Where We’d Invest in Real Estate in 2026 (If We Could Buy Anywhere)

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15:43Dave:Welcome back to the BiggerPockets podcast. We're going through our favorite markets to invest in 2026. Henry, you went first last time, so I'm going to go back to picking on Ashley. Ashley, what's your round two pick?

15:56Ashley Kehr:So this one I went for a short-term rental market and I ended up picking Fredericksburg, Texas. So the reason I chose this one is because it's close to Austin in San Antonio and it just has a lot going on. A lot of festivals, wineries, culinary tourism.

16:16Dave:Oh, it's got a cool downtown. I'm looking at it right now.

16:19Ashley Kehr:It is a little bit more expensive than the usual markets I pick. So the median home value is $514 ,000. The long-term rent isn't that great, but for short-term rent, the average nightly rate was$254 per night, 48 % occupancy, and the annual revenue per listing averaged around like$45 ,000 to$50 ,000 a year. So a big part of this one was really just like the draw to it. As an investor, I don't want to invest in a short-term rental in a big city where there's a lot of major hotels, things like this. In Fredericksburg, there's just starting to be development of bigger hotels, like the Waldorf Astoria is starting to develop a hotel there.

17:10Ashley Kehr:So kind of like doing the Starbucks model of following where they're going.

17:14Dave:I mean, that makes a lot of sense. Yeah, that's a really good idea. It looks very cool. I'm just looking at some pictures right now. It Is this like the kind of town, though, where you could rent this out and make money long term if you needed to? Or are you sort of going all in on short term rentals here?

17:31Ashley Kehr:Yeah. Long term rentals. You're only seeing like twelve hundred dollars. Oh, wow. Yeah. Wow. So you got to be an experienced operator in this because this is this sounds risky to me. I mean, I'm not going to be for a short term rental. This would work long term rental. No.

17:47Dave:So this is a play where you're really going to make a high quality short term rental experience. You're kind of like making a destination property.

17:57Ashley Kehr:Yes. Yes.

17:58Dave:All right. Well, I don't know. Actually, this one's a little risky for me, to be honest. But I'm not a short term rental expert, so I might not know. But I would go visit Fredericksburg. It looks pretty fun.

18:09Ashley Kehr:We'll have to ask Garrett on bigger stays for his opinion. Yeah, we'll have to ask Garrett about this. Because he's from Texas, too.

18:15Dave:Oh, he is. Yeah, we'll have to ask them about it. All right, I'll go second on this one. And mine, now I'm going down to the Southeast with both of you as well. I'm going to Knoxville, Tennessee. I really do. I like this market a lot. So we're seeing prices about 300 grand, which is pretty good, pretty affordable compared to everywhere else. Rents pretty solid at about 1800 bucks. So, I mean, you're not getting amazing cash flow right away, but you probably still can. But there's just so much to like about the economy. And I actually did a little bit of extra research here because I just wanted to give people an example.

18:54Dave:When you just look up the rent to price ratio of an average city, like this one comes in at 0.6. Not terrible. There's like value add. You can make that work. Probably not going to work for everything. But I specifically started digging into it because I was curious per Henry's comment about like, are there small multis? That's what I like to buy in Knoxville because I don't even know what kind of housing stock there is. And there are. And when you actually look at the rent to price ratio for small multifamilies, it goes up to 0.75, which doesn't sound like a huge difference, but that's a big difference.

19:26Dave:That's the difference between probably getting year one cash flow and not getting year one cash flow. So I really like to see that. It has a really strong population growth at 1.1%. You have the University of Tennessee as their largest employer. Other largest employer, top five, Dollywood, which I've never been to, but I want to go to. So that was exciting. Unemployment rate at 3.1%. Rent is still good. And fun fact, it's the birthplace of Mountain Dew, which I also enjoy. So there you go. What I like about this market is you can do a little bit of everything. I think you can find deals at work if you're willing to put in the work in a market like this.

