In this episode, Toby Mathis, Esq., sits down with 3,700+ unit operator Aaron Adams to discuss the six hottest real estate markets for 2026 and six markets to avoid. They cover the economic factors driving real estate growth, including GDP expansion, potential interest rate decreases, and tax bill impacts. Aaron shares his top picks: Kansas City (benefiting from Oracle’s massive $28 billion Cerner acquisition), Idaho Falls (emerging nuclear technology hub), Charlotte (continued banking sector growth), the Winston-Salem triad area (affordability with five universities), and Indianapolis (steady lockstep growth in rents, wages, and prices).
On the flip side, they discuss why to avoid Chicago (high property taxes, population decline), San Francisco (rent controls, tenant protections), Detroit (60% population loss, aging infrastructure), New York City (landlord-unfriendly policies), Los Angeles (high acquisition costs, poor cash flow), and Austin (overbuilt multifamily, high insurance and taxes). They also cover the strategy of investing in smaller cities within 30-40 miles of hot metros to capitalize on growth while maintaining affordability. Tune in for expert insights on where to invest for cash flow in 2026!

Highlights/Topics:

• 00:00 – Introduction: 2026 Real Estate Market Outlook
• 01:42 – Economic Convergence: GDP, Interest Rates & Tax Impacts
• 12:30 – Hot Market #1: Kansas City (Oracle’s $28B Acquisition)
• 17:02 – Hot Market #2: Idaho Falls & Markets to Avoid: San Francisco
• 23:08 – The 30-Mile Strategy: St. Joseph, MO Example
• 28:16 – Hot Markets #3-5: Charlotte, Winston-Salem & Indianapolis
• 35:31 – Asset Allocation Strategy: The 30-30-30-10 Model
• 40:39 – Markets to Avoid: LA, Austin, Chicago & Detroit
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Full Episode Transcript

[00:00] This is the Anderson Business Advisors podcast, the show for real estate investors, stock traders, and business owners. We help you keep more of what you earn and protect what you’ve built. Let’s get started.

[00:12] Toby: Hey guys, Toby Mathis here and today we’re going to be talking about the six hottest markets in 2026 and also six to avoid with, I think it’s over 3,700 unit operator, Aaron Adams. First off, welcome Aaron. 

[00:25] Aaron: Thank you very much. Thank you much. 

[00:26] Toby: Yep. Known Aaron for a lot, a lot of years. And here’s the thing, he’s in multiple markets. He manages the property, owns the properties and this is the waters he swims in. I want to dive in to 2026. Is this going to be a good year for real estate, or a bad year for real estate, or a toss them up year for real estate? What do you think?

[00:47] Aaron: I think the next 24 months are going to be like mid-2020 to mid-23, that 24-month period where real estate was absolutely explosive. There’s this convergence of factors this year that you and I were talking about it beforehand that make things really exciting as a full-time real estate investor. 

[01:10] Toby:  Yeah. Now there’s a lot of folks out there predicting the crash. Look at Miami. Look at all these things. Oh, the markets, oh, it’s never been higher. People can’t afford a house, blah, blah, blah. I tend to be a data guy. I know you’re a data person and we’ve been, I think it’s been good for us. But what are you basing this off of? What are these people missing? All the folks that are out there on Instagram, Tik Tok, and YouTube screaming about it’s going to be a dead year. It’s going to be level. Why do you think they’re wrong? And what are you basing it off of?

[01:43] Aaron: I think you mentioned Florida and Florida is such an interesting, it’s a perfect example of real estate is a community thing, right? And we’re going to talk about what communities we think are great, what communities are horrible, but you look at Florida. Florida is the number one destination for top 1% growth right now. Whether you’re a top 1% retiree, Florida is where everybody’s moving or whether you’re a top, all the billionaires, they don’t want to be in Florida, right? But then Florida has a massive amount of lower income retirees that are considering like Appalachia. 

[02:15] They’re thinking about moving to Tennessee or Georgia, you know, just because Florida is so expensive. And then you have a lot of, you know, middle-class Florida condo owners who thought they were going to retire there, realized how expensive HOA insurance has become, realized how expensive hurricane insurance has become. They are saying, maybe we should pivot, maybe the weather isn’t worth, you know, squeezing the worth of juice. 

[02:37] What’s a fantastic landlord friendly, tax friendly state that doesn’t fit for everyone. That’s been real estate for the last 200 years. It’s difficult to say this is what’s going to happen in the US, but there are some things that are going to unilaterally affect real estate investment that have to be looked at. The Wall Street Journal recently had an article that said, whatever your politics are, you can love Trump, you can hate Trump. He’s doing some things that are absolutely going to put a flamethrower to the economy. I mean, you look at 2025, GDP was up to 2.5%. Massive amounts of spending in AI. 

[03:12] I have a friend who bought a lot in Indiana for $3 million. It was an old Brownfield, an old manufacturing facility, that he got enough power to the lot. He got permission from the county commissioners to run enough power to the lot for an AI data center. Now, the cost to clean this Brownfield is like a thousand bucks a square foot, but he flipped it for $12 million to a private equity company that is trying to add data centers to AI. Because when you plug into chatGPT, who are the who are the pasters playing tonight? 

