5 Affordable, Cash-Flowing Markets I’d Buy In This Year

Dave:
Sting region in the country right now. It’s affordable, it’s got cashflow potential, and they’re on market deals that fit my buy box. Today. I’ll share with you which region I’m talking about, why I think it makes sense for so many investors, and I’ll even drop my list of five markets. Anyone looking for a new place to invest would be crazy not to consider. Hey everyone, welcome to On the Market. I’m Dave Meyer. I started investing in real estate 15 years ago in Denver and I did that for a while, but eventually I moved to Europe and all of a sudden the entire country was available for me. But I actually wound up moving to Europe with my wife for a couple of years and when that happened, all of a sudden the whole country opened up for me in terms of possible investment places. And there are lots to in the southeast and the south and there’s plenty to in the southeast in the Sunbelt, there are tons of good expensive markets with huge appreciation. But I started quickly realizing that the Midwest and more specifically the Great Lakes region, fit a lot of what I was looking for as an investor. And I’ve gone on to invest in that area and I’m looking to invest more. And in today’s episode I’m going to explain why and make my case for this region as something you should potentially consider as well.
And as we’re getting into this, I want to mention that I am so interested in this region of the country. Henry Washington and I are actually going there in mid-July to drive around. We’re going to go look for markets, we’re going to look for deals as part of BiggerPockets first ever Cashflow Roadshow. We’re actually considering buying deals as we find some good ones along the way, and we actually have two free meetups I want you all to know about. You can join us in Chicago on July 15th or in Indianapolis on July 16th. It’s going to be a great networking opportunity, a lot of fun times, so they are free, but you do have to rsvp, so we will put the link in the bio, but also go to biggerpockets.com/roadshow and you can sign up for free for those events. Hope to see you there. All right, well let’s get into why we are going to the Midwest and why I like the Midwest. It all comes down to my basic thesis about real estate.
Yeah, preview of the market. Okay. Oh, that’s true. That would make way more sense. Okay, good call we to see you on the cash. We hope to see you on the Cashflow Roadshow for this episode. What we’re going to do is we’re going to define quickly housing affordability and examine its key components because sort of the basis of my thesis around the Midwest. Then I’ll present current data on affordable metrics from house to cost, incomes, rent to price ratios, all that for a bunch of. Then I’m going to present some current data on a variety of affordability metrics for cities in the Great Lakes region like Milwaukee, Madison, Chicago and so on. And then I’m going to compare them to more expensive markets that still have great investing potential, but I just want to compare and contrast them. And then I’m going to just talk about how real estate investors can take advantage of what’s going on in the Midwest and why I believe the Midwest stands out for value and sustainability and how investors from really across the country should consider Midwest opportunities.
Alright, first up, just my core belief, sort of why I honed in on the Midwest in the first place goes back to a thesis that I’ve had essentially since 2022 when interest rates started to go up. My belief is that affordability is the defining problem in the housing market right now, but it’s also going to drive performance for real estate investors for the foreseeable future. Basically in expensive markets, many buyers are priced out. We are seeing lower demand in many of those markets and we’re seeing out migration from a lot of really expensive places, whereas affordable regions tend to have very stable, predictable types of markets, which for me as a buy and hold investor is really attractive. And I want to mention that yes, affordability is something that I care a lot about in my investing. The Midwest is not the only place that offers affordable, but the Midwest is obviously not the only place that offers affordability. You can find that a lot of other places in the country and even within the Midwest, there are some expensive cities, but they just want to call out that in that region in general, it is relatively affordable and that’s the number one reason why I look at these places and I’ll explain some of the other reasons as we go out through this.
So you find this affordability there and because my personal investing strategy focuses on long-term buy and hold investors, and because my personal investing strategy focuses on buying long-term buy and hold investments, finding great properties that you can comfortably hold onto for a decade or more, the Midwest sort of stable cash flowing markets align with this approach and they also, at least the ones I’m going to talk about today, offer steady appreciation without the extreme volatility of some of these boom and bust markets. Now we’ll get into the metrics before, but just as a reminder, I’m using this word affordability a lot and that obviously means different things in different contexts, but in the housing market affordability as a pretty specific definition, it’s how easily a typical person, a typical cult, it’s how easy the average American can afford the average price home. And within that there are sort of three things that make up affordability. Of course there are home prices, how much you’re paying for a property. Then of course there’s mortgage rates because so many people use mortgages to buy that property. The rate that you’re paying on that obviously matters a lot for affordability. And then third is household income. So just how much money that you’re generating and when you look at all three.