20:04It's a college town, which means there's going to be growth and jobs. It is not far from Asheville, North Carolina, which is a good real estate market in itself. It's not far from Pigeon Forge, which is a great short-term rental market, if you wanted to get into short-term rentals. I just think it's got a variety of entry points, which is solid.

20:25Dave:It's just a great, solid market. I think it has a lot of upside, too. It's solid today and might become a growth market in the future. And so to me, that's kind of the perfect experience. Very low risk, high upside, affordable entry point, unlike in Knoxville. Henry, you got to go. What's your second round pick? Look, man, I'm telling you, I like old, boring real estate. So I didn't pick exciting markets. I just picked markets with solid numbers. Second pick, Morgantown, West Virginia.

20:54Ashley Kehr:I just saw West Virginia on a list of top 10 states of where people are leaving.

21:01Dave:Yeah, it's a sad situation. Their economy is really rough. Here's why I picked it. Median home price,$237 ,000. Median rent, about$1552 ,000. So that's 0.65 % rent-to-price ratio. It's got 6 % vacancy. Unemployment's at 4.4%. But one-year job growth, around 2%. Five-year job growth, around 2%. Okay. So that's good. Growth in jobs, small growth. And I know you said people are leaving, but I believe there's like a 1 % or 2 % growth in population. But I think this is because it is a college town, right? It's the University of West Virginia, which is a big 12 school. This is a big school, big basketball school, right?

21:42So lots of people end up coming to this metropolitan area. Now, do they stay here after they leave college? That's a different thing.

21:50Dave:I want to just say, like, I think people look at state level population a little too much. Like I invest in Michigan. It's a state that has very bad population numbers. But there are very good population numbers in certain cities. And I don't really care what's going on in the state as a whole, because a lot of people might be just moving from within the state to the one or two cities that have good job growth and good economic prospects. And so I just think population is really much more important on a local level.

22:21Ashley Kehr:A lot of the numbers are.

22:23Dave:Yeah. I mean, yeah, pretty much everyone. But look at the employers. That's why I like it. So the University of West Virginia, about 7 ,000, 6 ,500 employees. That's big. West Virginia Medical, about 7 ,000 people employed there. And then Monday Health, which is about 3 ,000 people. So heavily invested in healthcare, but typically a lot of college towns who have medical schools, that's what they have in that area. And then Kroger is another big employer in the food space there. So solid jobs, solid schools, solid health care, downtown revitalization projects going on. I always like to look at like, are people like is the city itself spending money making the place better?

23:04Because if the city is not doing that, then it's probably not a place where people want to live. But the city itself is spending money. They're developing a rail transit system to connect people outside of downtown to the downtown area. And then the University of West Virginia is putting a lot of money into expanding its facilities in that area. So the businesses that are there are spending money and staying there. And the city is spending money trying to make the area better. It's a big school, big 12 school. And you've got solid numbers at 237 ,000 with$1 ,500 of rent. So you can find deals maybe on the market that makes sense.

23:44But if you're willing to put in a little work, you can probably find a really great deal. So just a boring, fundamental market. Is West Virginia the sexiest state in the world? No, but we're not looking to invest in sexy places. We're looking to invest in places that make money.

23:57Dave:I don't know much about West Virginia personally, but I think it goes along with some of my beliefs about the Midwest, that affordability is going to drive performance for a lot of places. You see some negative things about the West Virginia economy. So that would be my major thing. But if job growth is happening in Morgantown in particular, that would alleviate. Job growth and population growth. Yeah. I mean, that's true. If you have both of those things, then maybe Morgantown is one of the areas in West Virginia that is growing. So I like it. It's very affordable. Good place to get into the market.

24:30Dave:You're probably going to get good renters. So I like it. All right. Let's take a quick break. But when we come back, we will do around three of our best places to invest in 2026 discussion. We'll be right back. Here's the truth about passive investing. If the strategy isn't right on day one, the returns won't save it. Multifamily real estate offers structural advantages. Many investors are overlooking, including depreciation that can help offset taxable income while cash flow continues. BAM Capital builds its investment with that reality in mind. They are focused on solid operators, tax efficiency, and long-term performance.

