Top 2023 Cities for Cash-Strapped Real Estate Investors

Introduction

The point of this article is NOT to select the top MSAs for cash-strapped newbies (I’ve already created 2 very detailed posts for that, here and here).

Instead, I will be directly comparing the top 5 MSAs already chosen based on my previous data analysis, then comparing the best cities for real estate investment in those MSAs. Those top 5 MSAs are (in no particular order):

1. Dallas-Fort Worth, TX MSA (including Sherman-Denison MSA)
2. Greenville, SC MSA
3. Charleston, SC MSA
4. Charlotte, NC MSA
5. Atlanta, GA MSA (including Athens-Clarke County)

(Again, feel free to read my 2 posts linked above regarding why I think those are the top 5.)

I’ll also include the Austin, TX MSA into this analysis, as the San Marcos, TX area may still be affordable enough for new investors (while still having acceptable population/rent/price/income growth metrics).

I will not be including the Knoxville, TN MSA, as there is not enough job growth there to meet my standards for good market-growth fundamentals.

Once I finish comparing the MSAs, then I will compare the top cities for each MSA. Let’s get into it.

Comparing The Best MSAs for Real Estate Investment

Let’s look at Job Growth across our MSAs. The MSAs are ordered by average percent month-over-month job growth (for the year 2022), from highest to lowest.

Job Growth

1. Dallas-Fort Worth, TX

2. Charleston, SC

3. Charlotte, NC

4. Athens, GA

5. Atlanta, GA

6. Greenville, SC

7. Sherman-Denison, TX

8. Austin, TX

I like the upward month-over-month percentage growth trend of Sherman-Denison, TX the most (they have two microchip plants under construction), while Dallas-Fort Worth, TX has the highest average month-over-month percentage growth. And Sherman is only 65 miles north of downtown Dallas. That’s +1 to the North Dallas area.

Rent Growth

Here are the MSAs, ordered by average year-over-year percent in rent growth.

1. Atlanta, GA

2. Charlotte, NC

3. Athens, GA

4. Dallas-Fort Worth, TX

5. Greenville, SC

6. Austin, TX

7. Sherman-Denison, TX

8. Charleston, SC

Atlanta, GA and Charlotte, NC rank highest when it comes to rent growth percentage.

MSA Conclusion

Let’s lower the number of MSAs down:

1. Atlanta-Athens, GA
2. Charleston, SC
3. Sherman-Denison, TX
4. Austin, TX*

*I will keep Austin, TX in the list, as a separate data analysis study I conducted revealed San Marcos, TX still has favorable conditions at an affordable price. Maybe in the future I’ll publish the full results my study found.

The Best Cities in Each MSA

What would be the best cities to invest in each MSA?

I’ve published my analysis of the Atlanta, GA MSA here, and I’ve published my analysis of the Charleston, SC MSA here.

The Sherman-Denison, TX MSA is fairly small, and those are the only two towns in it. Pretty straightforward.

And for Austin, TX, I’ve concluded in a (currently) private study that San Marcos, TX is the best place for me, personally.

So here are the top towns by MSA:

Atlanta, GA MSA:

1. McDonough, GA

2. Fairburn, GA

3. Villa Rica, GA

Charleston, SC MSA:

1. North Charleston, SC

2. Summerville, SC

Sherman-Denison, TX MSA:

1. Sherman, TX

2. Denison, TX

Austin, TX MSA:

1. San Marcos, TX

That leaves us with 8 total towns with solid job growth, population growth, rent growth, income growth, and price appreciation. Let’s compare them.

Comparing the Top Cities for Each MSA

Let’s compare the demographics of each city.

Year-over-Year Percent Population Growth

Here are the top cities, in order of YoY percent population growth:

1. McDonough, GA

2. San Marcos, TX

3. Fairburn, GA

4. Villa Rica, GA

5. North Charleston, SC

6. Sherman, TX

7. Summerville, SC

8. Denison, TX

The Atlanta MSA towns (McDonough, Fairburn, and Villa Rica) appear to have increasing rates of population growth. Growth is slowing down for San Marcos, TX. Summerville, SC and Denison, TX appear to have lost population in 2021.