So when you look at all three of those things together on a national basis, affordability is really bad. It is actually close to 30 or 40 year lows. The last time we saw housing affordability this low was in the early eighties when mortgage rates were like above 10%. And this has obviously happened for a variety of reasons, but the main reasons are prices have gone up dramatically over the last couple of years. And although mortgage rates have gone up raising the home, the main reason is prices have just gone crazy over the last couple of years and in the last two or three years, mortgage rates have gone up as well and that has created a real challenge with affordability. When you look at how this is impacting Americans, it’s pretty significant the typical ownership cost right now. So if you add together mortgage taxes, insurance, all that for homeownership, it eats up about a third of the average person’s income. That’s pretty high, 32, 30 3%, where traditionally what experts believe is sort of the upper threshold of affordability is 28%. And that may not sound like a lot, but that matters. That’s probably hundreds or thousands of dollars per year that people are now spending on homes that they would normally have spent elsewhere in the economy. They would’ve saved or they would’ve invested. And so this problem of affordability is a lot.
And so this problem of affordability is spread a lot throughout the country. In fact, Adam Data, a really reputable data source said that 97% of counties in the US are less affordable than other historical averages. And we don’t know if we’re going to go back to those historical averages, but just when people say housing is expensive, it’s true, you can measure this, it is expensive across the country and I think this is going to matter a lot for the housing market going forward. I believe that there are certain markets that have just gotten so expensive that it is difficult and it’s going to continue to be difficult for prices to continue to go up and for rents to keep pace. We are already starting to see that, not everywhere of course, but a lot of more expensive markets like Austin or Phoenix have seen corrections. We see the total cost of home ownership in a state like Florida really damaging. We see the total cost of home ownership in Florida, for example, really putting downward pressure on prices in that city and we’re seeing the same thing in rents.
So that just impacts demand, right? I do believe that unless something changes, which it could, but the track that we’ve been on for the last couple of years and it seems like we’re continuing on for at least the next few years, is that housing is going to remain relatively affordable and my belief is that demand is going to start moving towards places where it is relatively more affordable and that’s going to help the housing market stay stable and continue to see sort of consistent appreciation. The second thing about this, and it’s sort of a secondary to that demand, is that I just think that affordability is good for migration, right? People are going to start moving towards more affordable places. We’ve seen this over the last couple of years, people moving expensive, people moving from expensive metros like New York or LA or San Francisco to much cheaper places, whether that’s Texas or the Carolinas or the Midwest.
And the other thing, I think a lot of people miss that, of course people move to more affordable places, but businesses tend to follow affordability too. If they can get cheaper real estate, if they can have a less expensive workforce, then they will move to more affordable areas that creates more jobs, a better economy and better conditions for real estate investing. The last thing I just want to mention about affordability is these places that are more affordable tend to more stable. There’s less volatility in these kinds of markets when the market swings and because there’s so much uncertainty in the market right now, I am happy with a slow and steady market. I do need to see appreciation. I need those fundamentals, absolutely. But if you can find an affordable market that is growing, man, to me, that is the perfect sweet spot to be in 2025.
So should I take a break or should we keep going to get into some of this first? Okay, cool. Alright, so that is my rant and my thesis about affordability and why it’s something I personally am targeting in a lot of my investing right now. So that’s my rant and my thesis about affordability specifically for buy and hold. I’m not talking about value add kinds of, so that’s my rant and thesis about affordability, especially for buy and hold kinds of investments. So let’s now just start to look at affordability metrics and how the Midwest compares to other places in the country. So we’re going to do this in a couple of different ways. There’s different ways to measure affordability. The first and easiest one is just median home price, right? How much are you paying for the average home? Milwaukee, for example, which has been one of the hottest housing prices in the nation, it’s still up 6% year over year, one of the fastest growing markets in the country right now.
