equipped us with diverse market insights. We’ve seen the aspirations of investors in primary cities and the untapped passion of those in secondary and tertiary ones. This broad spectrum of experience allows us to offer tailored financing solutions, from Fix and Flip/Bridge Loans to DSCR Rental and Rental Portfolio Loans.

We combine the agility of technology with human expertise, ensuring you close deals faster, enjoy competitive rates and have our unwavering support in every step.

Wrapping up

Exploring secondary and tertiary markets means embracing both the challenges and opportunities they present. The key? Knowledge, diligence, and a reliable partner in your corner. As the landscape of real estate investing evolves, staying informed and adaptable can be your greatest asset.

So, whether you’re diving into the deep end or just dipping your toes, remember every market has its unique story. Happy investing, and here’s to uncovering the next great opportunity!

Operating as a landlord is one of the best ways to pursue a career in real estate. For that matter, few exit strategies have proven more capable of generating long-term profits and facilitating financial independence. It is worth noting, however, that today’s most successful rental property owners are those who know where to invest. The market in which a rental property is located will play an instrumental role in its success or failure. Therefore, landlords must pay special considerations to where they buy their homes. Landlord friendly states, for example, warrant a great deal of consideration.

What Factors Make States Landlord Friendly?

From tenant-landlord laws to taxes and insurance rates, landlords in every state are expected to abide by countless rules and regulations. However, it is worth noting that many of the regulations put in place to maintain order are extremely localized. Outside of a few nationally recognized exceptions, many of the laws governing landlord and tenant relations change from state to state. As a result, several existing factors make some states more conducive to the prospect of owning rental properties than others.

While the factors investors find most attractive are essentially subjective, there are approximately six that are universally found in today’s most landlord-friendly states:

• Eviction Process: Evictions are perhaps the most feared aspect of rental property investing, which is why many landlords covet states which ease the process. Subsequently, some states make it a lot easier to evict bad tenants than others. While some tenant-friendly states make it nearly impossible, others tend to side with landlords by making the eviction process as quick and painless as possible, exercising a low tolerance for tenants who breach their leases.
• Landlord & Tenant Rights: Both tenants and landlords are awarded rights in each state, but the degree to which those rights are carried out will vary significantly across state lines. Sometimes, tenant rights are so extreme that they may actually jeopardize the landlord’s financial standing. On the other hand, several states have developed a more balanced reputation that favors each party. As a landlord, it may be in your best interest to invest in states whose laws don’t work against your right to earn a living.
• Rent Control: As its name suggests, rent control is often implemented to control the cost of rent in certain areas. Some states don’t allow landlords to increase rents despite inflation and yearly increases in taxes and utilities. The idea is to prevent ill-intentioned landlords from price gouging tenants, but the laws may hurt well-intentioned landlords trying to earn a living. Therefore, investors looking to become landlords should pay special considerations to any areas under the rent control umbrella.
• Registration & Licenses: There are a number of states that require landlords to acquire both registrations and licenses to actively rent their real estate assets to tenants. The licenses and regulations are, not surprisingly, to prepare homeowners for the prospects of becoming a landlord. That said, many of these credentials cost money, and can be more of a burden to some landlords, so it may be in an investor’s best interest to lease in a landlord-friendly state that doesn’t require them.
• Tax & Insurance Rates: Property taxes, and sometimes even insurance rates, are established by local municipalities. As a result, prospective landlords will want to consider the property taxes imposed on their own assets in the event they rent them out. Consequently, some states have much higher taxes than others, so it may literally pay to look at local taxes before investing in a rental property.
• Competition: The golden rule of real estate investing still reigns true: location, location, location. The location in which an investor chooses to buy a rental property is more important than ever, in fact. Due largely to the amount of competition in each market, investors will want to choose their location wisely. That said, some states inherently have more competition than others.
• Regulations After COVID-19: The COVID-19 pandemic brought about many changes to the real estate industry, including federal and state laws regulating rental properties. These policies mandated eviction moratoriums and rent freezes in certain localities. Many states have begun relaxing the laws set during 2020, and allowing landlords to resume regular operations.

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The Best States For Landlords In 2022 & 2023

There are a great deal of states that have developed a reputation for helping landlords in their investment endeavors, but some states boast inherent advantages over others. Three states, in particular, seem to award landlords with more benefits than just about everywhere else. To that end, some of the most landlord-friendly states in the upcoming year are as follows:

• Texas
• Indiana
• Colorado
• Alabama
• Arizona
• Florida
• Illinois
• Pennsylvania
• Ohio
• Georgia
• Kentucky
• Michigan
• North Carolina

Texas

Out of all the states landlords have found to be the most conducive to investing efforts, none may be more apparent than Texas. As it turns out, Texas offers a wide variety of landlord advantages. Still, the single most important reason has to do with the state’s inclination to take lease violations very seriously. Due largely to Texas’ propensity to favor landlords in lease violations, it’s fairly easy to see why rental property owners are enamored with the prospect of buying assets in the Lone Star State.