[03:48] That has to go to a data center and get processed somewhere. There’s this massive spend in AI to like handle the growth of the AI. It’s not just the brains of the computer. It’s who’s going to run the processing power. I’ve seen a lot of companies that used to be Bitcoin companies that have all these Bitcoin mining facilities that now they’re just becoming AI. That was a huge spend. The stock market was up, almost 20% last year. Consumer spending went up. 

[04:15] What’s great is we grew the economy by two and a half percent without significantly impacting labor. We still have, in fact, unemployment ticked up, which means we still have a lot of people that want to work. As these stimulus things come through, there’s going, I think we could be a three percent, three and a half percent. That’s just one factor that I think is going to have a massive impact this year.

[04:36] You also look at Donald Trump, he’s done some crazy. We collected 200 billion dollars in tariffs. Right. That’s real money. And I saw a lot of economists backpedaling who previously said that this is going to it’s going to doom and gloom. We saw I saw no doom and gloom in 2025 from tariffs. I saw a lot of revenue get created.  And I think what’s really interesting is for the first time ever, they always there was joke about the Fed and the interest rates.

[05:03] They say the Fed takes the punch bowl from the party. Right. As soon as the party gets started, the Fed comes in and they walk away because they jack up interest rates. Trump, for the first time, is trying to eliminate that and say, okay, we just had a great year, GDP wise, stock market wise. Let’s lower interest rates a whole another point and let business.

[05:21] I know as a business owner, man, I’ll do 40, 50 million dollars in additional business from a point as a real estate investor. That’s jobs, that’s income, that’s profits for partners. When you combine and then you combine that with this big, beautiful tax bill, you know, when in 2018 hit, it dropped my tax bill 20%. It’s going to drop it another 15% when I file this year. And a lot of Americans are looking at getting refund checks.

[05:44] You look at GDP, you look at interest rates, you look at taxes being reduced. Whatever your politics, you have to look at those and go, there’s a very good chance this is going to be an explosive year across the country.

[05:57] Toby: What you’re saying is that the economy is going to explode, which means people are going to make more money, which means they can afford more or how is this going to translate into the real estate market? And then I don’t want to get lost on this. I want to hit the top markets because you did mention, here’s Florida, you go into Miami. We have some unusual markets. But as an overall, when you’re looking at growth, you have to look at the country as a whole.

[06:21] And I never forget this. I remember somebody once said, hey, when the real estate market crashed out in 2008, you and I were both beneficiaries of that because we were investing throughout that. But even if you bought a house like at the peak right before it crashed, you’re still way up. You never want to forget that. Don’t bet against real estate. But let’s dive into that for a second.

[06:46] Aaron: Let me just give you a real example. I have I just finished 16 condos out here in Idaho. We started the project before, you know, a few years ago, we thought we were going to sell them for 330, 340 thousand dollars. By the time we finished them, there had been some additional condos on the market. A little bit of a saturation. But at current interest rates, we can only sell them for about 305, 310.

[07:11] We’re actually going to choose to rent those condos out and keep them as rentals. Because again, if interest rates drop a point, we’re going to be able to sell those to the same buyer for the equivalent of 290 in terms of their monthly bill. If we could sell it for 350, 360, if interest rates dropped to five percent.

[07:31] As the developer, I’ll make the same profit I was going to make for a homeowner. It’s the same mortgage. They would they would have paid it to 9300. They homeowners don’t tend to care if it’s 350. They care about, what’s my monthly bill going to be? That’s just one, seven-million-dollar project that we’ll be able to exit this year.

[07:51] I have that times 50 million dollars in projects where, if interest rates don’t drop, we’ll just keep them as rentals, which we’re always happy to do because we love keeping rentals. If interest rates do drop, then I’ll probably churn through those.  I have a 60-unit apartment complex I bought for three million back in 2018. If interest rates could drop to five percent, I can sell that for seven million dollars right now.

[08:13] Why wouldn’t I sell that and then and then do a 1031 exchange into seven or eight million more in new projects? I’m only 52 and I still like working. That fluid that liquidity, that churn hasn’t been happening because interest rates, how many of you watching this are gone? I locked my mortgage in a three and a half percent. I’m not selling. And we’ve seen studies at Joint Center for Housing study that said if interest rates get back under six percent, watch out. Everyone’s going to start moving. The boomer, mom and dad are going to sell their house and move down, into a condo maybe in Florida.

[08:48] The investors are going to sell through inventory. I know you have a lot of real estate that, wow, a triple quadruple, five times what you paid 2026 might be a good year to sell and then do another project.

[08:59] Toby: Yeah. The thing I can’t get away from is that we’re still under built. Because of the high interest rates, I think last quarter was one of the biggest quarters for bringing new units on. And then we’re going to be back like it’s going to drop. But we still have growth in population.  know people are thinking, oh, with all the immigration stuff, it’s impacting it.

[09:22] I know Joint Center for Housing, which you watch, I watch, came back and adjusted some of their numbers down. But it’s still we are significantly under built and we’re going the wrong direction. People keep saying, no, it’s going to be a crash on what planning? But a ton of equity like this is not a situation where people are under water and they have to sell.

[09:42]This is a situation where they have the choice, which means they’re going to sell if it makes economic sense. If those interest rates come down, it’s going to make more willing sellers, but also a army of new buyers that have been priced out of the market for a long time.

