If you’re a real estate investor looking for a new market to potentially acquire a rental property, Jackson, Mississippi can offer you some unique opportunities and a desirably low cost of entry.
Local investors know that we don’t have to spend a lot of money in order to make some money on real estate here. You’ll be able to cash flow your rental relatively quickly, and you’ll find there’s a strong pool of tenants who are always looking for well-maintained rental homes.
Let’s take a look at the current real estate market trends in Jackson, MS so you can get an idea of what it would be like to buy an investment property here.
Get to Know Jackson
Jackson is quickly becoming a highly sought-after housing market for Mississippi real estate investors. There are great opportunities for both residential and commercial opportunities.
This is a sophisticated southern city on the Pearl River. It’s the capital of the state, and it’s steeped in history and culture. The Freedom Trail runs through the city, and there are several monuments and memorials that commemorate America’s civil rights movement. It’s known as the “City with Soul.”
After a steady decline in population, there was a bump between 2022 and 2023. This could be due to the low cost of living and the growth of remote work. Many people can live wherever they want now, and tenants are increasingly more nomadic. Choosing to live in a city like Jackson comes with a lot of benefits. More than half a million people make up the metro Jackson, MS area.
Median List Prices are Up in Jackson
Let’s take a look at a positive statistic: real estate sales prices are up in the last few years, and over the last year alone, list prices are up 3.4% over the year before.
Any creep upwards is good, and you might be wondering why that percentage is so much lower than the national average (which is around 7.5%). Real estate in the Jackson metropolitan area has experienced a slow recovery, and that could account for the way this market is trailing others.
There’s more inventory here, which allows buyers to be selective when they’re choosing properties. In some markets, investors are grasping at whatever they can find because the inventory is so low. You won’t have to do that here; the total listings in the Jackson metropolitan area are up 8.4% from the previous year, even while listings have slipped and dropped 2.4% across the country.
Demand is steady, and supply in Jackson is catching up more than in other markets.
Diversity of Neighborhoods
It’s actually somewhat difficult to talk about how the market is performing in Jackson generally, because this is a hyper-local market. Everything depends on where your property is located. Most of the market conditions we have studied will depend on the neighborhood that a particular property happens to be in. This is true when we look at sales prices, rental values, availability, and demographics. It’s hard to make a blanket statement about Jackson. It really depends on which zip code we’re talking about.
Most investors see this as a strength. It means you can buy a single-family home in a gated community or a small apartment building close to downtown Jackson. You can be selective about duplexes or condos or invest in townhomes.
Real estate trends in many cities across the country have often felt like a tale of two markets over the last few years – even within the same city. A lot of experts thought this meant we were in a bubble and that the market was about to crash. It hasn’t. And in a market like Jackson, we don’t expect it to. The conditions simply aren’t here.
Real estate in Jackson is immune to those bubble concerns right now. Home prices in the entire Jackson metropolitan area increased far less than the national average during the last year, and people are less eager to spend more than they can in communities like ours.
Economic Factors in Jackson Housing
It’s impossible not to look at some fundamental economic factors when we’re talking about the housing market and whether it’s where we want it to be. The job market in Jackson has remained strong; major employers are in the healthcare, retail, and technology fields.
Interest rates, unemployment, and household income all impact local housing markets. Mortgages are more expensive, thanks to the interest rates that keep increasing. While that’s bad news for the sales market, it’s actually good news when you’ve got a home to rent. It means that your tenants are less likely to go buy their own home. They’ll continue renting until it’s economically feasible for them to buy.
Jackson is an Attractive Renter’s Market
The best reason to buy investment property in Jackson is that you’ll always be able to count on a good pool of tenants who need homes.
Taking a look at the statistics and the narratives, it may seem like some homeowners in the area are struggling to make mortgage payments and keep up with the expenses that come with homeownership. Buying is out of the question for a lot of people, even with prices remaining reasonable. So, the demand for rental property in Jackson remains strong.
Rents have been rising in Jackson, too, which is great news for your cash flow and (ROI).
Median rent for a three-bedroom, two-bathroom rental home in Jackson is around $1,100 according to Zumper statistics. The rents in Jackson have gone up more than 10 percent. Some of the neighborhoods in Jackson that have the highest rents include:
- Andover
- Harvey Crossing
- Ashbrooke
Renters love these neighborhoods, so if you’re looking for a place to invest, consider one of these areas.
Diversify and Increase Your Portfolio with a 1031 Exchange
You can get a lot more for your money in Jackson that you can in other markets. Home prices are less expensive.
For savvy investors, this might mean selling properties in a market where they’re worth more, and then re-investing those funds into properties here.
We’re talking about a 1031 exchange.
This tax deferment program is named for the IRS code that describes and permits the program. You can use it as an investor who owns properties elsewhere, especially if you’re ready to sell those properties.
The 1031 exchange allows property owners to defer paying the taxes on any income they earn off the sale of their property by purchasing another like-kind property with the proceeds of that sale.
You can do a lot with this in a market like ours.
Here’s an example. Perhaps you sell an investment home that has appreciated quite a bit over the time that you’ve held it, and your capital gains are $350,000. You can take that money and use it to buy another investment property. In Jackson, you could buy several properties. And, your taxes are deferred.
The new property you buy has to be similar to the one you sold. That doesn’t mean you have to buy a property that’s exactly the same. You can sell a single-family rental home and buy an apartment building. It simply has to be one income-producing property for another income-producing property. You cannot use the 1031 Exchange to sell your rental units and then buy yourself a new home that you plan to live in yourself.
- Timelines and Requirements
When you sell your original property, you cannot pocket any of the money that you make. It goes into a separate escrow account that’s managed by a qualified intermediary.
After you close on that sale, you have 45 days to identify a like-kind property that you’d like to purchase. You don’t have to buy it yet, and there’s always a chance that your offer won’t even be accepted on the new property. But, you have to at least identify a property within the 45 days.
You need to close on a new property within 180 days of selling the first property. So, your timeline to buy a new property is 180 days; the clock does not restart after the 45-day identification period.
- Why this Works in a Market Like Jackson, MS
The tax deferment benefit is a great reason to use the 1031 Exchange, but there are other advantages as well. The main advantage, of course, is that you’re investing in several rental properties instead of just one because the homes you can buy here are far less expensive than most other markets you might be coming from.
It’s something to think about.
When you’re thinking about investing in real estate, and you want to learn more about the Jackson real estate and rental market, partner with an expert in the local industry. We can be that partner for you. Our Jackson property management and real estate services are geared towards listening to your investment goals, and making it easier for you to navigate the market and its challenges. We’re here to help. Contact us at Lucroy Residential.