In fact, Texas tends to emphasize the preservation of landlords’ rights in the event lease conditions are broken. For that matter, few places facilitate easier relief, compensation, or repossession of the rental unit if the lease terms are violated. That means landlords with well-crafted lease agreements can enjoy more “peace of mind” than their counterparts in just about every other state. If that wasn’t enough, Texas boasts several affordable markets where demand is increasing, and rental asking prices are still desirable.

Indiana

One of the most landlord-friendly attributes of Indiana is the state’s price-to-rent ratio. With a median home value of $145,300, which is well below the national average, the median rent in Indiana is about $1,100. However, it is worth noting that the profit potential isn’t the only reason landlords find Indiana to be such a great place to own a rental property. In addition to attractive rental rates, the rules that govern security deposits lean heavily in favor of landlords. Laws in the state of Indiana allow landlords to retain security deposits for 45 days. As a result, landlords may take an appropriate amount of time to determine whether they need to use the deposit on any damages caused by tenants. Other states don’t give the landlord enough time to evaluate the property, potentially leading to them giving back the deposit when some of it should have been kept.

Colorado

Colorado is unique in that it is one of the few states where local law enforcement takes the landlord’s side. Whereas many states protect the tenants’ rights at the expense of the landlord, Colorado does the opposite. As a result, the process of evicting a tenant for unpaid rent is made simpler. Any demand for compliance notices initiated by the landlord is limited to 72 hours. Tenants are given two options at that time: pay their landlords or leave the property. After the demand for compliance expires, tenants are given a mere 48 hours to get out of the home. Other states, however, may allow the eviction process to drag on for far too long, effectively ruining any profit potential for the owner.

Alabama

Many of the state laws in Alabama make it an attractive state for landlords. Property tax rates are the second-lowest in the country at just 0.42%, making real estate investing options attractive. Landlords can raise the rent as long as they provide a 30-day notice. Rental laws prevent tenants from withholding rent if a landlord does not make repairs to the property. Also, landlords are favored in the eviction process in Alabama. If a tenant breaches the rental agreement, landlords can give a 14-day notice to end the lease. If tenants do not pay the rent, the landlord can give a 7-day notice of eviction. Alabama state laws do not cover late rent fees, meaning that landlords have the freedom to set their own prices for late rent fees. 

Arizona

Similar to Alabama, landlords can raise the rent on their property with a 30-day notice. Landlords in Arizona are favored in the eviction process. If a tenant fails to pay rent or fails to maintain the property, the landlord can give a 5-day notice to rectify the situation. If a tenant breaches the rental agreement, the landlord can give a 10-day notice. If the issue is not rectified, the landlord can then file an eviction lawsuit. In more cases of more serious violations, such as vomiting a crime on the property, a landlord can give an unconditional quit notice to vacate the property within 10 days.

Florida

Although Florida has one of the highest population of renters in the US, the laws in this state lack detail, creating favorable circumstances for landlords and the freedom to set many of their own rental guidelines. For instance, as long as it is returned within 60 days after a tenant vacates the property, there is no limit to the amount a landlord can charge for a security deposit. Rent control is prohibited in Florida, and landlords can set their own price for late rent fees. If a tenant is destroying the property, landlords can give a 7-day notice to vacate before proceeding with eviction lawsuits. 

Illinois

Landlords in Illinois can also set their own prices for a security deposit for their rental properties. The security must be returned within 45 days unless the tenant owes money in rent or has caused damage to the property. Late fees are limited to $20 or 20% of the rent. If a tenant breaks the lease terms, landlords can give a 10-day notice to vacate the property before proceeding with the eviction process. 

Pennsylvania

The eviction laws in Pennsylvania are also attractive to landlords in Pennsylvania. If the tenant fails to pay rent or violates the lease terms, the landlord can issue a 10-day notice to pay or move out. After 10 days, the landlord can begin the legal eviction process. The average rental income in this state is around $1,300, which is an attractive cash flow for rental owners. Cities such as Philadelphia and Pittsburgh have different landlord-tenant laws than the state, so be sure to research these regulations when investing in Pennsylvania. 

Ohio

Becoming a landlord in Ohio comes with the potential for tax write-offs such as mortgage appreciation and improvements made to the property. Also, the eviction process favors the landlord in this state. If a tenant fails to pay rent, the tenant must move out of the property within three days after receiving notice from the landlord.