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28:17Dave:Welcome back to the BiggerPockets podcast. I'm here with Ashley Kerr and Henry Washington talking about our favorite places to invest in 2026. And I am going with a place that I have actually long thought about investing and I've been looking at deals here for like four or five years and have never pulled the trigger. It is Kansas City, Missouri. Oh man. I like Kansas City a lot because it is like, if you look at the geographic center of the country, it's like plop in the middle and it's like the major intersection of highways and railroads, which makes it one of the logistics capitals of the country just for infrastructure and logistics, which is a really recession-proof thing.

28:59Dave:And I really just like those kinds of like solid blue-collar kind of jobs that get a lot of investment from the government, that get a lot of investment from the states. You get a lot of colleges there. There's just all sorts of stuff going on in Kansas City, but it's still super cheap. The median home price is$2.80. rents around$1 ,500. So cash flow is possible. But the things that I really like about it is just the straight up affordability. The home price to income ratio is 2.3, which is really low. The country as a whole is about 4.4. So just you can buy a lot of house with your income there.

29:37Dave:And I think that bodes well for housing demand. It's also one of the few cities in the country still that is not rent burdened. If you haven't heard that term, economists, budgeting, personal finance experts say that if you spend more than 30 % of your income on rent, you are rent burdened. And like most cities in the country, like the average person is rent burdened, not in Kansas City, which makes me feel like I'm going to be able to, I would be able to find tenants who can pay. You know, I'm not going to have problems collecting rent. And it means that there is potential for rent to grow in the future.

30:11Dave:Both are good things. There are a lot of investments going in the area. Panasonic just put in a battery plant. Garmin is expanding in the area. And perhaps more important than everything, Kansas City has more barbecue restaurants per capital than any other city in the world. This is true. And I am going to get a lot of hate for this. I like Kansas City barbecue. I'm a big fan of Kansas City style barbecue, and I want to go eat there. And Henry, you and I talk about this all the time. I like to invest places I like to go eat. And so Kansas City is very high on that list. Kansas City barbecue is delicious.

30:49Kansas City is kind of a conundrum. It's interesting because a lot of the development on the Kansas side is fairly new. Like that's where they have a, I think they have a NASCAR track that's on the Kansas side. I believe that MLS team, the soccer team has a big stadium that's on the Kansas side. And like lots of new stores and infrastructure. So lots of restaurants, outlet malls, the casino, I believe is on the Kansas side. So investor heavy market. So lots of competition. Yeah, that's true.

31:16Dave:I think that is a good point. But again, lots of small multifamily. It's a market where you can get lots of small, but also lots of older buildings, older homes. So you got to deal with the problems that come with those things. But I like the market. Yeah.

31:33Ashley Kehr:Do you guys have a preference as far as which side of the city you'd rather invest in? Most people invest in the Missouri side because that's where most of the housing is. There's not a ton of housing on the Kansas side. Okay.

31:45Dave:All right. So that's my first one. Henry, what's your round three pick? Round three. My round three pick is one that I didn't really know going into this, but it is Peoria, Illinois. Oh, yeah. This is like on the top of like every list right now. So I picked Peoria, Illinois, because again, the pricing and fundamentals are ridiculous. What do you think the median house price is in Peoria, Illinois? 220?

32:13Ashley Kehr:180. $1.67. Whoa. Okay. Yeah. $1.67 with a median rent of about$1 ,260. So just under$1 ,300 for median rent. So again, 0.75 rent to price ratio. Vacancy's high though. 12 % vacancy. So that means people have options. So you got to make sure your rental's on par. One year job growth, 1%. Five year job growth, about 2%. But the reason I added this to my list was I wanted something that had a little bit bigger of a metropolitan area compared to my other two. Population of about 400 ,000. So 398 ,000. The city of Peoria itself is 110 ,000, but the metropolitan area puts you at about 400 ,000, which for that price point is pretty unusual to be able to have a, because that lets you know that there's people.