So even though it’s in the Midwest and people say there’s no appreciation there that has had strong appreciation, the median sale price is just $199,000 as of April. That is less than half the national average. So definitely an affordable market. Let’s look at Indianapolis. I talk about Indianapolis a lot because it has really strong fundamentals. One of the hottest markets, I think Zillow named it the number two hottest market in the country. The entry point low, 200,000, 220, 200 30,000 is the median home price in Indianapolis. What about Pittsburgh? Which by some measures is the most affordable market, not in the country in the entire world when you compare the incomes in Pittsburgh to home prices, some people, some measurements say it is the most affordable market at $237,000 just in median home price. You get to some bigger cities like Chicago, you move up to 3 45, but these are all markets where the median home price is at or less than the national average. So that by that measure, Midwest is doing pretty well.
It quickly will just show just the difference here. If you look at Seattle, where I live, the median home price is $851,000. So that is triple, literally more than triple. So that is four times higher than it is in Milwaukee. You could buy four houses for everyone you can in Seattle, it’s three and a half times higher than it is in Indianapolis, so that’s pretty dramatic. In San Diego, the median home was $1 million in May. So these things are really, really different. When you were talking about investing one, yes, it’s really, really different. So as I talked about, I think affordability is going to help the housing market continue over time in a lot of these markets in a stable way. I’m not saying San Diego won’t grow, it probably will. I’m not saying Seattle won’t grow. I actually think it really will. But as an investor, if you are looking to buy value and be able to scale a portfolio, being able to buy four properties in Milwaukee that is also growing and has cashflow is a very interesting proposition to say the least. Let’s move on to two of our other metrics of affordability. Let’s move on because we have two other metrics of affordability that are super important for cashflow because as I said, San Diego, Seattle probably going to grow, but the cashflow prospects in those cities aren’t that great. So let’s look at some metrics on how much cashflow you can buy for your money in the Midwest. We do though, have to take a quick break. We’ll be right back.
Welcome back to On the Market. I’m Dave Meyer talking about my thesis and why I am spending not all of my investing effort, but a lot of my investing effort around the Midwest. Where we left off was just talking about entry points and the median home price in some of these great lake cities compared to the expensive coastal regions. I want to turn our attention now to two other things. The first is going to be home price to income ratios. Remember I mentioned affordability that matters a lot. It’s basically how expensive is a house relative to the average income in that area. And again, even though in Seattle and in San Diego, people have really high salaries, but when you look at it as a ratio, the Midwest again really stands out. Many Midwest cities have really low ratios. Detroit is 1.9%, meaning the house costs basically double what you earn in a year.
In Indianapolis it’s 3.3 basically meaning your income, if you put a hundred percent of your income towards buying a house, it would take you 3.3 years to do that. Milwaukee’s, 3.8, Pittsburgh’s 3.4. So all of these are really good, right? Relatively speaking. So all of these are relatively low that probably this number probably doesn’t make sense to you without a lot of context. So let me just compare this for example, to a city like Miami that’s 8.5 years New York, 10 years San Diego, 10 years Los Angeles, 12 years, just again measuring the affordability again, just measuring affordability. Normal people can afford to buy homes in the Midwest. They really can’t where they as much in these really expensive markets. And to me this just means that it’s going to have a healthy housing market in the future. And again, to me healthy doesn’t mean going up five, 10, 12% every year. It means where normal people with normal jobs can afford to participate in the housing market. That to me as an investor is a market I want to be in. I think it’s good just for the general society. I think it is good for demand over the long run and for me it makes my investment a little bit more predictable, which I really like.
Next, let’s turn to rent to price ratios, which we’re going to actually use rental yields, which is a little bit different than how we always measure it on the show. Usually on the show we measure one month of rent divided by the purchase price. We’re going to measure it by a year of rent divided by the purchase price, but basically the same thing, the higher the rental yield, the higher the potential for cash flow. So when you look at these markets in the Great Lakes region like Cleveland, the rental yield’s 8.4%. Chicago, it’s 7.8 buffalo, 8%, Detroit, seven, Pittsburgh, 7%. So all really good relatively speaking. When you compare it to Boston or Seattle, it’s 4.5%. So a lot lower Los Angeles, 4.6%. It’s not exactly half, but it is definitely pretty low.