Georgia

Georgia is another state with informal eviction laws, allowing landlords to quickly resolve issues with unpaid rent. After landlords issue an eviction notice, tenants have seven days (unless otherwise specified) to pay rent. If they do not, landlords can begin court proceedings to remove tenants if necessary. There are also no limits on late rental fees or security deposits in Georgia, thus providing landlords with more flexibility to establish these numbers based on the property. 

Kentucky

Rental laws in Kentucky fail to specify limits on late fees or security deposits. Landlords can use the security deposit funds for any damage done to the unit, unpaid rent, or other costs incurred by the tenants. Kentucky also has extremely lenient eviction laws. Landlords can begin the eviction process with a seven-day notice to tenants. For any other lease violations, landlords only need to provide a 15-day notice to begin the eviction process (if the tenant does not fix the issue). 

Michigan

Michigan allows landlords to deduct damages from a tenants’ security deposit, and allows them to hold onto the deposit for up to a month after tenants vacate a unit. Michigan is also known for looser laws on rental rates and fees charged by landlords. Note that Michigan does have a slightly higher property tax rate than the national average. However, the protections built in for landlords can be beneficial for property owners. 

North Carolina

North Carolina is a rapidly growing market, largely due to the low cost of living and tax rates. For landlords, there are numerous policies that can help when managing properties. First, in cases of a lease violation landlords do not have notice requirements before initiating an eviction. However, in cases where rent is not paid, landlords must give a ten-day notice before starting the eviction process. Landlords are not obligated to renew the lease or rental agreement. 

Summary

While great rental markets exist in every state, there’s no doubt that some states reward investors who choose to set up shop in certain locations. Make no mistake, certain states are better to invest in than others. For example, landlord-friendly states tend to place the rights of homeowners ahead of their tenants, which bodes incredibly well for any rental property portfolio. These states tend to favor landlords in the eviction process and offer low property taxes. Combined with great cash flow, there’s no reason landlord friendly states can’t simultaneously put an asset over the top while mitigating risk. Therefore, pay special considerations to the rules in regulations in your particular state.

If you’re considering buying a rental property, familiarizing yourself with the best rental markets in the country could go a long way in preparing you to invest in your first buy-and-hold asset. Aside from being some of the best cities to invest in real estate, today’s best places to buy rental property can teach us a lot about how to invest in specific locations. The location you choose to invest in will ultimately determine the viability and success of any assets you acquire. After all, those who know how to read and interpret market indicators will know where the best rental markets reside. Keep reading to learn where the best places to invest in real estate long term are, and why investors should be excited.

Best Rental Markets In 2023

Rent growth in 2022 was attributed to supply and demand constraints in the housing sector. Historically low interest rates, pent-up demand, and years of government stimuli created a competitive market—the likes of which had never been seen before. At the same time, inventory was unable to keep up with the pace of buying activity; there simply weren’t enough homes to keep up with demand. As a result, even those who wanted to buy were relegated to the renter pool in 2022, causing rents to spike. In response to higher home prices and rental rates, many households used the work-from-home trends created by the pandemic to relocate to the Sunbelt.

As we get closer to turning the page on 2022, however, the best rental markets are starting to shift to the Midwest. Over the latter part of 2022, the Midwest has seen some of the fastest rental rate growth in the country, and 2023 doesn’t appear as if it will put an end to the momentum. The convergence of record rent increases and inflation is forcing more people to move back in with families or roommates, or even delay renting altogether.

The shift in sentiment has also changed the best places to buy a rental property in 2023. Instead of focusing on the Midwest, as investors have done throughout 2022, the best rental markets in 2023 are looking more and more like the following:

• Chicago, Illinois
• Cincinnati, Ohio
• Columbus, Ohio
• Grand Rapids, Michigan
• Louisville, Kentucky
• New York, New York
• Phoenix, Arizona
• Spokane, Washington
• Raleigh, North Carolina
• San Diego, California

Chicago, Illinois

The Chicago real estate market looks well positioned to be one of the best rental markets in 2023. If for no other reason, Chicago represents the third-largest metropolitan area in the United States. With more than 50.0% of the city’s population already locked into a rental agreement, buying a rental property in Chicago is just as much of a volume play as it is a smart decision. The number of potential renters in a city with relatively high private sector employment bodes well for investors looking to fill units. Additionally, Chicago could see its number of renters grow over the course of 2023. With a mere 16.8 weeks of supply in the housing sector, there aren’t nearly enough homes to keep up with buyers. Those who can’t buy will be forced to rent and drive up demand in a city that already has peak competition. Rents have already risen about 7.3% over the last 12 months. If interest rates continue to spike and home affordability continues to crumble, there’s no reason to think rents won’t march even higher in 2023.