[9:58] Aaron: Yeah, people always discount how many how many people are sideline homeowners. I have employees working for me in Charlotte and Kansas City and Indianapolis who would love to buy a house for 250 or 275. They can’t because those houses right now are still being sold at 325, 350, 375. There’s just not enough supply. Think back to economics 100 supply and demand. The supply is so curtailed. We’ve under built what we need going back to 2012.

[10:30] The real shortage of housing is four or five million. I see that all the time I saw the house in Indianapolis that I had owned. It’s in a blue-collar neighborhood. I had I bought it for like five thousand dollars 15 years ago to tax sale, rented it out. I had a long-term tenant. That tenant finally moved. I throw it on the market for $130,000. I have multiple offers because $130,000 in Indianapolis median home price is $150.

[10:56] Anything under that, it’s like we see this. We always talk about our rental pyramid, for a thousand and under, you have this kind of a tenant pool. You get to a thousand and 1500. You get over 2500 that it starts to shrink. And it works the same way with home prices. Increasing the supply will keep the prices down.

[11:15] Having cheap money to buy those, it will literally just no one can predict, what setting fire to the economy will do. That’s where Trump’s experience as a businessman, I think, is really helping the country because he’s not a nervous. Now he’s willing to take risk credit to him for that. You may hate what he tweets, but, what’s helped China for the last 20 years is two to four percent of GDP growth every year.

[11:41] And the U.S. could use some growth like that. We can always solve labor. We can create a worker visa program. We got, folks from Guatemala and El Salvador that will line up to come back in this country to work on a worker visa. If any of you traveled to Europe, I know you were just there a couple of weeks ago. I always joke that, I was in Portugal last year. Nobody at my hotel was from Portugal who worked at my hotel. I was in Japan this summer. Nobody in Tokyo was Japanese working in my in my hotel. They were all workers on a on a visa.

[12:09] We just need to roll that out here in the U.S. and we can solve that labor crisis very quickly.  That’s like a two quarters solution.

[12:16] Toby: Well, that’s it’s definitely going to be an issue. But let’s focus like a laser beam here on the hottest markets. Do you want to do the six hottest and then the six worst or do you want to do one and one? I’ll leave it up to you. Do you want to. 

[12:29] Aaron: I think it would be fun to talk about a market, why we love and then talk about one that we hate. I think that’s like all right. 

[12:36] Toby: Let’s do this. What’s your number one favorite market right now?

[12:39] Aaron: It’s a sneaky pick because when I tell people Charlotte, they’re like, oh, yeah, well, Charlotte and Kansas City is my favorite market right now. I was in Kansas City last week and all of a sudden I see what’s Larry Ellison’s company, the big database software company, Oracle. I’m driving by Southside Kansas City. I see this massive Oracle campus. I’m like, wait a minute. Oracle is like an Austin company. What is this huge campus?

[13:06] I’m talking like a hundred acres. I get on chatGPT and I’m like, what is this?] Oracle, a couple of years ago, bought for twenty billion dollars, bought Cerner Health. Now Cerner is a Kansas City based health company. They run hospitals and they do insurance. Oracle, with all of its database enterprise billions, has decided that they wanted to have a health division.

[13:30] They spent 28 billion. They buy Cerner. They set up this massive campus and literally on the south side of Casey, this was within a mile of like a hundred of the 300 single family homes we manage. And I’m like, holy crap, this is literally double the price of those homes. And there’s reasons why Kansas City is hosting the World Cup this year. There’s reasons why data and tech have exploded. There’s reasons why millennials and Gen Z’s are moving to Kansas City.

[13:58] And it’s been this flyover, like, just vanilla market forever. But man, it’s red hot. And because it’s so affordable, because prices have never exploded, even during covid, it never went crazy like some of the other Midwestern cities. It’s just an incredible value proposition and the economics behind it. Missouri is landlord friendly, tax friendly. Check this out.

[14:20] First time I’ve ever seen this happen in 25years, tax bills went from seven or eight hundred bucks a year on our Kansas City properties down to $300 this year. They actually fixed property tax. I’m calling my investor saying, congratulations, you just got an extra two points on your cap rate on your Kansas City rentals that I’ve sold you.

[14:41] Just to highlight, Missouri just passed legislation. First time I’ve ever seen this, if you’re a Missouri residents, you are allowed to take capital gain tax and apply it against your five percent state tax bill. I was like, wow, that’s a symptom of a state that realizes we’re a flyover state, we’re a bunch of cornfields, we’re not very sexy, but we can be sexy by legislation, by bringing people in.

[15:08] And that’s what Indianapolis basically did in the 70s and 80s and it’s on everyone’s radar. I’m a huge fan of that because they’re hosting World Cup, they’ve spent money on infrastructure. It just checks all the markets. It’s a sneaky, sneaky market that I think is really positioned to explode this year.

[15:23] Toby: That’s an interesting one. Now do the counter. What would you avoid? What’s a market that you’d be like, hey, it’s just it’s stinky. Just you can’t use Miami.

[15:35] Aaron: Three hundred miles away Chicago. And a lot of people go to, you go to Chicago and you’re like, this is great. You got the lake and you got great sports and you have restaurants and you have theater and concerts. I saw you two a couple of years ago at Soldier Field in July and open air in the football stadium.

[15:54] That was like a religious experience for me. Chicago has among the highest property taxes in the US. They’ve had ongoing population decline. Right. They’re not even keeping their population. The state has been so fiscally irresponsible. It’s a sexy place to visit. I would love to spend, a year or two living in downtown Chicago.

