Little Rock is centrally located in the state of Arkansas with a population of 200,000 people. Little Rock has a lot to offer to those looking at moving away from dense metro areas and seeking an outdoor lifestyle with a low cost of living.
Geographically, the state of Arkansas sits above Louisiana, has Missouri to the north, Oklahoma to the west (and a small bit of Texas), and to the east Mississippi and Tennessee. The wide-open spaces of America and the great cities that surround Arkansas are all driveable. Given the disruption to most aspects of the American lifestyle, we believe Little Rock will continue to have increased net migration.
Like many linear markets that we recommend, Little Rock isn’t on a huge media radar but in recent years it has made some prominent lists. Most people relate Little Rock as a former residence of 42nd President Bill Clinton. Beyond that, not much is mentioned on the national media radar (which we like). However, it is interesting to note some of their accolades and rankings on various media lists:
- Kiplinger’s as Number 1 on the “10 Great Places to Live”. With a population of nearly 200,000, it has the amenities of a larger city but is small enough that you can feel part of the community.
- Gallup listed them as number 6 on “America’s Happiest Cities”
- Moody’s had them at number 2 on Investors Services “Most Diverse Economy in the Nation”
- Forbes’s put them #46 in the Top 200 “Best Places for Business and Careers.” The article mentions that Little Rock’s cost of living is 6% below the national average and has a median home price of $149,000 and an average commute of 23 minutes.
- Outside Magazine ranked Little Rock as a paradise for outdoor enthusiasts.
The Little Rock Economy
“Fundamentally, Little Rock has a healthy economy based on agriculture cultivation and distribution, aviation, shipping, and to a lesser degree, biotech.” -Arkansas News, THV11
‘Worth Magazine’ ranks Little Rock as one of 10 cities to watch in 2020.
The sustained strength of the Little Rock region and its ability to weather national or global economic downturns is directly attributable to a regional approach to development and the diversity of its business community. Little Rock is home to various industries with large employment bases including healthcare, aerospace, finance, agriculture, education, and non-profit organizations.
The entire state of Arkansas has a population of just over 3 million people with approximately 200,000 in Little Rock. To put that in context, Little Rock’s entire population would fit inside of 8 square miles of New York, making it feel more like a community rather than a city. Its central location gives it a powerful advantage. 40% of the nation’s population and buying power is within a 550-mile radius.
The Port of Little Rock is America’s best-connected inland port and is a designated Foreign Trade Zone and a US Customs Point of Entry. This further boosts the economy and connectivity both domestically and abroad.
For further information, we recommend the City of Little Rock section on Economic Development Taxes and Business in Little Rock.
Taxes in Little Rock
Looking at relocating or starting a business? Central Arkansas is more than ideal offering tax incentives for economic activity in the state. Advantage Arkansas Income Tax Credit is one of many examples of these aforementioned incentives. Advantage Arkansas offers a state income tax credit for job creation based on the payroll of new, full-time, permanent employees hired as a result of the project. Learn more at the Arkansas Economic Development Committee webpage.
The state of Arkansas as a whole has lower property taxes than the majority of the nation, ranking #10 in the lowest effective tax rate. The majority of counties pay less than $800 annually. The statewide average is 0.63%. Specific to Pulaski County the median property tax is $915 per year for a home worth $134,300 (the median value in Pulaski County). The average tax collection ends up being 0.68% of a property’s assessed fair market value.
For more on property taxes contact the Pulaski County Tax Assessor’s Office.
As per WalletHub, the median property tax in Pulaski County, Arkansas is $915 per year for a home worth the median value of $134,300.
Real Estate in Little Rock
A quick glimpse of real estate in Little Rock gives you great insight into what to expect for rental properties in the area and why the numbers make sense as real estate investors.
- Median home value in Little Rock is $152,585
- Median list price per square foot in Little Rock is $110,
Little Rock-North Little Rock-Conway Metro average of $103.
- Median price of homes currently listed in Little Rock is $219,900 while the median price of homes that sold is $188,100.
- Median rent price in Little Rock is $975, which is lower than the Little Rock-North Little Rock-Conway Metro median of $995.
Source: Zillow (May 2020)
While mainstream media clumps US real estate as one it should always be narrowed down to either cyclical, linear, or hybrid markets and more specified to one of nearly 400 MSAs.
Real estate headlines typically highlight cyclical markets such as San Francisco and New York City. Using the same data and analyzing the rent to value ratios and median home values based on Zillows data, a stark contrast is revealed.
Arkansas is Landlord Friendly
The state of Arkansas is one of the most landlord-friendly states in the nation. And with fewer states being landlord-friendly these days, it is a huge factor in where you do your real estate investing.
The landlord-tenant laws in Arkansas are much more favorable to the landlords. While we never want to have to evict tenants certain situations arise that require it. Our first solution to any potential tenant issues is to screen them properly as part of your due diligence.
In Arkansas, a landlord may give notice of lease termination for any reason. Even model tenants may be subject to having a lease terminated. The landlord must give one rental period’s notice for an oral lease, or provide notice according to the terms of a written lease. – Arkansas Attorney General Office- Landlord and Tenant Rights
Further examples of how landlord-friendly Arkansas are explained below:
When renting, tenants agree to take the house as-is. If the landlord promises to make any repairs or do any maintenance the Arkansas Attorney General Office states that this should be in writing. However, “even if a landlord does not make a promised repair, the tenant should continue to pay the rent.” (Arkansas Attorney General Office)
Right of entry
In Arkansas, there are no regulations written that deny a landlord right of entry into the property once the tenant moves in. Most states require some form of notice.
Security Deposit Return
Landlords have 60 days to return the tenant’s security deposit once vacated.
There are no specific laws allowing a tenant to withhold rent or repair and deduct.
A landlord may be able to immediately terminate a lease if rent is five days late. A landlord has 14 days to terminate for other lease violations.
The US Population is Migrating Away From Expensive Cities
For the past few years, there has been outbound migration from expensive coastal cities such as New York City, Boston, Los Angeles, and many others into smaller cities such as Denver, Charlotte, Dallas, Houston, and many others. As those cities receive more residents, jobs get taken, and the cost of living increases the even smaller metropolitan areas feel a trickle-down effect.
In October 2019, Forbes detailed this phenomenon:
“The bigger Southern cities such as Atlanta, Charlotte, and Tampa have long welcomed a steady influx of newcomers, but they are no longer alone. As housing prices in those metropolitan areas have risen, more affordable secondary markets in the Southeast have become the latest magnets for new arrivals in search of a better quality of life. People are flocking to the likes of Spartanburg, South Carolina; Greensboro, North Carolina; Little Rock, Arkansas; Brunswick, Georgia; and Jacksonville, Titusville and Palm Coast, Florida.”
If Atlanta and Tampa are much cheaper than New York or Washington DC, how much cheaper are places like Memphis, Palm Coast, or Little Rock?
The acceleration of work from home could mean an individual with a big city salary and the expense of a small city lifestyle.
As Jason mentions in episode 1414 of The Creating Wealth Show, “It’s more pleasant. There are plants around. People aren’t pushing and shoving. Everything’s less expensive, not just the real estate. That’s going to be the desirable commodity.”
Post COVID or the new normal lifestyle design will be completely different and is undergoing tremendous accelerations. With social distancing becoming a norm balance in space, noise, and lifestyle become more conscious. Imagine remote tech workers that enjoy an outdoor lifestyle. More folks have moved towards gardening wherever they found themselves during lockdowns. That lifestyle change and hobby may grow with a number of new gardeners looking for space.
“Travel just two miles south of downtown and you’ll find one of America’s largest urban wetlands, 1,800-acre Fourche Creek. Put in at Interstate Park and you can paddle between the 300-year-old cypress trees that host some 188 species of birds, all within the heart of the city.”
Additional Resources on Little Rock Real Estate Investment
The Creating Wealth Show, Episode 334: Little Rock Arkansas Real Estate Investment Market Profile with Local Market Specialist Jeremy
The Creating Wealth Show, Episode 395: Little Rock Arkansas Market Profile With Local Market Expert Alex