So think of all, so this means that in these markets that I just mentioned like Milwaukee and Indianapolis and Chicago and Cleveland, the potential for cashflow is just better. It is just the ratio of how much you pay for a property to how much rent you can collect for that property is higher generally speaking than other areas of the country. And so when you look at all of these affordability metrics altogether, right? When you’re looking at and when you look at these affordability metrics altogether, when you look at just the entry point, when you look at the income to price ratio, when you look at rental yields, it paints a picture to me of a stable housing market environment. This is of course not true for every single market in the Midwest or the Great Rakes region, but just regionally speaking it does stand out in terms of its ability to generate cashflow and its affordability, which for me as an investor in 2025, that’s where I want to spend a lot of my time. Now I have invested money in higher price cities looking for appreciation and I do that. I choose to sort of split my investing. I do some for high appreciation and that’s a little bit riskier, but it can really generate some huge rewards. Others, for my retirement, I just want stable, good assets that I’m going to want to hold onto for 10 or 20 years. And to me, the Midwest really offers second part of my portfolio and that’s why I’ve been spending a lot of time looking for and executing on deals in that region.
One last thing I do want to just say about the affordability is one last thing I just want to say about the affordability of these markets and then we’ll move on is about total home ownership cost. This is coming up a lot in the housing market recently because usually we talk about affordability in terms of home prices and mortgage rates and income, but in the last several years, taxes and insurance have gone up so much that it really is factoring into affordability in a way that it didn’t used to. So I just want to call out that there are some states in the Midwest that do have higher taxes. Illinois being one of the more notable ones that having a relatively high property tax rate near 2%. That’s not unique to Illinois. There are other states, New Jersey has really high property taxes, taxes has really high property taxes, but I do want to call out then a state like Illinois, your taxes are going to be pretty high, but I think the way that it’s mitigated, but what I’m saying is that, but what I’m saying is the property tax rate is higher.
So if it’s close to 2%, that is true. And in New Jersey that’s significant because home prices in New Jersey are pretty high, but when you talk about 2% of property taxes in a relatively affordable area, it’s not as impactful to the overall affordability as it might be in a more expensive market. But it is definitely something to keep in mind if you are going to look in this region. The second thing is insurance costs because the second thing is insurance costs, and this is another area where the Midwest tends to stand out. There is relatively lower risk of natural disasters in the Great Lakes region compared to Florida or the Gulf Coast or California or wildfires in Colorado. And so although insurance premiums have absolutely gone up in the Midwest where they’ve gone up pretty much everywhere, they haven’t seen the explosive growth that you see in some higher risk areas of the country. And so that is another sort of benefit to the overall affordability of the Great Rakes region and that is just one other benefit to the overall affordability of the Great Lakes region.
Alright, so those are just some, okay, so those are some of the affordability metrics, but let’s just recap sort of this Midwest advantage for long-term buy and hold investments. First and foremost is cashflow and holding power. As I’ve said, I think that the Midwest offers the best cashflow potential regionally speaking in the country because they have those higher rent to price or rental yield ratios. And for me, I’ve talked about this a lot, but buying right now in these kind of uncertain times, I need cashflow and I’m pretty comfortable. I’m not crazy about it. I don’t need some enormous cashflow if it’s great asset, but I need it minimum to break even get a two or 3% cash on cash return. That’s factoring in all of the expenses. None of that fake cashflow, real cashflow. I want that early in my investment because that allows me to hold on.
My whole strategy around Midwest is buying great assets that are likely to appreciate and holding onto them for a long time while my rent income grows and my cash on cash return grows. But in order to be able to hold onto these, I need that positive cashflow. And so that’s why I’ve personally been targeting with some of my longer term investments, these cashflowing areas of the country in the Midwest. So that’s the number one Midwest advantage I think right now. The second thing is this steady appreciation versus volatility. I’m the first to admit the Midwest historically sees slower home price appreciation. It hasn’t seen the same things that we’ve seen in the Southwest or the Sunbelt. I’m okay with that personally because you can still buy a lot lower, you can buy for a lot of value and if you buy in the right markets in the Midwest, they are still appreciating.
I’m not saying that I would invest in a market where prices aren’t going up. I wouldn’t because that’s a number one inflation hedge. It’s a great way to get leverage returns. It’s just part of investing in real estate is you want that good, you want appreciation, but what I like about some of the areas of the Midwest is that they appreciate steady. They just three 4% year after year, they haven’t seen these wild swings. Yes, Boise, Austin, Phoenix that grew like crazy during the pandemic, they’ve been in corrections for the last several years and if you bought in 2019 or 2020, you’re still doing great, don’t get me wrong. But for me with trying to buy now for my retirement in 10 or 20 years, I just want a market that’s going to grow steadily and have cashflow and that’s what is offered in the Midwest.