Cincinnati, Ohio

Owning a rental property in the Cincinnati real estate market is growing more attractive with each passing day. With local rents growing about 6.0% in the last six months alone, Cincinnati has one of the fastest metro-level rent growth rates in the country. The rise in rental rates appears to be attributed to the city’s relative affordability. With that in mind, more people are looking to Cincinnati in an attempt to escape today’s high prices. With a median sales price somewhere in the neighborhood of $230,000, Cincinnati real estate is more affordable than the national average and, therefore, one of the last bastions of affordable housing. The added action, however, is straining the city’s 11.4 weeks of supply. Not unlike just about everywhere else, there aren’t enough homes to satiate buyers. As a result, local rents are expected to increase significantly as buyers are turned away from purchasing and towards renting. 

Columbus, Ohio

One of the best places to buy a rental property in 2023 is shaping up to be the Columbus real estate marketin Ohio. Similar to Cincinnati, Columbus has seen a lot of extra attention over the course of 2022. At $246,515, the median home value in Columbus is well below the national average. Due to the city’s relative affordability, more people are looking to call it home. However, Columbus only has about 13.1 weeks of inventory; not nearly enough to keep up with demand. The imbalance between competition and inventory has created more demand for rentals, increasing rents as much as 6.0% over the last six months. Looking into 2023, demand for real estate in Columbus will increase as more people look to escape less affordable markets. When supply fails to keep up with demand, more renters will enable landlords to increase rental rates, making Columbus one of the best rental markets in 2023.

Grand Rapids, Michigan

While rents in the Grand Rapids real estate market haven’t increased at quite the same pace as the previously mentioned cities, 2023 is starting to look like a great year for passive income investors. For starters, landlords will see plenty of demand thanks to the city’s distinct lack of inventory. With 7.0 weeks of supply, inventory is nowhere near capable of keeping up with demand. Subsequently, Grand Rapids is expected to see a steady influx of net migration due to the city’s relative affordability. More households will be forced to rent, regardless of whether they can afford to buy. Discrepancies in supply and demand have already resulted in a 5.4% increase in rents over the last year, and there’s nothing to suggest the trend won’t continue. As a result, investors will see plenty of demand for their rental units, giving them the ability to increase asking prices accordingly.

Louisville, Kentucky

While not technically part of the Midwest, the Louisville real estate market is benefiting from the same migration trends as the rest of the best rental markets on this list. Most notably, renters are choosing to call Louisville home because it represents a more affordable real estate market. The median home value in Kentucky is about $125,000 less than the national average, serving as an affordable alternative for anyone who was granted work-from-home privileges over the course of the pandemic. The added attention on the Louisville market will pose a significant challenge for local inventory levels. With a little more than two months of inventory, demand greatly outweighs supply. The lack of inventory has already increased rents by 8.1% over the last 12 months. Therefore, it’s reasonable to assume that more people moving to Louisville in search of affordable living situations will ironically increase rental rates.

New York, New York

Few cities across the country have proven to be a better market to be a landlord in than New York. In the last six months, metro-level rent growth increased upwards of 5.0%, trailing behind only Columbus and Cincinnati. However, unlike its Ohio counterparts, New York hasn’t seen an influx of demand because of affordability. Instead, the New York real estate market is finally starting to get its legs underneath it. With what looks like the worst of the pandemic in the rearview mirror, New York is starting to fire on all cylinders. People are going back to the office, and landlords are seeing more demand for their units. New York landlords have already been able to increase rents at an attractive rate, and current trends suggest they will continue to be able to do so—at least for the foreseeable future. 

Phoenix, Arizona

Only a handful of metropolitan areas have seen their rents increase as much as the Phoenix real estate market over the last three years. Since the beginning of the pandemic, in fact, rents in Phoenix have increased by about 32.0%. Only seven other cities with a population greater than one million saw rents increase at a faster rate than Phoenix since the first quarter of 2020. The increase was directly correlated to the market’s relative affordability and households’ inclination towards warmer weather during the pandemic. Rent increases have cooled off in recent months, but Phoenix remains a destination for both older generations on the brink of retirement and up-and-coming tech industry employees. Demand from several generations of buyers and renters will make Phoenix one of the best rental markets in 2023.

Spokane, Washington

While separated by an entire state, the Spokane real estate market is benefiting from its more expensive neighbors to the West: Seattle and Portland. Both Portland and Seattle have seen exorbitantly expensive home values lead to a mass exodus. In search of more affordable living arrangements, many households have set their sights on Spokane. With a population that barely eclipses 200,000 people, Spokane is a relatively small city receiving a lot of attention. Demand for housing has already increased home values 12.6% over the last year. Additionally, Spokane’s 11.9 week of supply can’t keep up with the net migration. As a result, the rental market has become the beneficiary of an influx of demand. Spokane real estate investors with units for rent will most likely be able to avoid vacancies with ease and increase rental rates in 2023, making it one of the best rental markets to invest in.