33:02People are living there. Population is, you know, average population growth, average job growth, which is solid. The top employers in the area, again, healthcare, OSF healthcare, 14 ,000 regional employees. Healthcare's massive there. Then Caterpillar, the heavy equipment brand, 12 ,000 employees.

33:25Dave:Oh, okay. That's big. So you've got jobs in heavy machinery. You've got jobs in healthcare. You've got them spending money again on revitalizing the downtown area. I mean, Illinois, as we showed on the Cashflow Roadshow, is just a great market where you can buy cashflow. And this is no exception to that. If you don't want to be in the hustle and bustle of Chicago, then you can still find great numbers in a place where you've still got a decent sized metropolitan area. You've got lots of small multifamily options there. I mean, at those numbers, you can absolutely buy something on the market that makes sense.

34:05And so if a big city like Chicago scares you, even though it cash flows, then you can go out to a less industrial city and you can still find great numbers. So there's markets all over the country in these little pockets where if you look at the fundamentals, the fundamentals make sense. Are they the sexiest places in the world? No, they're not the sexiest places in the world, but some of these numbers are pretty sexy.

34:28Dave:Honestly, like there's so many times we have people come on the show and they're operating in their hometown. And maybe if you live in a big city or you've never been to these towns, they seem kind of random, but like there's absolutely great fundamentals and they're easy to get to know. And there's less competition to Henry's point earlier. There's a lot to really like. I hear these people just investing in their hometown cities of 50 ,000, a hundred thousand, 200 ,000 people doing great, doing fantastic. Sometimes I'm just jealous. I'm like, man, that's just like a manageable market with low competition.

34:57Dave:Like you could probably do really, really well there. So I like these kind of markets, especially if you just commit to it and just like, I'm going to learn this market like the back of my hand. You're probably going to do very well. Yeah. I mean, that's what you have to do, right? Like I see all the comments on posts. It's like, oh, you could buy cheap houses, but nobody wants to live there. Look, guys, you're not going to find a major metro with super cheap houses that nobody's ever heard of that you're going to be able to buy a house and make a ton of cash flow. Like you've got to look at some of these ancillary markets that are closer to some of these big cities, which you've got some examples of in this show.

35:35Like this is what you want to do. Yes, there are sub$200 ,000 homes in America and there are markets where those homes exist and you can make money. So what we're trying to do is show you where you can go and find some of these amazing fundamentals. Like I said, they're not going to be the sexiest places in the world, but we don't need the place to be sexy. We just need the cash flow to be sexy.

35:59Dave:All right. Well, I like it. It's another good choice. Ashley, round us off. What's your third round pick?

36:04Ashley Kehr:My last one is Winston-Salem, North Carolina.

36:09Dave:I almost did this one. It's a good market.

36:11Ashley Kehr:This metro population, 684 ,000. The median home value, 250K to 280. The typical rent for a single family home is around 1 ,600 per month. The vacancy rate is 9%, 2 % employment growth. This stood out to me here in the last five years, there's been$2.6 billion in investment in the area, making 6 ,600 new jobs. And right now in the pipeline, there's$11 billion in planned development that would lead to 18 ,000 potential jobs. So the major kind of industries, the employers here are, there's a Wake Forest has a big healthcare system, Atrium Health Wake Forest Baptist. Of course, the university, there's a 330 acre innovation quarter.

37:09Ashley Kehr:And then a lot of corporate and manufacturing. The Hanes brand is there. And then some government services in there too.

37:17Dave:I really like Winston-Salem. I almost picked this city as well. I just I like everything going on in North Carolina, to be honest. I just think it's a really solid state. There's so much to like about the economy, population growth, just everything going on there.

37:31Ashley Kehr:Property taxes. Yeah.