Year-over-Year Percent Rent Growth

Here are the top cities, in order of YoY percent rent growth:

1. Fairburn, GA

2. Denison, TX

3. North Charleston, SC

4. McDonough, GA

5. Summerville, SC

6. Villa Rica, GA

7. Sherman, TX

8. San Marcos, TX

All cities experienced solid median rent growth (no surprise here, as this is one of the reasons they were chosen). Sherman and Denison, TX appear to be experiencing an increase in rent growth percentage year-over-year, while Fairburn, GA has the highest average percent growth, year-over-year.

While all cities are experiencing strong rent growth, if I had to choose one city from each metro, it would be due to the trend of year-over-year growth (the orange dashed line from the graph on the right):

1. Denison, TX

2. North Charleston, SC

3. McDonough, GA

4. San Marcos, TX

Year-over-Year Percent Income Growth

Here are the top cities, in order of YoY percent income growth:

1. McDonough, GA

2. Villa Rica, GA

3. San Marcos, TX

4. Denison, TX

5. Fairburn, GA

6. North Charleston, SC

7. Sherman, TX

8. Summerville, SC

McDonough, GA has the highest average year-over-year percent growth in income overall.

While average growth for San Marcos, TX remains high, its positive growth is slowing down (indicated by the orange dashed line on the graph on the right).

On the flip side, Villa Rica, GA, Fairburn, GA, and North Charleston, SC are all seeing considerable year-over-year percent growth in median income.

The Atlanta MSA towns have won my vote for this round.

Year-over-Year Percent Price Growth

Here are the top cities, in order of YoY percent price growth:

1. Sherman, TX

2. Villa Rica, GA

3. Fairburn, GA

4. San Marcos, TX

5. McDonough, GA

6. North Charleston, SC

7. Denison, TX

8. Summerville, SC

As a disclaimer, remember that as of this writing, the US Census has only released numbers up to 2021. Therefore, these numbers don’t reflect any growth seen in 2022 nor reflect any decreases in price we are seeing currently in 2023.

Sherman, TX had a large spike in 2021 (which might mean it's due for a correction in 2023). As prices are dropping as I write this, I won’t comment any further.

Metric Breakdown

Here is one last breakdown of the metrics of each city, sorted from lowest rent-price ratio to highest:

8. Summerville, SC

Median Price: $229,800

Median Rent: $1,023

Rent-Price Ratio: 0.45%

Median Income: $64,507

Percent Renter-Occupied: 34%

7. North Charleston, SC

Median Price: $203,100

Median Rent: $954

Rent-Price Ratio: 0.47%

Median Income: $52,264

Percent Renter-Occupied: 51%

6. San Marcos, TX

Median Price: $201,200

Median Rent: $1,020

Rent-Price Ratio: 0.51%

Median Income: $42,500

Percent Renter-Occupied: 74%

5. Sherman, TX

Median Price: $157,900

Median Rent: $820

Rent-Price Ratio: 0.52%

Median Income: $53,536

Percent Renter-Occupied: 46%

4. Villa Rica, GA

Median Price: $178,900

Median Rent: $955

Rent-Price Ratio: 0.53%

Median Income: $76,544

Percent Renter-Occupied: 40%

3. McDonough, GA

Median Price: $191,700

Median Rent: $1,100

Rent-Price Ratio: 0.57%

Median Income: $73,215

Percent Renter-Occupied: 50%

2. Fairburn, GA

Median Price: $170,700

Median Rent: $1,111

Rent-Price Ratio: 0.65%

Median Income: $58,741

Percent Renter-Occupied: 45%

1. Denison, TX

Median Price: $111,700

Median Rent: $773

Rent-Price Ratio: 0.69%

Median Income: $52,784

Percent Renter-Occupied: 41%

Conclusion

As always, remember bad deals can be found in the best markets, and good deals can be found in the worst markets. But I’ll be choosing a few of these markets to make sure the demographic trends are in my favor.