Raleigh, North Carolina

The Raleigh real estate market was a beneficiary of the new migration patterns created by the pandemic. Local home values have increased about 56.3% since COVID-19 was officially declared a global emergency. In that time, rents have increased a slightly more modest (but nonetheless impressive) 32.9%. As more people chose to call Raleigh home, landlords and sellers were able to increase their prices at a historic pace. That said, residents haven’t chosen to flee Raleigh as prices rise. If anything, more people are looking to call Raleigh home in 2023, which suggests it may be one of the best rental markets in 2023.

San Diego, California

Many of the hottest real estate markets in 2022 were located in the Sun Belt. As more people were granted permission to work from home during the pandemic, many households chose to relocate to warmer locations. The San Diego real estate market, in particular, saw an incredible influx of demand when buyers and renters prioritized cities with warmer weather. The resulting demand increased rents and home values almost exponentially over the last three years. Landlords have been able to increase rents as much as 5.0% in the last six months alone. That said, higher home values and rents haven’t scared away potential buyers and renters; if anything, demand remains largely intact. As a result, local landlords will find that they can simultaneously lower the risk of vacancies and increase rents in 2023.

Top Factors That Affect A Rental Property Investment

There are countless factors that play into a location’s rental viability. The sheer number of variables that have even the slightest impact on an area’s rental property performance is staggering. That said, not all indicators are created equal; there are some factors that affect a rental property investment inherently more than others, not the least of which include:

• Location
• Economy
• Vacancies & Listings
• Future Development

Location

First and foremost, the golden rule of real estate investing is still alive and well: location, location, location. Investing in a rental property with at least some success is always contingent on the area in which it is located. The location of the respective property will determine everything else I’ll discuss henceforth.

Before considering a subject property, you need to pick a location that facilitates a healthy rental market. Specifically, pay special consideration to the economy’s health, demand, job opportunities, new home construction, unemployment rates, household income, affordability, and anything else that could potentially influence a renter’s decision to live in the area. Even the best rental property in a poor location doesn’t stand a chance when all is said and done. You need to invest in an area that people want to call home and where demand will persist for the foreseeable future.

Economy

The local economy will play an integral role in determining the best places to buy rental property. Here’s a list of some of the most important economic factors you’ll need to consider when looking at the location in which a rental property is situated:

• The number of sales of existing homes
• The prices of existing homes
• The volume of new construction
• The local economy
• Population trends
• Unemployment rates
• Job growth
• Median household incomes
• Affordability

While this list is not exhaustive, each of these indicators will play an essential part in determining whether or not an area is worth investing in. Positive trends in each would likely suggest the location is ready to be invested in, but economic indicators are not mutually exclusive. Darren Nix, Founder of Steadily Landlord Insurance, adds that “investors should watch for new home costs. When the costs start to decrease, there will be less demand for existing homes and rentals”. While it’s better to have everything working in an area’s favor, a rental market can thrive with just a few of these factors on its side.

Vacancies & Listings

Mind due diligence and pay close attention to the ratio of vacancies relative to the number of listings in a particular area. An unusually high number of listings, for example, could represent one of two scenarios: either the neighborhood is currently in the middle of a seasonal cycle, or it is trending downwards. It is in your best interest to discern what the listing ratio in a particular area means for an impending investment.

Take note of the area’s vacancy rate, too. At the very least, vacancy rates will give you an idea of what sort of demand to expect. Low vacancy rates could be a good sign, as demand appears intact and active. High vacancy rates, however, could suggest poor conditions. Additionally, lower demand could force landlords to lower rates to attract tenants, not unlike yourself.

Future Development

Areas with future development projects in the pipeline are typically representative of a healthy market. Most likely, projects have broken ground because the area has shown promise, which bodes well for rental property investors. Conversely, a distinct lack of development suggests there is reason to avoid the area. Therefore, you’ll want to contact the local municipal planning department to gather information on all the new projects currently underway or will be sometime soon.

Summary

Finding the best places to buy rental property, or at the very least the best market near you, is essential whether you are purchasing your first or your fourth buy and hold property. Luckily, several indicators can help you choose an optimal location. These factors range from local economic markers to average vacancy rates and population trends. A great place to start is always looking at the year’s best rental markets. Although, these cities are just the beginning. Pay attention to the factors defining these emerging real estate markets and allow them to guide your search for the best location for your investment.

