The multifamily real estate market has taken a hit from the COVID-19 pandemic, but you can increase your chances of successful investment if you choose the right location.
When it comes to investing in multifamily properties, location is key. The assumed value of a property is associated significantly with its location. As real estate investors know, you can always spruce up a home to make it look presentable to buyers, but you can’t change its address.
Therefore, investing in the best location is crucial to succeeding in the competitive world of multifamily investing. If you’re planning to invest in multifamily real estate, look for rental properties with a great capitalization rate. Here’s a rundown of the best places to focus your multifamily investing strategies in 2021.
Top markets for multifamily investing
One of the most profitable multifamily markets is in Arizona, rents in Phoenix average at $1,564 as of April 29, 2021. It’s among the fastest-growing cities in the U.S., with a 16.2% population increase from April 2010 to July 2019 Census estimates. Job growth, good business climate, lack of natural disasters, and improved quality of life have drawn more people and businesses to this desert city.
Additionally, Phoenix is among the top on the list for multifamily property sales in the last decade. Since 2009, it has earned nearly $42 billion in rental investment sales. The upturn in Phoenix’s multifamily investments is attributed to the overall economic growth in Arizona.
Salt Lake City, Utah
In the recent 2021 Emerging Trends in Real Estate report published by PwC, Salt Lake City ranked among the top 10 cities to invest in real estate. It’s a popular destination for families coming from other states like California before and during the COVID-19 outbreak. Salt Lake City is not necessarily a low-cost market, but it’s relatively affordable compared to other established markets.
Moreover, it boasts one of the lowest unemployment rates, at 3.6% (second to Hoover, AL). The growth in economic opportunities, even during the pandemic, has kept in-migration to this city high.
Salt Lake City is a bustling metropolis with a stellar reputation for offering the best returns on multifamily investments. Multifamily sales surpassed $407 million in the first five months of 2020. Additionally, real estate developers delivered 1,682 rental units.
Raleigh, North Carolina
The multifamily market in Raleigh has seen steady growth as new supplies and optimistic net absorption hooks more investors in. With a 474,000 estimated population, the city grew by 17.3% from 2010 to 2019. Otherwise known as the “City of Oaks” due to a myriad of oak trees lining its city street, Raleigh is one of the fastest-growing cities in the U.S.
Similarly, steady job growth has contributed to its appeal to investors. During its remarkable expansion, the city’s unemployment rate dropped from 4.7% in February 2021to 3.9% in March. Home to thousands of young professionals, Raleigh has become one of the top tech hubs in the nation. The Research Triangle Region, or known simply as “the Triangle”, is a partnership among areas that include a triad of research institutions—North Carolina State University in Raleigh, Duke University in Durham, and the University of Carolina at Chapel Hill. This region attracts many of today’s innovative companies due to its burgeoning educated workforce.
These favorable conditions offer promising opportunities for investors who wish to dip into multifamily investing in the city of Raleigh. In the third quarter of 2020, there were roughly 106,098 units on the multifamily market at a 7.6% vacancy rate. This means that this city can meet its ongoing demand for affordable housing.
Gains in the job markets and a switch to reasonable secondary markets augmented the demand for multifamily real estate in Tennessee. Nashville, in particular, has a population of 670,820. This city saw a steady rise in population growth as more people migrated from other states during the pandemic.
Experts expect that Nashville’s real estate market will continue to boom throughout 2021 as inbound migration keeps the rental market strong. Its low unemployment rate, business-friendly landscape, vibrant culture, and affordable cost of living are among the key factors that attract families and businesses to relocate to the “Music City.”
Nashville’s housing market has stayed robust amidst the economic slowdown brought by the COVID-19 crisis. It’s one of the hottest multifamily markets in the US today. Tennessee is among the seven states that don’t charge an income tax.
It’s all about location
While the multifamily property market has stayed resilient throughout the years, many real estate investors are still on the fence on whether to invest in it. It’s hard to take an optimistic view when the world is still reeling after the coronavirus outbreak, which has heavily impacted several industries. But it’s great to know that investing in multifamily properties remains profitable in 2021.
Whether you want to invest in apartments, duplexes, triplexes, or others, it’s important to keep abreast with the current trends, especially on locations with excellent multifamily cap rates. To learn more about the multifamily investing strategies that’s right for you, we suggest you go straight to the experts.
At MultifamilyDebt.com, we use proprietary software powered by Lending Standard that connects lenders and investors seamlessly. We take on the manual effort of collecting and comparing loan offers so that you have more time for what truly matters— growing your multifamily business. Send us details about your rental property to be matched with custom loan offers or email our team at email@example.com.