[16:18] I think it would just be a vibe, a cool thing to do. But man, as an investor, I hate that city. I just can’t think of it. I’d have to buy for I always say, look, I’d buy a fourplex in Manhattan if I get it for 20 cents on the dollar. At some point anywhere makes sense. But it’s difficult to get 20 cents on the dollar stuff in Chicago.

[16:36] Toby: It’s kind of like the tale of those two cities is one is saying, hey, we want you to come here. We’re going to make it more affordable for you. We’d really love your investment dollars.  And then there’s another city saying, get out. Now, I know it’s simplistic, but yeah, it does seem like you have. It’s two very different philosophies. All right. Give me another good one. What’s another city? I should be should be on my radar. Should be on my bingo card. 

[17:05] Aaron: Idaho as a state. A lot of people, boys, he’s been on their radar, especially, I used to joke that Gavin Newsom was the realtor of the year in 2020 for Idaho because he drove everyone out of California over. They all moved to Idaho.

[17:16] Toby: They came here, too. They came here in Vegas, man. 

[17:28] Aaron:  I love Idaho. I love Southeast Idaho, though, because I moved to Utah in the mid 90s before Adobe was huge, before tech had exploded, before Utah became Orange County of the Rockies. Utah was just a collection of little towns, Provo, Spanish Fork, Lehigh, right? A little Mormon communities. You go through Utah now and it feels like you’re driving through San Diego and Orange County. Right.

[17:43] Tech is there. Big money is there. Mormon Housewives reality shows are popular. Everybody loves that. That’s 30 years ago that I moved to Utah. Idaho, to me, feels like what Utah did 30 years ago. You have one of the things that’s really interesting is right here in Idaho Falls, they have a national laboratory for nuclear research. And the thing they’ve pioneered is a house size nuclear power plant.

[18:08] It’s about 2000 square feet that can power a city of 75000 people. Then I’m talking to these A.I. private equity bros and they’re telling me that the only way they’re going to be carbon neutral and green is with these little nuclear house size power plants because nuclear is finally popular enough, because it’s not carbon. I’m like, oh, my gosh, that just that alone is going to quintuple the size of the national laboratory here in Idaho.

[18:36] Affordability is high. Migration and population growth has still been red hot.  They’re very, very low taxes. We raised our kids here from 2014 until they’ve all graduated high school.  And I always say to people, look, no traffic, no pollution, no crime, no taxes. What am I missing? Cold winters? That’s a good trade off. it’s huge.

[19:03] Toby: I’m going to stop you because you’re mentioning markets. These are markets, by the way, that you actually have management offices and properties. I’m going to say to anybody, if you like some of these markets, because Aaron’s one of those guys where he moves his management to where the properties are the best. He runs around the country and says, we’re going to be in this community. 

[19:26] In the event that he has those offices, I will put what we’ll put an email or something for some of your folks that somebody can reach out again. If you’re interested, you’re like, I really want to be in Kansas City or I really want to be in Idaho Falls, then they can reach out. That will be in the show notes, guys. Also feel free to put your comments of why you think Aaron is dumb.

[19:51] Yeah, I used to be called a clown. I still remember that. I did one with Clint three or four years ago and I was like, the market’s going to take off. I think it was right around Covid and they told me the clown. And I was like, ok, thanks. I’m like, history is pretty interesting thing.  But anyway, market to avoid. If you liked Idaho Falls as a good market, then what’s its counter market?

[20:14] Aaron: I hate San Francisco. I think you have aggressive rent controls, you have tenant protections. You really have really high acquisition prices. I mean, property tax is good, but they’ve lost population from Covid evicting is a nightmare. You really have a negative carry without a pre without appreciation and speculation.

[20:34] You’re looking at losing money, you’re making one percent on your money. I get clients all the time, especially my international clients. I get clients, Chinese clients are like, well, I have family in the Bay Area and I like Northern California. Why wouldn’t I own investment property there? And those are the reasons why. And what’s become interesting is, you know, the coasts are really tough because of rent controls and landlord unfriendly states. And then you get anywhere that’s hurricane is going to get you’re going to get screwed on insurance. 

[21:07] Then you have fires in California that’s screwing up insurance. Hailstorm is killing Oklahoma, Tony. Oklahoma, you only got one insurance left because of hail storm. Insurance is such a huge issue now. People are like, well, what’s the hottest geographic area fly over states right in the middle and then Appalachia kind of on that. West Virginia, Western North Carolina. That’s you don’t have insurance issues. You don’t have property tax issues. 

[21:35] You don’t have landlord unfriendly state governments. The middle of the country, the least sexy, part of the when I left California as an investor in 2004 for Indianapolis, people thought I was a lunatic. Why are you leaving to move to a flyover state? I was just chasing cash flow. I was just chasing rent. I’ve looked like a genius ever since.

[21:57} Toby: And it’s interesting. You just hit on something because property taxes, insurance claims, landlord friendly laws and things like that you’re going to be looking at. Then there’s the national stuff, which is interest rates going down and affordability. All that stuff plays into it. But you just hit the ones that I think are really hurting a lot of landlords out there, because I have, you know, we have tens of thousands of clients that do this stuff. That’s what I’m hearing is the insurance. 