The third thing is this low entry cost because this allows, first of all, people who are new to investing to get into markets where maybe they couldn’t afford where they live, right? If you live on one of the coasts or in the southeast or in the Sunbelt right now, it’s pretty hard to get into the market and that lower cost of entry in a solid market means a lot. It means that you might be able to get your deal a lot faster to start that amortization faster to start getting those tax benefits. That is really compelling for a real estate investor and it’s not just for your first deal. That lower entry point means one, you can scale your portfolio faster, you can buy more units if that is important to you. For me, I focus on quality of units more than buying more units, but it means I could buy more quality units faster because of that lower price point and it also means more diversification. If I have X amount of dollars to spend in the Midwest, I could buy a single family home in one region. I like I could buy a duplex in a different neighborhood that I think might appreciation appreciate. I might even buy an apartment building for basically what it would cost me to buy a single family home in Seattle or San Diego. And that diversification again gives me a lot of optionality, which I as an investor really like.
So those are just three of the examples. So the cashflow potential, the lower volatility, the lower entry point. And then last thing I want to say here is about the stability and tenant demand a lot. Again, not every market we’ll talk about specific markets, not every market in the Midwest, but many of them have growing populations with really good renter bases. And to me that tenant demand is super important. It’s going to lower my vacancy, which I care a lot about. I really as an out of state investment, I want low vacancies. I don’t want turnover costs. I want people who are going to stay for a long time and there are great cities for this. If you look at Indianapolis or Columbus or Madison, they all have really low vacancy rates and to me that adds that stability to my portfolio that I’m looking for in these long-term holds.
So those are some of the advantages I personally see Midwest, and it’s not just me. If you look at the hottest lists for home prices in the country, Zillow’s top number one, Buffalo, New York in the Great Lakes region number two, Indianapolis in the Great Lakes region. And these are usually on these lists. You see things like Boise or Austin or Dallas or something like this. These markets are hot because there’s relatively low supply, but there is sustained demand and that is a great thing as a real estate investor and that is a great thing as a real estate investor. So if I have sold you on considering this, it’s not going to be right for everyone and their strategy, I’m just sharing with you why I’m excited about it. If I have sold you on this concept and you want to figure out how you might be able to explore ideas and potentially invest in the Midwest, I’m going to share with you how you can capitalize. But we do need to take one more short break. We’ll be right back.
Welcome back to On the Market. We’re here talking about how to take advantage of some of the benefits I see in the Great Lakes region of the US now for people who live in the area, that’s pretty obvious, right? If you happen to live in the Great Lakes region, I think investing in your own market, in your own backyard makes a lot of sense. There are probably several good markets within driving distance if you do live in that region. So I would focus on figuring out which markets have the strongest fundamentals around you and just investing in your own backyard. But I also think as I’ve shown that I’m doing this, that I think investing out of state or long distance into some of these markets can make sense for certain investors. Many investors who live in high cost cities like Seattle or San Diego or Boston, New York, whatever, I get this question all the time.
People are struggling, they’re trying to figure out how to make a first investment and the deals are thin. You’re looking at a house hack that may not make you a ton of money or you’re banking on appreciation and you’re not getting any cashflow. Those things can be right for some people, but I think for a lot of folks especially who are looking for this long-term approach to real estate investing, considering investing out of state in some of these markets can make a lot of sense. You’re going to be able to buy a lot more. You’re going to be able to buy a lot more units because it’s much more affordable. You’ll be able to get that cashflow that provides stability. And there are all the other benefits that I actually talked about. Now if you are going to do this, it’s super important to hone in on a good market because there are absolutely bad markets because there are absolutely markets within the Great Lakes region that probably aren’t great for real estate investing.
There are markets that have seen huge, there are lots of places in the Midwest that are seeing population decline just as an example, and you still can invest in places with population decline, but that’s something you want to know. And for me as an out-of-state investor, I’d rather just invest in a growing city. Just off the top of my head, there are cities like Des Moines, Iowa that’s growing a lot. Indianapolis is growing, Madison, Wisconsin is growing, Columbus is growing. These are the kinds of markets that have really strong fundamentals in population growth because they have really strong economies.
