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It’s no secret that affordable housing is becoming harder to find for many young professionals, especially those who recently graduated from college with a pile of student loan debt. However, more young professionals are discovering a path to homeownership while kick-starting their real estate investing portfolio: house hacking.

House hacking is a real estate investment strategy where you rent out part of your main residence to cover housing costs, such as mortgage payments. This is a great strategy investors can use to afford their first properties, especially if they have the freedom to live anywhere in the country. 

With that in mind, I wanted to highlight a handful of prime entry markets where house hacking can lead to homeownership and real estate income. These markets are still affordable—with median home prices less than the national average—and are also experiencing solid job growth and price appreciation. After all, just because a market is affordable doesn’t mean it’s a good place for your first investment. 

Selecting the Best Markets for Your First House Hack

For this analysis, I incorporated median home prices and rental data from Zillow. I also retrieved job growth data from the Bureau of Labor Statistics

I’ve seen a lot of other news sources discuss “affordability” without taking property taxes and rising insurance costs into account. So, I incorporated data from the Tax Foundation and Insurance.com, respectively. (Goodbye, most cities in Texas and Florida.)

After filtering out the most unaffordable markets and areas where job growth was below the national average, I’m left with the 44 markets below. I chose to visualize these by one-year job growth since it’s a key metric I evaluated for this specific analysis.

From the 44, I chose 10 cities that have the best fundamentals for buying your first house hack. They aren’t as well known as others. But unless you have enough money for the large down payment required for those attractive high-appreciation or faster-growing markets, you may want to consider these “underdog” markets instead.

From this list, I highlighted 10 cities that offer incredible investment opportunities for young professionals looking for their first house hack. They are presented below in no particular order.

Chattanooga, TN-GA

Chattanooga built a citywide fiber-optic “smart-grid” network, which offers some of the fastest citywide internet speed to homes and businesses in America. The grid has also undoubtedly helped Chattanooga become a good place for startups as well, as noted by the VC firms with a presence in the city.

The Chattanooga metro area is a primarily blue-collar economy largely focused on manufacturing and logistics, with a good-sized presence of healthcare and banking jobs. The city also benefits from its forward-thinking approach to its smart grid.

The job market has steadily grown over the past few years and is continuing to see healthy price appreciation as well. If you like the growth and amenities that Tennessee has to offer but can’t afford Nashville, Chattanooga would be a fine pick.

  • 1-Year Job Growth: 2.33% (National: 1.48%)
  • Median Price: $309,819 (National: $420,800)
  • 1-Year Price Growth: 5.47% (National: 4.28%)
  • Median Rent: $1,596 (National: $1,462)
  • 1-Year Rent Growth: 4.80% (National: 4.49%)
  • Median Days on Market: 45 (National: 45)
  • Estimated Monthly PITI: $2,101 (Calculated using a 20% down payment, 7% interest rate, statewide average insurance, and countywide median property taxes)

Columbia, SC

Columbia is the capital of South Carolina and home to the largest college in the state, the University of South Carolina, as well as Fort Jackson, the U.S. Army’s largest initial entry training installation. That makes roughly 20% of the workforce employed by the government. 

This means more stability but overall less growth than its Charlotte, North Carolina, and Charleston, South Carolina, counterparts. Columbia also has the lowest median price out of this article’s top 10 list. 

If affordability is most important to you, this may be a solid choice. But as far as economic growth goes, there are better markets on this list.

  • 1-Year Job Growth: 3.41% (National: 1.48%)
  • Median Price: $253,466 (National: $420,800)
  • 1-Year Price Growth: 4.06% (National: 4.28%)
  • Median Rent: $1,553 (National: $1,462)
  • 1-Year Rent Growth: 4.76% (National: 4.49%)
  • Median Days on Market: 51 (National: 45)
  • Estimated Monthly PITI: $1,733

Fayetteville-Springdale-Rogers, AR-MO

The Fayetteville, Arkansas MSA, also called Northwest Arkansas (NWA), comprises Fayetteville, Springdale, Rogers, Bentonville, and a few smaller surrounding towns. Its growth is driven by three Fortune 500 companies: Walmart, Tyson Foods, and J.B. Hunt Transportation Services.