[22:26] I’m experiencing that myself because I have properties in Kansas City and Texas, North Carolina and in Maryland and Nevada and Washington. The ones that hurt are when they come back to you and they say, by the way, your insurance is going to go up. And if we’re insuring 100 properties, it’s a big chunk of money when it starts to adjust. And by the way, those fires in California, for example, this time last year, we’re paying for that. It’s spread out all over the country. It always comes out. 

[22:56] Everybody’s getting these higher insurance bills. You got to factor that stuff in. All right. You didn’t like San Francisco. Let’s go to another market that you do like since I think we’re on number three. 

[23:10] Aaron: I chose a market that it’s more about a strategy, but it’s also a market that I like. I have four trailer parks in St. Joseph’s, Missouri. Now, the reason I mentioned St. Joseph’s is because it’s 30 miles north of Kansas City. Years ago, Toby and I were talking, I’m talking like a decade ago and he’s like, oh, you’re in Charlotte. I’m like, yeah, I’ve been in Charlotte for about five years.

[23:32] And so he’s like, oh, we bought a bunch of homes in Winston, Salem. And I’m like, isn’t that like cigarettes, Philip Morris, like big tobacco? He’s like, yeah. And I’m like, I think that’s near Charlotte. And you said, yeah, it’s about 40, 45 minutes away. And I’m like, I’ve never been there, never heard of it. And you’re like, yeah, I haven’t either, except that I bought homes for like 5000. I think you had bought an apartment complex for like 5000 a unit, right? It was some insane.

[23:57] Toby: We were buying portfolios of people that had deferred maintenance and a lot of old timers, you go in there and you just offer them, hey, I’ll just pay you interest. I’ll give you a decent interest rate. I want to buy these at this and you just give them an income stream. They do it on installment sale as a tax guy, we’re just going to spread it out. They don’t have to 1031. They usually just want to know that they’re never going to outlive their money and they don’t want to work anymore. So yeah, you pick them up really cheap.

[24:21] Aaron: I love this idea of finding a metro area that you like, like I love Kansas City. And at 30 miles away, St. Joseph, Utah, St. Joseph, Missouri is benefiting from all of the things that made Kansas City one of my red hot market right now. You can buy single family homes.

[254:40] I’m literally looking at buying because I’m out there a lot, babysitting these trailer parks. Like I was looking at a single family home for $80,000 in not in a war zone, not in a blue car, like a middle class neighborhood by a park next to the community center on a quarter acre. And it was just a husband and wife had a little two vision house with their little kid and they were they needed to move trade up to a nicer house. 

[25:02] Affordability is like almost three times 3x right now. It’s insane how cheap homes are. That’s a really good strategy. Think about an area that’s on everybody’s radar, like Charlotte, and then how do you go 30, 40 miles away because you still benefit and people will still commute, especially if it’s in an area like Charlotte where they don’t have snow. If one thing I didn’t know about St. Joseph before I spent, you know, $10 million there is that’s where the Pony Express started. 

[25:31] The original Pony Express left St. Joseph, Utah, St. Joseph, Missouri, and went all the way across the US, right? I was like, why is everything in St. Joseph, why is it Pony Express gas station, Pony Express car wash? Everything’s Pony Express. And it’s, you know, the history major, I mean, my undergrads in history went back and

[25:53] I’m like doing the homework. And my question was, well, why did the Pony Express start in St. Joseph’s and not 30 miles down the river in Kansas City? And St. Joseph’s had the bridge across the river first. You still had to ferry Kansas City only had like 3000 residents, St. Joseph’s was the big city. I just think that’s a fascinating thing, which really highlights that real estate growth communities, it’s just this moving like amoeba in the US. 

[26:23] As an investor, you need to find out what’s hot for the next 60 months, not what you think you want to be in because like people been telling me about Detroit forever, that’s a city that I hate. Moving to that next bullet point, you know, everyone’s like, well, 15 years ago, so you can get $1,000 homes in Detroit, right? But Detroit lost 60% of its population from the 1960s. 

[26:46] When you lose 60% of your population, and you have, like firefighting services, deserts, police services, deserts, we’re like, sorry, you don’t get coverage if you call 911, we’re not coming because it’s too far away. How do you how does that work as an who cares if the house is a dollar, right? Detroit would be the antithesis of the small town.

[27:12] It’s got aging housing stock. It’s got, a lot of volatility. Yeah, there I get that there’s some big companies and they keep saying Detroit’s coming back. It’s not back. It’s not back. And as an investor, there’s so many better places that you can invest in Detroit, because Michigan is not landlord friendly, it’s not very tax friendly. There’s a lot of reasons why Michigan doesn’t make sense for rental properties. Even though you know, I wouldn’t mind spending the weekend in Detroit, taking advantage of the restaurants, seeing a sporting event, going to a Lions game, I get it, but I just don’t want to be an investor there. 

[27:43] And that’s where people get mixed up. A cool city, a classic cool city, Nashville. Nashville is such a great place. I’ve been to a Titans game in the fall after spending the night before going to all the honky-tonk bars. What a great place. But Nashville has been way too sexy, way too overblown, and just isn’t good for investment properties. That’s as an investor, you got to think of it that way.

[28:05] Toby: You got to look at the cash flow and speaking of cash flow. We were avoiding Detroit. What’s another one that you’d go to? What’s another city that’s on your top six list?

