What might be the top three cash flow markets for investors in 2025? I not only looked at price and rent data to find out, but I also narrowed down results by overall job growth.
I wouldn’t want to invest in a shrinking market, no matter how good the cash flow was. So without further ado, here are three of the best markets for cash flow that are also seeing solid job growth.
El Paso, TX
Metrics
- Median price: $234,200
- Median rent: $1,427
- Rent-to-price ratio: 0.61%
- Five-year job growth: 8.7%
El Paso continues to see steady job growth in the military, energy, and logistics sectors. It’s also one of the most affordable cities in the United States, with a cost of living 12% below the national average. The metro also has one of the highest rent-to-price ratios for a city with above-the-median five-year job growth.
Columbia, SC
Metrics
- Median price: $249,700
- Median rent: $1,494
- Rent-to-price ratio: 0.60%
- Five-year job growth: 7.5%
Columbia, the capital of South Carolina, has an economy supported by the local government, the military (Fort Jackson), healthcare, education (the University of South Carolina), and manufacturing.
The vacancy rate is about 10.4%, which is higher than El Paso’s 7.7%, but this is probably due to the transient nature of Columbia’s tenant base (students and military). If I were investing in this market, I’d want to make sure I purchased the property just before (or during) leasing season.
Tuscaloosa, AL
Metrics
- Median price: $248,600
- Median rent: $1,536
- Rent-to-price ratio: 0.62%
- Five-year job growth: 2.4%
Tuscaloosa may not have as much job growth as the other metros on the list, but a look underneath the surface reveals good fundamentals. Tuscaloosa had a five-year population growth of 10.2% (national average is 3.1%) and five-year household growth of 16.1% (national average is 6.2%). This is in part due to the growing student population.
In fact, according to the University of Alabama’s website, “With students from all 67 Alabama counties, all 50 states, the District of Columbia, and 95 countries, UA is educating and graduating more students than any college in the state, awarding more than 9,000 degrees over the past year.” And their 2024 fall enrollment was 40,846, surpassing 40,000 for the first time.
Unbeknownst to many unfamiliar with the region, the very first major Mercedes-Benz plant outside of Germany was founded in Tuscaloosa in 1995. According to Mercedes-Benz’s page on Tuscaloosa, the factory employs about 6,000 people and produces about 260,000 vehicles per year.
Tuscaloosa’s economy is supported by jobs in the government, logistics, manufacturing, health, and education sectors, all of which are growing. The only sector shrinking is the “professional and business services” sector (also known as white-collar jobs, and why Tuscaloosa’s job growth isn’t as strong as the other cities).
This isn’t necessarily a bad thing. All it means is that Tuscaloosa is primarily a blue-collar and university economy and serves as the industrial backbone of western Alabama.
Honorable Mention: Ocala, FL
Metrics
- Median price: $259,900
- Median rent: $1,636
- Rent-to-price ratio: 0.63%
- Five-year job growth: 13.3%
Ocala is a small but growing market. The majority of the jobs here are in government, healthcare, and manufacturing. It also helps that Ocala is located in inland Florida. This reduces the impact hurricanes have here, and Ocala is likely to have lower insurance costs over time than cities directly on the coast.
My only concern as an investor is that there has been an equally strong growth in housing supply, and the vacancy rate sits at 12.9%. If I were to invest here, I would need to rely on my property manager to ensure I buy in the right neighborhood and have a property that attracts the right tenants. (But this argument also applies to investing in any market.)
What Else to Look For in Cash Flow Markets
Investing out of state can be daunting if you’ve never done it before, especially if you’re unfamiliar with the market. So I asked Zach Lemaster, CEO of Rent to Retirement, what his advice was for researching the best out-of-state markets, what to avoid, and how to get started. His response:
The most successful investors strategically choose the right market to invest in based on their goals, instead of only focusing on their local market because it feels comfortable.
The best place to start is to be very intentional in mapping out your investment criteria. I recommend identifying three markets that generally fit your criteria. Next, you must connect with local professionals that are familiar with the market to learn more intricate details of each market.
Many markets can vary dramatically between favorable and unfavorable neighborhoods to invest in within a few short miles. That is why leveraging local knowledge is absolutely essential when exploring a new market.
Once you’ve narrowed your search and identified properties that fit your criteria, take action to actually acquire the properties so you don’t fall into the perpetual analysis paralysis that prevent so many from accomplishing their goals.
Finally, be meticulous in tracking performance.
You never fully know a market until you actually invest there. Don’t be afraid to go back to the drawing board if your initial market choice is not performing as expected. Remember, real estate investing is a lifelong journey where we are always refining our goals and criteria!
Look to Rent to Retirement for Investment Properties
As you can see, a lot of work goes into finding, buying, and managing out-of-state properties. If you’d like help with this process, Rent to Retirement offers hands-off investment properties (here’s a quick list of them) with healthy cash flow in key markets.