While I don’t prefer metros with primarily one or two large employers (what happens if they leave?), Walmart HQ is probably here to stay, and has also issued a strict work-from-office policy. This is driving relatively huge growth in the area, as most white-collar Walmart office workers will now need to live near HQ.

  • 1-Year Job Growth: 3.31% (National: 1.48%)
  • Median Price: $342,579 (National: $420,800)
  • 1-Year Price Growth: 4.74% (National: 4.28%)
  • Median Rent: $1,631 (National: $1,462)
  • 1-Year Rent Growth: 3.75% (National: 4.49%)
  • Median Days on Market: 57 (National: 45)
  • Estimated Monthly PITI: $2,333

Greenville–Anderson–Greer, SC

Greenville has a strong manufacturing, distribution, and healthcare economy and should continue to see healthy growth for the foreseeable future. But I’m not convinced this market has more potential than Fayetteville, Arkansas, or Chattanooga, Tennessee, for an outsized return on investment.

  • 1-Year Job Growth: 2.80% (National: 1.48%)
  • Median Price: $299,908 (National: $420,800)
  • 1-Year Price Growth: 3.69% (National: 4.28%)
  • Median Rent: $1,585 (National: $1,462)
  • 1-Year Rent Growth: 4.38% (National: 4.49%)
  • Median Days on Market: 50 (National: 45)
  • Estimated Monthly PITI: $1,973

Indianapolis–Carmel–Greenwood, IN

Indianapolis has a low unemployment rate (3.6% as of June 2024), and its job market grew by 2.49% over the past year (for comparison, the national average was 1.49%). The metro area had a five-year percent price growth of 56.29% (national: 49.49%) and a one-year percent price growth of 3.3% (national: 4.28%). I wish the appreciation were a little higher, but Indianapolis remains one of the last affordable yet still-growing cities in the country.

Indianapolis also has a healthy transportation and life sciences economy (and in fact, has one of the largest life science clusters in the nation), with its major exports being pharmaceuticals, motor vehicle parts, and medical equipment and supplies.

Indianapolis has the benefit of being the only metro with more than 1 million jobs on this top 10 list. And while the city has technically seen a small decline in population, many people have been moving to the outer suburbs, giving the MSA a total positive increase in population. 

In conclusion, the diverse economy and low cost of living could continue to drive growth (albeit slower growth than popular metros like Austin, Texas; Boise, Idaho; and Nashville, Tennessee) into Indianapolis. This city could be a fine place to grow your career if you’re in the right industry and buy your first property.

  • 1-Year Job Growth: 2.49% (National: 1.48%)
  • Median Price: $284,630 (National: $420,800)
  • 1-Year Price Growth: 3.30% (National: 4.28%)
  • Median Rent: $1,588 (National: $1,462)
  • 1-Year Rent Growth: 4.13% (National: 4.49%)
  • Median Days on Market: 39 (National: 45)
  • Estimated Monthly PITI: $2,057

Lafayette–West Lafayette–Frankfort, IN 

Lafayette sits one hour north of Indianapolis and two hours south of Chicago and is home to Purdue University, which is known for its engineering, technology, and agriculture programs. Purdue has produced Nobel Prize winners as well as several astronauts, including Neil Armstrong. Next to Purdue is the West Lafayette Purdue Research Park, where technology and health science companies employ over 3,000 people.

Lafayette also ranked No. 1 on Realtor.com’s winter 2023 housing affordability index, which also took local economy, price appreciation, and lifestyle amenities into account (similar to what we’ve done here).

However, because Lafayette is such a small market, the winter and summer breaks of the college have a relatively large impact on the number of jobs in the MSA, and it actually isn’t growing as fast as other similarly-sized towns (like St. George, Utah).

  • 1-Year Job Growth: 3.23% (National: 1.48%)
  • Median Price: $266,785 (National: $420,800)
  • 1-Year Price Growth: 8.45% (National: 4.28%)
  • Median Rent: $1,429 (National: $1,462)
  • 1-Year Rent Growth: 7.22% (National: 4.49%)
  • Median Days on Market: 32 (National: 45)
  • Estimated Monthly PITI: $1,820

Lexington-Fayette, KY

Lexington appears to have a solid healthcare, manufacturing, and logistics-based economy. Its job growth has been fairly healthy, along with its price appreciation and rent growth. 