West Virginia, known for its rugged landscapes and warm Appalachian hospitality, also offers a range of affordable cities that are perfect for those seeking a high quality of life without breaking the bank. In this article, we’ll explore the top 10 most affordable cities in West Virginia. Each city on this list combines affordability with a wealth of amenities, creating a welcoming environment for residents of all ages. Join us as we delve into the beauty of these budget-friendly cities and examine the factors that contribute to their affordability, along with the importance of education, healthcare, recreation, and community engagement.

Top 10 Cities in West Virginia

10. Wheeling: Nestled along the Ohio River, Wheeling stands as a historic and affordable city in West Virginia. The cost of living in Wheeling is below the national average, offering affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s rich history, cultural events, and recreational opportunities make it an attractive destination for residents seeking affordability and charm.

9. Parkersburg: Parkersburg, located along the Ohio River, is another affordable city that offers a high quality of life. The cost of living in Parkersburg is below the national average, providing affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s friendly community, access to outdoor recreation, and cultural attractions make it an appealing place to call home.

8. Martinsburg: Martinsburg, in the eastern part of the state, is an affordable city with a small-town feel. The cost of living in Martinsburg is below the national average, offering affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s proximity to Washington D.C. and Baltimore adds to its allure, while its historical sites, recreational activities, and community events create a vibrant lifestyle for residents.

7. Morgantown: Home to West Virginia University, Morgantown is an affordable city that combines a lively college town atmosphere with stunning natural beauty. The cost of living in Morgantown is below the national average, providing affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s access to outdoor recreation, educational opportunities, and cultural events make it a popular choice for residents.

6. Clarksburg: Clarksburg, nestled in the hills of North-Central West Virginia, offers an affordable and serene lifestyle. The cost of living in Clarksburg is below the national average, offering affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s rich history, recreational opportunities, and community engagement make it a warm and inviting place to live.

5. Huntington: Huntington, located along the Ohio River in the western part of the state, is an affordable city with a vibrant energy. The cost of living in Huntington is below the national average, providing affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s cultural diversity, access to outdoor recreation, and community events create a dynamic and inclusive atmosphere for residents.

4. Beckley: Beckley, surrounded by lush mountains in southern West Virginia, offers an affordable escape with a relaxed ambiance. The cost of living in Beckley is below the national average, offering affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s proximity to national parks, recreational opportunities, and community gatherings make it a tranquil and budget-friendly place to call home.

3. Clendenin: Clendenin, situated along the Elk River, is an affordable city with a close-knit community. The cost of living in Clendenin is below the national average, providing affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s scenic beauty, outdoor recreation, and community-driven events create a warm and inviting atmosphere for residents.

2. Grafton: Grafton, nestled in the Allegheny Mountains, offers an affordable and peaceful living experience. The cost of living in Grafton is below the national average, offering affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s historical charm, recreational opportunities, and strong sense of community make it an idyllic and budget-friendly destination.

1. Ripley: Ripley, located along the Ohio River, rounds out our list of the top 10 most affordable cities in West Virginia. The cost of living in Ripley is below the national average, providing affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s friendly atmosphere, recreational activities, and community events make it a welcoming and affordable place to live.

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Factors that Contribute to Affordability

1. Cost of Housing: Affordable cities in West Virginia generally offer a range of housing options, from affordable rentals to reasonably priced homes, making it easier for residents to find suitable accommodation within their budget.
2. Utilities and Transportation: These cities often have lower utility costs, including electricity, water, and gas. Additionally, transportation expenses, such as fuel prices and commuting costs, are generally more affordable compared to national averages.
3. Groceries and Everyday Expenses: The cost of groceries and everyday expenses, including food, household goods, and services, is often more reasonable in these cities, allowing residents to manage their day-to-day expenses effectively.

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The Importance of Quality of Life

1. Education: Access to quality education is crucial for families and individuals. Many of these cities offer excellent educational institutions, including public schools, colleges, and vocational training centers, providing opportunities for learning and personal growth.
2. Healthcare: Access to reliable healthcare facilities and services is essential for a high quality of life. These cities have reputable hospitals, clinics, and healthcare providers, ensuring that residents have access to quality medical care when needed.
3. Recreation: Affordable cities in West Virginia often offer a plethora of recreational activities, taking advantage of the state’s natural beauty and four distinct seasons. From hiking and biking in the mountains to water sports on the rivers and lakes, residents can enjoy various outdoor pursuits throughout the year. Additionally, many cities host community events, cultural festivals, and concerts, fostering a vibrant and engaging atmosphere.
4. Community: A strong sense of community is essential for a fulfilling lifestyle. In West Virginia’s most affordable cities, residents can find a warm and welcoming atmosphere, where neighbors come together to support one another. Community events, such as farmers’ markets, cultural festivals, and charity fundraisers, provide opportunities for socializing and building connections.