[28:16] Aaron: I mentioned it a couple times, but guys, Charlotte is just like Charlotte’s been a heavyweight for years. I’ve been in Charlotte for 15 years. What Charlotte has done is they’ve continued to grow enough with housing, and, and wages have gone up enough. If you’re a millennial, getting, your 30 something job and you just got married, it’s very easy to make 80 to 120,000 a year in Charlotte. 

[28:40] And if you make that, then you can definitely afford a $250,000, $300,000 house. And so, you know, Charlotte has been a double-digit growth city for the last 15 years. It’s the largest banking area outside of Manhattan. Millennials and Gen Z’s love it there. It’s landlord friendly. Housing supply has not been overbuilt like it has in some markets. And man, we just crushed Charlotte for so long. I will say though that we’re using the St. Joseph’s strategy in Charlotte. We buy very little in Charlotte proper anymore. And we buy a lot within 30 miles of that metro. 

[29:19] Toby: Shelby and a few of the others. 

[29:21] Aaron:  Yeah. We’ve done really well there. A city that I hate that’s comparable since Charlotte is the big number two banking center. It brings up why New York City, number one banking center, guys, New England, New York, it all sucks for, investment property. It’s just way too expensive, way too landlord, unfriendly rent anywhere that has rental caps run. Toby, I don’t know if you saw this on joint center for housing, but there is a really cool case study.

[29:48] It was Minneapolis and St. Paul, you know, right? If you’ve been there right across the river from each other, many, but they’re two different city governments. Minneapolis enacted rental caps, rental restrictions. St. Paul didn’t guess who’s destroyed three years later.  No new development in Minneapolis. 

[30:06] Toby: They’ve done studies on this over and over again that rent controls destroy it, destroy cities. They’re going to, to keep doing it because they think it’s greedy landowners. But it’s like, if you take away any incentive, there’s not going to be investment. If you don’t have investment, then you’re going to have crumbling crappy bit, buildings, then they’re going to try to socialize it and then every, in governments are really bad at running these things.

[30:32] Aaron: I’m sorry, if you live in New York and you’re in your poor, you’re probably excited about that mayor, but no land there is excited about that mayor. They just see him as a nightmare, that guy doesn’t understand money. He’s never made any money. He’s never had payroll. He’s going to struggle in that city. There’s a reason that Bloomberg did so well. 

[30:54] Toby: Again, we’ll see it play out. We’ve got this thing. Every time we put a video up, you can go back and watch videos from a long time ago with Aaron, you’re going to see how right or how wrong everybody is. This one will be sticking there. If New York just takes off and goes through the roof and Charlotte’s gets beat and then we’ll come back and we’ll make funny of it. Hey, alright. We don’t like New York as a landlord. Again, this is not a judgment on the city. 

[31:17] It’s a beautiful city. People love to live there. But if you’re looking for cashflow properties as an investor, and that’s what, and that’s what we’re talking about here. Where’s a good place to be a landlord? What’s another good city to be a landlord in? 

[31:30] Aaron:  Number five of six, and again, like Toby mentioned earlier, if you are interested in picking up a property from one of these markets, reach out to us. We host a live monthly event where we allow investors like you to come to my offices in Indianapolis or out in Idaho, meet all my partners, take a look at these deals, decide if you’re interested in them. But not only will we sell you inventory that I currently own from my personal supply, we’ll also manage it for you. And that’s a very unique component.

[31:56] The 3,700 properties that we manage every month for investors are properties that investors bought from us over the last 17 years. We’ve been hosting those monthly events for 17 years. We have a really long track record of that. And the fact that we don’t outsource the management has been really the key component. Now, a couple of years ago, Toby came to me and he said, hey, you know those properties that I have in Winston-Salem, why don’t we partner and put a management group in place and then we can potentially sell properties to other investors. 

[32:26] That was a joint venture that Toby and I worked on together. And we’ve bought another 175 properties in Winston-Salem. One thing that I didn’t understand about that market about why it’s so good is there are five universities in a metro of less than two million people. And, you know, everybody’s sort of waiting for us but you have the historical black colleges that are there, you have community colleges, and you have big tobacco. Philip Morris, R.J. Reynolds all started there in that little city.

[32:54] And man, it’s the culture is so hundred years ago. It’s really interesting as I’ve spent time there. I’m just fascinated by, you think back to, pre-1964 civil rights, antebellum period after the Civil War. Very little has changed in Winston-Salem except that you really can throw a dart anywhere in North Carolina and crush it. I love Raleigh as well. As long as you’re not coastal North Carolina, it’s a fantastic really, it’s just one of my favorite spots to be. 

[33:26] Winston-Salem has the affordability that Charlotte lost about eight years ago. The reason we’re forced out into the suburbs around Charlotte is to still get the rents, but that’s still there’s still so much inventory in Winston-Salem.

[33:41] Toby: In Winston-Salem, it’s like they call it the triad because you got high points and watch the other city. 

[33:45] Aaron: Greensboro. 

[33:46] Toby: Greensboro.

 [33:50] Aaron: Toby was a visionary because man, you’re probably have 15x on that first portfolio that you bought there. 

[33:57] Toby: I don’t sell them. I always try not to look at the values. I know that we have to do it periodically, but I don’t know. I’m one of those guys that I try not to sell stuff or that we did sell some of those because there was so little inventory at one point. We sold some off to investor clients, but we try to hold on to it and you try not to look because otherwise you’re tempted to do dumb things. Like these are good cashflow properties. Just sit on them, let them do their thing. It’s like, it’s like a crock pot. You put some vegetables in there, you put a pot roast in there. Don’t mess with it. Let it, let it cook. And the longer it is better.