So just for example, I just pulled a couple of numbers here, but you look at Milwaukee, there’s a reason that we’re going there on the Cashflow Roadshow, great cashflow potential. It also has a super affordable price point at $200,000 in median price. It’s growing at one of the fastest rates. So it’s seeing good appreciation right now and its population is growing. And so there’s a lot of fundamentals to about Milwaukee. You should still dig into the economy, make sure there are good jobs moving to the area, make sure that there aren’t any red flags like rising vacancy. But on paper, Milwaukee has a lot of what you might look for in real estate investing. Look at Chicago. I think a lot of people sleep on Chicago. It is a massive metro area. There are pockets that I probably wouldn’t want to invest in because they don’t have great appreciation or they don’t have great cashflow, but there are absolutely pockets in the third largest city in the country where you can buy below the median home price.
To me, that is a very compelling investment thesis and I talked to a lot of people in Chicago who are investing there very successfully. Or you look at Indianapolis, this has very strong population growth over 1% per year that’s higher than the national average. It has great job growth, it has super low unemployment, people are moving there, people like living there. So there’s a lot to in a city like Indianapolis too. Now I’m just picking these three markets, the ones we chose for the Cashflow Roadshow, but we didn’t pick them because they’re the three best markets in the Great Lakes region. We picked them because they’re all great and they’re within driving distance of each other. But there are lots of other good markets in western New York, in Chicago, in Indiana, in Michigan, in Wisconsin, they’re all over the place. So you should just do your research and figure out which ones are most aligned with your strategy.
So that is true whether you are one of those folks I was describing earlier and you are just trying to get into your first investment, you’re looking for a way to afford a first investment, that can make a lot of sense. The other sort of avenue or type of investor who should consider this, and again the ones I mentioned are people who live in the Great Lakes region and then people who are looking to afford their first deal. The other avenue is for people who want diversification within their real estate portfolio. That’s why I do it. I started investing in Denver, which was more affordable when I started, but it’s become a more expensive market. I still have a portfolio there. I have started to make some investments here in Seattle, which is a very expensive market and I want to diversify. I also want to be in more predictable markets.
To me, this provides the right balance for my long-term portfolio. Some more expensive, more appreciation focused markets that allow me to take some big swings while I have my more stable, predictable portfolio in the Midwest. And I think this resonates with a lot of people when I talk to them about it, is trying to diversify just regionally and types of markets. And so even if you invest in a more expensive market, you could still invest out of state or long distance in some of these regional areas. If you buy into my thesis or for other reasons, think that the Great Lakes region or the Midwest more broadly could be a good move for you. Now of course, if you’re doing that, you do need to build a team. So it’s really important to find a great agent and to find a professional property manager. But you absolutely can do this.
I have done it relatively easily. I have a great property manager in the Midwest that I use now and I trust to not only manage my properties, but help me look for more deals. And if you are diligent and follow the steps that we always share on BiggerPockets about how to invest long distance, you absolutely too can find the right team to help you do this out of state. I will tell you from personal experience, I have invested in my own backyard. I have invested out of state long distance. It really isn’t that much harder. It does mean you’re going to pay a property manager, but when you consider the affordability and benefits of cashflow that are in this region, it usually more than offsets the cashflow differential that you would get in investing in a super expensive market. So for me, that diversification piece is key and why I personally have started putting some of my money into these regions.
So before we get out of here, I do want to share with you five markets that I particularly like in the Midwest. This is no means comprehensive. There are many more that I like, but these are just five that I was looking at and thinking about yesterday when I was writing this outline. So I’m going to share them with you again. Three of them are on purpose, the ones that we picked for the Cashflow Roadshow because I’ve been researching them a lot and they’re top of mind. So number one is Milwaukee. It’s got a lot going for it. It has a diversified economy, it does have manufacturing, it has healthcare. There are more tech startups in the area. What I like about it is, again, the affordability, but it also has a large renter population, which means that I can get in early and I believe that I’m going to have long-term tenant demand for my properties, which is going to lower my vacancy rate and provide stable upward pressure on rents. I don’t expect it to go crazy. I’m not trying to price gouge. I’m just saying that in a market with strong demand, rents are probably going to be at least keeping up with inflation, which is super important to me.