Known as the “Horse Capital of the World,” the city has limits on homebuilding so as not to encroach on the many horse ranches in the area. This has created artificial upward pressure on home prices, as supply is limited. This market may be worth more investigation.

  • 1-Year Job Growth: 2.26% (National: 1.48%)
  • Median Price: $299,845 (National: $420,800)
  • 1-Year Price Growth: 6.52% (National: 4.28%)
  • Median Rent: $1,415 (National: $1,462)
  • 1-Year Rent Growth: 5.50% (National: 4.49%)
  • Median Days on Market: 44 (National: 45)
  • Estimated Monthly PITI: $2,111

Myrtle Beach-Conway-North Myrtle Beach, SC-NC 

Myrtle Beach is a resort city that has seen large growth over the past few years, and the surrounding metropolitan area has seen considerable growth. The city is also visited by an estimated 20 million tourists per year, making it one of the most visited cities in the country.

According to the Bureau of Labor Statistics, Myrtle Beach has seen a large increase in the number of trade, transportation, and utilities jobs over the past year. However, the median age is 50.9 years old. This may turn off young professionals from relocating to the area.

  • 1-Year Job Growth: 3.53% (National: 1.48%)
  • Median Price: $338,480 (National: $420,800)
  • 1-Year Price Growth: 1.80% (National: 4.28%)
  • Median Rent: $1,881 (National: $1,462)
  • 1-Year Rent Growth: 2.88% (National: 4.49%)
  • Median Days on Market: 75 (National: 45)
  • Estimated Monthly PITI: $2,130

Springfield, MO

Springfield is the third-largest city in Missouri, and its economy is based on healthcare, manufacturing, retail, education, and tourism. It’s also home to the corporate headquarters of Bass Pro Shops and O’Reilly Auto Parts. 

Low cost of living, quality healthcare, and outdoor activities seem to be the driving force for this MSA. It appears to have a growing job market, but I’m not convinced there’s any particular good reason a company should move here when they could simply move 90 minutes south to Northwest Arkansas and take advantage of the growth happening there. 

I’d pick Fayetteville, Arkansas, over Springfield, although it’s worth noting the median home price in Springfield is approximately $84,000 cheaper.

  • 1-Year Job Growth: 2.39% (National: 1.48%)
  • Median Price: $257,747 (National: $420,800)
  • 1-Year Price Growth: 3.53% (National: 4.28%)
  • Median Rent: $1,288 (National: $1,462)
  • 1-Year Rent Growth: 4.48% (National: 4.49%)
  • Median Days on Market: 44 (National: 45)
  • Estimated Monthly PITI: $1,843

Waco, TX

Waco is centered halfway between Austin and Dallas and is about an hour-and-40-minute drive from both of them. Baylor University is the largest employer, and the MSA has seen relatively big gains in employment in recent years. But I don’t think the growth is good enough to endure Texas’s high property taxes and insurance rates.

  • 1-Year Job Growth: 4.06% (National: 1.48%)
  • Median Price: $261,013 (National: $420,800)
  • 1-Year Price Growth: 0.81% (National: 4.28%)
  • Median Rent: $1,563 (National: $1,462)
  • 1-Year Rent Growth: 4.46% (National: 4.49%)
  • Median Days on Market: 34 (National: 45)
  • Estimated Monthly PITI: $2,010

Final Thoughts

While finding affordable housing is increasingly challenging for young professionals, the strategy of house hacking presents a viable pathway to both homeownership and real estate investment. By targeting less mainstream yet promising markets, new investors can find opportunities that align with their financial realities and career goals. 

The markets highlighted in this analysis offer a combination of affordability, job growth, and potential for appreciation—key factors for those looking to make their first investment. Some of these markets may not be the most glamorous, but they provide a solid foundation for building wealth through real estate. 

Young professionals willing to explore these underdog markets may find that house hacking in these areas not only makes homeownership achievable but also sets the stage for long-term financial success.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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