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Conclusion

West Virginia’s top 10 most affordable cities offer a wealth of opportunities for individuals and families seeking a quality lifestyle without breaking the bank. From charming river towns to vibrant college communities, these cities exemplify West Virginia’s warmth and sense of community. The factors that contribute to affordability, such as cost of housing, utilities, and everyday expenses, make living in these cities a cost-effective and prudent choice.

Beyond affordability, the importance of education, healthcare, recreation, and community engagement enhances the overall quality of life in these cities. Residents can access top-notch educational institutions, reliable healthcare services, and a wide array of recreational activities that celebrate West Virginia’s natural beauty and cultural heritage. The strong sense of community fosters a welcoming environment, where residents can forge lasting connections and thrive.

Whether you’re a young professional, a growing family, or a retiree seeking the perfect place to call home, West Virginia’s most affordable cities offer an inviting and enriching lifestyle. Explore these cities and discover the unique opportunities each one has to offer, making your dream of living in the Mountain State a reality.

Wisconsin, the Dairy State, is renowned for its picturesque landscapes, friendly communities, and a cost of living that won’t break the bank. If you’re in search of a place to call home that offers affordability without compromising on quality of life, you’re in luck! In this article, we will uncover the top 10 most affordable cities in Wisconsin. Each city on this list provides a unique blend of affordability, access to excellent amenities, and a welcoming community atmosphere. Let’s dive into the beauty of these budget-friendly cities and discover the factors that contribute to their affordability, along with the importance of education, healthcare, recreation, and community engagement.

Top 10 Cities in Wisconsin

10. La Crosse: Nestled along the banks of the Mississippi River, La Crosse is a hidden gem in Wisconsin. The city’s cost of living is below the national average, offering affordable housing options, lower transportation costs, and reasonable healthcare expenses. With picturesque views, abundant recreational opportunities, and a vibrant downtown area, La Crosse provides residents with a high quality of life without a hefty price tag.

9. Eau Claire: Eau Claire, known for its arts and culture scene, is another affordable city in Wisconsin. The cost of living in Eau Claire is lower than the national average, providing affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s strong sense of community, diverse cultural events, and access to outdoor activities make it an attractive destination for budget-conscious individuals and families.

8. Green Bay: Home to the Green Bay Packers, Green Bay is not only a sports haven but also an affordable city. The cost of living in Green Bay is below the national average, offering affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s proximity to Lake Michigan, outdoor recreational opportunities, and lively community events make it a sought-after location for residents.

7. Appleton: Appleton, situated in northeastern Wisconsin, is an affordable city with a rich cultural heritage. The cost of living in Appleton is lower than the national average, providing affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s excellent school system, recreational facilities, and family-friendly atmosphere make it an ideal place to call home.

6. Janesville: Janesville, located in southern Wisconsin, offers an affordable living experience. The cost of living in Janesville is below the national average, providing affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s beautiful parks, recreational activities, and community events create a welcoming environment for residents.

5. Wausau: Wausau, situated in the heart of Wisconsin, combines affordability with natural beauty. The cost of living in Wausau is below the national average, offering affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s access to outdoor recreation, cultural attractions, and a strong sense of community make it an attractive destination for residents.

4. Sheboygan: Sheboygan, located on the shores of Lake Michigan, is an affordable city with a charming coastal vibe. The cost of living in Sheboygan is below the national average, providing affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s stunning beaches, water sports activities, and cultural festivals create a lively and enriching lifestyle for its residents.

3. Superior: Superior, situated on the western tip of Lake Superior, is an affordable city with a relaxed maritime ambiance. The cost of living in Superior is below the national average, offering affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s access to outdoor recreation, historical landmarks, and community events make it a captivating place to live.

2. Manitowoc: Manitowoc, nestled on the shores of Lake Michigan, offers affordability with a touch of nostalgia. The cost of living in Manitowoc is below the national average, providing affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s maritime heritage, recreational opportunities, and friendly community create a warm and inviting atmosphere for residents.

1. Beloit: Beloit, located on the Wisconsin-Illinois border, is an affordable city with a vibrant downtown scene. The cost of living in Beloit is below the national average, offering affordable housing options, lower transportation costs, and reasonable healthcare expenses. The city’s diverse cultural events, recreational facilities, and community engagement opportunities make it a lively and budget-friendly place to call home.