[34:35] Aaron: Toby is the one that guys that, that taught me the 30-30-30-10 Yale model of asset allocation. I remember talking to him years ago and we were talking about how most top one percenters put 30% in the market, 30% in real estate, 30% in private equity, 10% in cash. And I said, well, I don’t even have a private equity guy. Toby has introduced me to his private equity guy.

[35:00] I love that guy. And I’ve been selling property and trying, I’m only at about 10% of my net worth in private equity. But that’s one of my goals this year is to get to 20%. I was up 18% in 2024 on those private equity investments. And men are easy. And at 52, I need to be less rental, real, less trailer park in St. Joe’s and more Blackstone private equity fund. 

[35:31] Toby: A lot of people, they build themselves a job and that’s who we buy from. I know you do, but that’s where we were going in. We were buying portfolios. It’s usually from somebody who’s got their 10 properties and their kids don’t want them.  And that’s it. It’s like a lot of times you build these things up and they’re valuable, but you want to diversify so that you’re not stuck. 

[35:55] And then as you get older, you may just say, hey, you know what, there’s a 1031 exchange where you can go into an up read. It’s a 1031 plus a 721 exchange where you can avoid tax. And then you have a steady income stream forever, and it’s like, there’s lots of different options for you. 

[36:13] Aaron: I meet investors every month at our live event that don’t even have 30% in real estate. My problem when I met Toby, I was like 90% real estate and I needed to get more in the market, more into private.

[36:23] Toby: I’m trying to make sure your hair doesn’t turn gray. And 90% real estate. That’s just like, 2008 was fun, right? When you’re buying, but if you were holding onto 90% of your portfolio and watching it just because.

[36:43] Aaron: You and I met like in 2012, 2013, I want to say. I was 90. I maybe had the only one I had in the market was with my, my IUL. That was it. I had no money in the market. I had nothing in private. I was in 98% real estate. And now I’m down about 65% real estate. I have a deal that’s selling this month. I’m going to make 800,000 bucks. I was talking to our friend Nicole and she’s going to make 800,000. I said, what are you going to, how are you going to allocate yours? And she’s like, 550, 600 back into real estate. 

[37:17] I’m going to call our buddy Nick, and I’m going to push 1000 of it to him. I’m going to put 200,000 in the market. And then I’m only going to reinvest about 300,000 into real estate. I’ve been following that pretty faithfully as I’ve sold deals. But as an investor, I want you to think about what your allocation is. And if you’re like, this is all new to me, then come spend three days with me. Come, join me. And we’ll help educate you on how rich people do their money. 

[37:41] I’ve learned a lot from Toby. I’m a smart guy. When I see somebody doing stuff that I’m not doing, making money from it, then I want to copy them. I’ve learned Toby’s the one who got me off of term life insurance. And Toby’s the one who taught me about 30, 30, 30, 10. And Toby’s the one who got me into private equity. I’m a good student as well. 

[37:59] Toby: Bad market. We have triad, good market. What are we on? I don’t even know.

[38:06] Aaron: Bad market number five, we’re down to our last two. Bad market number five is still in California. I hate LA. And I love LA. Guys, I’d love to have a house in Manhattan Beach or Newport Beach. I love the vibe. I love the restaurants. I love the sunsets. I love California. I didn’t want to leave there, except I couldn’t get any deals. But man, California is the, what, seventh, sixth largest economy in the world. 

[38:31] But it only benefits a very narrow few. And absentee landlords are not part of that group. They’re not part of that group.

[38:39] Toby: I’ve had so many people over the years on the YouTube channel, and they put in the comments, like, oh, hey, can I make SoCal? I’ve known some people that have done okay, but they have to steal deals. They have to find deals where they can do value add. It’s really tough to go cash flow and anything there without really improving it, building, sometimes you can find it.

[38:57] I want turnkey. I want boring. I want no surprises. I don’t want the market. Always think about this, how much risk you’re taking in a market. If it’s gone up like a meteor, it could come down like a meteor. But if you’re just kind of steady, Eddie, like here’s where it’s going, you’re not going to get these wide fluctuation. It’s the same thing we do with value companies versus growth stocks. It’s like, hey, you know what, the market’s going to have a drawdown every year. How do I know? Because it always does. 

[39:28] Like, it’s going to be a drawdown. There’s a bunch of risk. And sometimes it’s going to be really nasty. Like every decade or so, you’re going to have a 40% drawdown. That’s just the price of admission. If you want to level that out, don’t buy things that are subject to that big of a drawdown. You may not get the meteoritic rise, but you’re also going to not get those huge fluctuations. 

[39:49} Some of these markets, everything you’ve hit so far, I happen to agree with, but the, the, the top five markets that you just hit, they’re not, there’s not a lot of room to go down. You’re not going to have that 75% drawdown. Like we had in Vegas during the recession, because it didn’t skyrocket up. These things have been growing. When you say double and triple or quadruple, remember I’m buying a property like for $30,000, you know, when it quadruples, it’s 120,000.

