5 Cities to Buy Real Estate in, Including 3 With Prices Under $180K

From a real-estate investing perspective, there’s little not to like about the Midwest right now.

That’s according to Dave Meyer, BiggerPockets’ housing market expert and the author of “Start With Strategy: Craft Your Personal Real Estate Portfolio for Lasting Financial Freedom.”

Amid one of the least affordable environments in decades — thanks to eye-popping home price appreciation over the last few years and surging mortgage rates — buyers are increasingly looking for more affordable markets, Meyer said. And compared to coastal locations like New York, Miami, Los Angeles, San Francisco, and Seattle, many markets in the Midwest offer those lower price points, giving them fundamental tailwinds going forward.

“I think affordable markets are going to do the best over the next few years,” Meyer told Business Insider last week. “In the Midwest, for example, people are still able, even with higher interest rates, to afford new homes and afford rent.”

But in addition to any price appreciation they might see in the years ahead, Meyer said the Midwest is also attractive for real-estate investors because of the high cash flow levels many of its markets offer. This is because they typically have higher median rents relative to median home prices. Basically, they offer more bang for your buck in terms of generating monthly income.

Meyer shared five affordable Midwest cities — Cleveland, Indianapolis, Cincinnati, Toledo, and Milwaukee — that are great for investors looking for high cash flows. All of them have median prices well under the national median of $403,164, according to Redfin data.

To measure the cities’ ability to generate cash flow, we calculated their price-to-rent ratio by dividing their median home prices by their yearly median rents (monthly rent multiplied by 12). The five cities had price-to-rent ratios below 16. By comparison, San Francisco’s is 29.5. Rent data for Toledo was pulled from Zillow, while price and rent data for the other cities was pulled from Redfin.

As another measure of affordability, we’ve also included home price-to-income ratios from Point2. The highest on the list below is 8.1, while markets like Seattle, Los Angeles, Manhattan (New York City), and San Francisco all have ratios above 16.

The cities and their corresponding data are shown below in no particular order.