Factors that Contribute to Affordability

1. Cost of Housing: Affordable cities in Wisconsin generally offer a range of housing options, from affordable rentals to reasonably priced homes, making it easier for residents to find suitable accommodation within their budget.
2. Utilities and Transportation: These cities often have lower utility costs, including electricity, water, and gas. Additionally, transportation expenses, such as fuel prices and commuting costs, are generally more affordable compared to national averages.
3. Groceries and Everyday Expenses: The cost of groceries and everyday expenses, including food, household goods, and services, is often more reasonable in these cities, allowing residents to manage their day-to-day expenses effectively.
4. The Importance of Quality of Life
6. Education: A strong educational system is essential for the growth and development of a community. The most affordable cities in Wisconsin prioritize education, with well-funded schools, dedicated teachers, and access to educational resources. From top-notch public schools to renowned universities and community colleges, residents can find excellent opportunities to pursue their academic goals.
7. Healthcare: Access to quality healthcare services is paramount for residents’ well-being. Affordable cities in Wisconsin offer a range of medical facilities, hospitals, clinics, and healthcare professionals to ensure that residents receive the care they need. Residents can access preventive care, specialized treatments, and wellness programs to maintain their health and vitality.
8. Recreation: Wisconsin’s affordable cities embrace the state’s natural beauty, offering residents an abundance of recreational opportunities. From serene lakes for fishing and water sports to scenic parks for picnics and relaxation, there’s no shortage of outdoor activities to enjoy. Additionally, many cities host community events, arts festivals, and sports competitions, fostering a sense of camaraderie and engagement among residents.
9. Community: A strong sense of community is essential for a fulfilling lifestyle. In Wisconsin’s most affordable cities, residents can find a warm and welcoming atmosphere, where neighbors come together to support one another. Community events, such as farmers’ markets, cultural festivals, and charity fundraisers, provide opportunities for socializing and building connections.
10. Conclusion
11. Wisconsin’s top 10 most affordable cities offer a wealth of opportunities for individuals and families seeking a quality lifestyle without breaking the bank. From scenic lakefront communities to vibrant cultural centers, these cities showcase Wisconsin’s diverse charm and sense of community. The factors that contribute to affordability, such as the cost of housing, utilities, and everyday expenses, make living in these cities a cost-effective and prudent choice.
12. Beyond affordability, the importance of education, healthcare, recreation, and community engagement enhances the overall quality of life in these cities. Residents can access top-notch educational institutions, reliable healthcare services, and a wide array of recreational activities that celebrate Wisconsin’s natural beauty and cultural heritage. The strong sense of community fosters a welcoming environment, where residents can forge lasting connections and thrive.
13. Whether you’re a young professional, a growing family, or a retiree seeking the perfect place to call home, Wisconsin’s most affordable cities offer an inviting and enriching lifestyle. Explore these cities and discover the unique opportunities each one has to offer, making your dream of living in the Dairy State a reality.

• New York allocated $85 million to pay homeowners for building ADUs in their backyards.
• Grants are given to local governments or nonprofits who distribute the funds.
• New York is doling out millions to help homeowners build tiny homes, called accessory dwelling units, or ADUs, in their backyards. 
• As of August 15, the Empire State has spent $23.4 million doing so, according to New York State Homes and Community Renewal, which is in charge of the funds. 
• It’s part of a package passed within the state’s 2022 to 2023 budget called the Plus ONE ADU Program, which provides grants of up to $125,000 to homeowners across the state who add an additional housing unit to their property. The state plans to give a total of $85 million out in grants by 2028. 
• “It comes at a time when we need to investigate every avenue to build every single unit that we have,” Jolie Milstein, president of the New York State Association for Affordable Housing, told Insider. 
• The program is one way lawmakers are trying to ease a worsening housing shortage, a nationwide issue that is making both buying and renting a home very expensive for most Americans.
• Through this program and other proposals, Gov. Kathy Hochul is planning to address “New York’s housing crisis by increasing the housing supply, which is why she brought forth initiatives to expand housing options — including through the construction of accessory dwelling units,” a HCR spokesperson told Insider. 
• In the first round of funding, HCR gave out nine grants of between $500,000 to $2.6 million to local governments like Ulster County and the Town of Amherst, and nonprofits like Habitat for Humanity of New York City and Westchester, HCR said. 
• Through these grants scores of homeowners — from those located near Buffalo to New York City — will receive cash to turn their garage into an apartment or build a tiny home in their backyards, HCR said. 
• In order to apply, owners need to meet a certain threshold of the area median income, which varies depending on where they live in the state.
• Many cities, in New York and beyond, have eased zoning ordinances to allow homeowners to build additional living units on their property.
  
• In California — where the housing crisis is especially dire — the state legislature even overrode local zoning ordinances, to allow all homeowners to build on their property. A similar bill in New York did not make it through the legislature, Spectrum News 1 reported.
• Still, Milstein sees the grant program as an “innovative” way to give those a head start where building is legal, and “show this can be a successful way to allow people the freedom and flexibility to address the crisis in their own home.”