Now normally Milwaukee has been a lower mid appreciation market, but it’s been really, really booming the last couple of years. And again, I believe in large part that is due to the affordability. And so I do think it will slow down. I don’t think Milwaukee is going to remain the hottest market in the country going forward, but it is encouraging to see that these affordable markets in the Midwest are seeing really good appreciation to national averages. That as an investor is obviously something you’re really going to like. The second one also, my second market also in Wisconsin is Madison. This is one I’m going to visit in a couple of weeks. I’m really interested in it. Madison’s a little different. It’s kind of a different play because Madison’s affordability has diminished, but to me it’s kind of an interesting maybe hybrid market where it’s not fully affordable, but it’s still so much cheaper than tech hubs like San Jose or Seattle where there’s a blooming sort of tech scene In Madison, it is more expensive.
Cash flow is a little bit lower, but I do like the stability that comes from the state government being there, the University of Wisconsin being there. I think it has really stable demand. It has low vacancy. It’s one that I like personally. Third is Chicago. And again, I understand some people shy away from Chicago due to landlord regulations or taxes, but it is just so affordable. Again, the third largest city in the us, there are so many people living there. There are so many pockets, so many neighborhoods to invest in. And with the average home value being in the 300 thousands and rents being relatively high, Chicago has good cashflow markets and if you buy in the right neighborhood, you definitely could get cashflow and appreciation at the same time in an enormous city where you’re not betting on some city turning around. Obviously Chicago has a huge massive economy and that is very likely to continue.
And so I think Chicago is overlooked by a lot of people. Fourth is Indianapolis. You guys know, I think this is a standout market just because it’s such great job and population growth and still being so affordable. I haven’t been there in years. I’m super excited to check it out on the roadshow. Again, we’re doing a meetup there on July 16th. If you’re in the area, it’s free. But there’s just a lot of things to like, it’s affordable. They have good laws, they have a diversified economy, favorable tax treatment. All of this stuff is pretty good. Indianapolis, really strong market. Last I have said, again, Pittsburgh, I know not everyone considers this the Midwest, but it is in the Great Lakes region and again, one of the most affordable markets in the world and it has tons of tech companies. It is one of the sort of robotics hubs of the country. Google and Uber have offices there. There’s great universities there. They’re rent to price ratios. Excellent. So I think Pittsburgh, again, it hasn’t had historically great appreciation. That’s something to call out, but I think there’s a lot to like about what’s going on in Pittsburgh. Something if you’re thinking about the Midwest, I would look into a little bit further.
So those are my five markets and let’s, so those are the five markets I like, but again, there are a lot more out there. In conclusion, as we wrap up this episode, I just want to remind everyone, my basic theory here is that affordability going to be good for me and potentially for other investors for long-term buy and hold for people who want to build their portfolio and get in at affordable price points where there is the potential for cashflow. So you can hold on so you have a high degree of confidence that you can hold onto these properties for a long time. The Midwest offers a lot of things to like it is probably not going to grow as fast as it has the last couple of years. That is probably not going to continue. You probably won’t see many Midwest or Great Lakes markets on the fastest appreciation markets in a couple of years from now, but I do really believe that they’re going to offer stable growth, low volatility growth, which for me is something I like.
I know if James were here, he’d be turning over in his grave. He would not accept this approach to real estate investing, but this is how I handle a good portion of my portfolio. I spend the rest of my portfolio investing in higher risk, higher appreciation markets like Seattle or investing in syndications. I do all of that. I like to build out a balanced, a portfolio that is balanced for risk and balanced regionally. But I think I am putting some of my money and some of my portfolio into the Midwest for a lot of the reasons I mentioned above, and I think it’s a really good area for a lot of our listeners here to consider as well. Thank you all so much for listening to this episode of On The Market. If you have any questions, please don’t hesitate to reach out to me on biggerpockets.com or on Instagram. And again, if you’re in the Chicago or the Indianapolis region on July 15th and July 16th, make sure to join us on the Cashflow Roadshow. It’s going to be a lot of fun. Hope to see you there. If not, we’ll see. Thanks again for listening. We’ll see you next time.