With a tight multifamily real estate and little inventory, knowing how to pick a market to invest in is crucial. Here are five things you should be looking at to select a market.
1. Demographics; Who lives in the area today? Is there a migration of people moving into the market? What is driving the movement?
2 Rent Rates; What are the average rents in the area? Is it a A, B, C or D area? How much are houses renting for (and competing for apartment dollars)?
3. Employment; