Real estate investors from across the country are targeting rental properties in Arkansas to build rental portfolios. Arkansas is a current favorite of real estate investors for both cash flow and appreciation! Easy Street Capital is proud to be a leading provider of rental loans for investors looking to build rental portfolios in the Natural State!
Investment Property Loan Types for Real Estate Investors in Arkansas
When it comes to real estate investing in Arkansas, there are many different markets and rental loans to choose from. For investors that like to get their hands dirty, rehabbing run down properties, hard money renovation loans are a perfect choice! These loans allow you to buy a property quickly and finance your rehab costs as well! Once you are done, you can either “flip” the property for a quick profit or pursue the BRRRR Strategy by renting it out and then refinancing into a long-term, low-rate DSCR loan!
Long-term DSCR Loans are great rental loans for investing in turnkey rental properties. Turnkey refers to properties that are rent-ready and require no renovations. Move-in ready single family homes and fully furnished short term or medium term rentals are great for cash flow and price appreciation. Most DSCR Loans are fixed rate for thirty years, you pay the same rate for the long-term, while, if historical patterns continue, rents and appreciation increase steadily each year. Bottom line, debt costs stay the same while cash flow increases!
According to a recent study, Northwest Arkansas has the nation’s most competitive small rental market! Local business leaders are sounding the alarm on the lack of housing available in the state. Duke McLarty, the executive director of the Northwest Arkansas workforce housing center, was recently quoted in the Arkansas Democrat Gazette saying “As more people every day call Northwest Arkansas home, and we don’t have housing to meet that demand, the market is going to respond with higher rents. More housing is the answer. We just need more of it, and we needed it yesterday”
Where To Invest In Real Estate In Arkansas
Arkansas is a great market for real estate investment properties because of the diverse geographic options. There are several medium-sized cities with varied rental property demand drivers such as Fayetteville (home to the University of Arkansas), Bentonville (Walmart headquarters), Fort Smith (historical attractions) and Little Rock (the capital and home of the state government). Arkansas is also known as “The Natural State” due to its many natural wonders and hotspots for vacationers searching for outdoor getaways. As such, real estate investors in Arkansas have found success with short term rentals and vacation rentals in hidden gems such as Eureka Springs in the Ozark Mountains and Hot Springs in the Ouachita Mountains region.
Fayetteville
Fayetteville is a college town located in northwest Arkansas with a population of over 85,000. It is home to the University of Arkansas main campus, which has an enrollment of over 28,000 students. The city is also known for its vibrant arts and culture scene, including the Walton Arts Center and Crystal Bridges Museum of American Art. Real estate investors can target the student housing market or long-term rentals. There is also great short-term rental potential during events such as Razorback football games and the Fayetteville Roots Festival.
Bentonville
Bentonville is a fast-growing city in northwest Arkansas with a population of over 50,000. It is home to the headquarters of Walmart, the world’s largest retailer, as well as other major regional companies. The city also has a thriving downtown area with shops, restaurants, and museums, drawing in both tourists and residents. Real estate investors can take advantage of the demand for long-term rentals. Additionally, events such as the Bentonville Film Festival and the Ozark Mountain Music Festival drive short-term rental demand.
Bentonville, along with Fayetteville, Springdale and Rogers, Arkansas make up one of the fastest-growing and popular growth areas for real estate investors known as the “Northwest Arkansas (NWA)” metropolitan statistical area. While known for its corporate headquarters, Bentonville has blossomed into much more than a company town. The influential magazine, Southern Living, recently proclaimed Bentonville as “the South’s next cultural mecca.” Many savvy real estate investors are predicting Northwest Arkansas could be the fast-growing trendy areas in the 2020s, similar to Austin, Texas and Nashville, Tennessee in the 2010s.
Fort Smith
Located in western Arkansas, Fort Smith has a population of over 80,000 and is the second-largest city in the state. The city’s economy is diverse, with industries such as manufacturing, healthcare, and education. Fort Smith is also known for its rich history and cultural attractions, such as the Fort Smith National Historic Site and the Riverfront Blues Festival. Real estate investors can find opportunities in both long-term and short-term rentals, with a steady demand from renters and visitors alike. The Fort Smith city website offers a helpful guide to historical attractions in the city – perfect for trips for history buffs.
With affordable real estate prices, Fort Smith is great for investors either just getting started or currently tight on capital. According to Redfin, the December 2023 average sales price of a single family home was $198,500, a 11.5% increase from February 2023. Coupled with reports, Fort Smith has seen a 13% increase in rent since February 2023. For investors using DSCR Loans, which require as little as 20% down – an investor using rental loans on an average rental property in Fort Smith, can earn rental income of approximately $10,800 per year on a down payment of only $39,700, a 27% cash-on-cash return!
Little Rock
As the capital of Arkansas, Little Rock is the state’s largest city and home to many government agencies and corporations. Its economy is diverse, with industries such as healthcare, education, and transportation. Little Rock is also known for its vibrant arts scene and outdoor recreation opportunities. The city is a great market for real estate investors. Young professionals and families have generated plenty of demand for rental properties.
Little Rock has been a steadily growing market with Rocket Homes reporting a median sale price of $238,000 for January 2024, a 8% year-over-year growth! Several large companies are headquartered in Little Rock, including Dillard’s Department Stores, Simmons Bank and Bank of the Ozarks. There is an undeniable need for more housing in the state capital. Real estate investors are poised to answer the call – providing much needed supply – and making significant returns from rising rents.
Eureka Springs
Nestled in the Ozark Mountains of northwest Arkansas is the charming city of Eureka Springs. Known for its Victorian architecture and winding streets, it’s a popular destination for history buffs and art enthusiasts alike. Eureka Springs is also home to a number of natural springs and parks, including Lake Leatherwood City Park, which offers a variety of outdoor activities like hiking and fishing.
Due to its unique blend of history, culture, and natural beauty, Eureka Springs is a sought-after location for STR investors. Eureka Springs serves as a relaxing getaway for families from nearby states such as Missouri, Oklahoma, and Texas. Rental rates and occupancies remain steady, with peak seasons during the spring and summer months. Festivals like Eureka Springs Blues Weekend and the May Festival of the Arts bring in even more visitors and potential rental income.
AirDNA, a leading data provider for the short-term rental industry, gives Eureka Springs a score of 75 for investability and a $219 average daily rate, annual occupancy rates of 45% and monthly expected revenues of just over $3,000.
Ready to Get Started?
Ready to invest in real estate in Arkansas? Easy Street Capital is Arkansas’s best provider of rental loans for both hard money rehabs and long-term rental properties.
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