37:34Dave:Low corporate taxes. So a lot of businesses are moving there. Like there's there's just a lot to like in North Carolina. And Winston-Salem is still relatively affordable compared to like Raleigh-Durlam, which has exploded over the last couple of years. Charlotte's gotten it's still relatively expensive for how big of an economy it is but Winston-Salem Greensboro which is close you know like they're both a little bit uh more affordable so I'm all in on this place I love this one actually well that's what I was going to say is is you've got that sister city of Greensboro which is about a similar size to Winston-Salem and only about 30 minutes away which in the grand scheme of driving is like the same city so you really get like a two for one with this market.

38:14Dave:All right. Well, very good. I'm not going to argue with this. I'm going to, I don't know. Are we picking winners? Ashley, you won this round.

38:20Ashley Kehr:I'm just going to keep doing the same strategy, piggyback off of another great one. We did another time.

38:29Dave:I like it. Well, I don't think we awarded anyone a winner for the second one. So Henry will award you that winner. So we each win one and we all feel good about ourselves and we'll come back to do this again later this year when we do it. Because I'm joking, but I do, I really think this is valuable because one, these are good markets. If you want to consider for yourself, if you're investing out of state or you're just trying to learn how to research markets, hopefully you see the thought process here. You know, there's a lot of things that Ashley, Henry and I are talking about, whether it's economic growth, population growth, but ultimately it really comes down to your own strategy.

39:06Dave:Like Ashley picked a place in Florida that I wouldn't choose, but is great for certain people. You know, like Henry picked Morganstown, West Virginia. I probably wouldn't invest there. It probably works really well for certain people. Whereas I'm sure Ashley and Henry probably wouldn't invest in some of the markets that I picked. And so the key thing here is to learn the variables and the data that you should be thinking about because then going out to get it is pretty easy. You can look this stuff up on Zillow or Redfin or, you know, ChatGPT. It's just learning the process of thinking about which markets to invest in.

39:36Dave:And that's why we do these episodes, not because we want you to pick one of these nine markets in particular, but just so you can see how to think through these questions. We're not trying to tell you where to invest, but Dave, come on, the people want to know. If we had to pick one of these nine. Oh, that's a fun one. What's the one we would pick? What's the grand winner that we would choose to invest in? I'd hands down know which one I would choose. All right, go. I'd choose Connecticut.

40:01Ashley Kehr:I think I'm going with Illinois.

40:04Dave:Henry's going with Hartford. Ashley's going with Illinois. It's funny. We're all picking other people. Actually, I think I'd go with Knoxville, Tennessee, I think is the one I would pick. Why Knoxville for you? I think I said it earlier. I just like that it's solid right now, but I think it has long-term upside. There's a lot of markets in Tennessee that have gotten too expensive and overgrown. And I think Knoxville has some potential to run still. I like that it's a state with no income tax. I like that there's a big university there. So I think there's just a lot to like there. I like Connecticut for the density.

40:39There's always going to be growth. People are always going to live in this area because of the pricing of New York City, because of the pricing of Boston. And because those markets are so amazing, there's always going to be jobs in those markets. So a market like this is always going to see people living there. They're always going to have jobs. And you can get great small multifamilies. So I would be looking for that four to 10 unit property in this market that doesn't need a ton of work that can make some cashflow now, but be a cashflow monster in the future.

41:10Dave:Well, let us know in the comments, which of the nine that you would pick, or if you think that there's something way better and we missed the obvious one, let us know in the comments as well. And we will be back with another one of these episodes in a couple of months because we love doing this one. It's a lot of fun, even though it takes a lot of work and research for each of us. Hopefully you enjoyed this episode. Ashley, thank you for letting us borrow you from the Real Estate Rookie Show. We appreciate you being here.

41:34Ashley Kehr:Yeah, thanks so much for having me. I always love a good homework assignment.

41:38Dave:And thank you, Henry, for joining us as well. Thank you, sir. And that's what we got for you today on the BiggerPockets podcast. We'll see you next time. Thank you all for listening to the BiggerPockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian Kay. Copywriting is by Calico Content. And editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com.

42:14Dave:The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. BiggerPockets LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.