[40:22] There’s not much that could actually go down. Like you’re pretty safe in that. Los Angeles, one of those markets where it could beat you up pretty good. It’s, it’s continued to grow, but man, Manhattan beach, good luck getting in there for 2 million or, or less, right? It’s just not] affordable. 

[40:42] Aaron: Remember our mutual friend, Nick, he had like $10 million and I remember he bought four Newport beach condos for two and a half million each. He’s like, that’s what I know. I was in Orange County and I’m just scared. I’m like, oh my gosh, talk about eggs in one basket. Like all 10 million, that could go to 5 million easy. I don’t know how that played out for him, but that was a few years ago. He and I were chatting about that.

[41:07] Toby: Yeah, maybe it’s up, but you didn’t cashflow. That’s for certain. You’re losing every month and you it’s, I don’t know. I don’t like getting hit every month in the neck. I like having checks come in and I’m just boring. Speaking of boring, what’s your last, your number six top market and then we’ll do the number six worst market. 

[41:27] Aaron: My number, six red hot, we mentioned a couple of times Indianapolis, I started investing there in the summer of 2004 and median rents at that point were, were $450 a month. They’re now 1500 median home prices were 40, 50,000. They’re now 250. Median incomes have quintupled as well.  Indianapolis is one of the rare markets in the country where almost in lockstep, property appreciation, wage increases, wage growth and rent growth have, have grown together.

[42:03] Clients were buying homes from me 15 years ago for 60,000 that were rented for 500 a month. They’re now buying properties for 120 for a thousand a month. The return has stayed the same and that’s why we haven’t abandoned it. Like we left Orlando, like we left some of those markets. Indianapolis is just fantastic at diversifying itself. Eli Lilly is, I’ve been buying their stock lately because they’re going to have another weight loss drug come out that is getting great news. 

[42:31] They’ve added a million square feet and 2000 hotel rooms that are getting finished this year because they’re a top 12 convention market. And there’s just so many, so many elements of that. My son grew up here in Idaho kindergarten through senior year of high school. And he went out to school in downtown Indianapolis, majored in music. He’s now graduating, has zero plans to move anywhere, but to stay in Indianapolis. He loves it there. That’s where he’s from. 

[42:48] It’s funny when he first moved out there, he was homesick that first year. He was like, I’m going to be back in Idaho. He couldn’t leave fat. He wasn’t even home for the whole break for Christmas. He was like, I got to go back. I have a life there. And he’s the typical Gen Z, I think that is thinking there’s a lot for Gen Z’s and millennials in Indianapolis. It’s been a great market.

[43:15] Now that a counter to that would be one that we mentioned earlier briefly, which is Austin. Guys, Austin, overbuilt, multifamily insane amounts, right? That actually drove rents down and, you know, people are like, well, Tesla’s they’re great, but still supply and demand. Taxes in Texas are really high, which has hurt it. Insurance costs are high there as well. I’ve even seen the wall street guys pulling back from Austin. Nobody’s building to rent there. Love Austin, great, great place, love Texas.

[43:50] Toby: We used to buy in Texas. I bought properties from you in Mesquite. 

[43:54] Aaron: Bought a lot of Dallas for you. 

 [43:57] Toby: That’s actually, when you were talking about buying outside of cities, that’s where we were getting a lot of it from. They did circles and they bought in these circles outside of Dallas and you’d just keep going out and they’d always be looking out another, in 20 minutes drive. And you’d be looking at these different areas. If you did that, you, killed it. You constantly moved out, but Texas, unfortunately, has high property taxes and high insurance costs and it makes it kind of suck.

[44:25] Austin’s one of those prime examples, you know, probably 10 years ago, people are like, Austin’s great and it did have a meteoric rise and, but it never cash flowed, never cash flowed.

[44:38] Not like you need to do. 

[44:39] Nope. All right. That was the six, I’ll say Aaron’s six favorites and six markets to treat with disdain. Now, if you’re an investor, the least favorite markets but I really appreciate you coming on. Like I, this was a 20 minute video that ended up being more. 

[45:58] Aaron: Sorry, Matt.

[45:00] Toby: Don’t be sorry. All right, guys, put your comments down below, which we’re not omnipotent and Aaron is giving you as his opinion. What markets do you think that he should be looking at? What markets do you want other people to take a peek at and give us examples? Don’t just say, you know, Austin’s great. Give me an example of cashflow deals and let’s talk about it. There are other cities. I know that there’s plenty of different places where people find cashflow. Why do you think your markets should be on the list or beat somebody out?

[45:37] What cities have you been in? What markets where you’re like, I would not go back there with a 10 foot pole.  I’m talking to people that got burned. I’m still in Baltimore, but I hate Baltimore. 

[45:48] Aaron: I hate St. Louis. I hate Cleveland. There’s some cities I definitely hate. Yeah. 

[45:52] Toby: Yeah. And it’s not that we don’t like the city. It’s just that from a investment standpoint, you get a negative feeling when you get beat up a little bit. Um, but share with that. We’ll put in Aaron’s colleagues, if you want to reach out and talk to them about property or how you, how you attend the summit and those types of things, you could do that as well. Thank you, sir, appreciate it. And we’ll have to have you on again. We’ll be watching this to see whether your predictions are good or bad. And we’ll make fun of you if you make a mistake.

[46:24] Aaron: Sounds good, man. Appreciate it. 

[46:25] Toby: All right. See you guys.

[46:28] Outro: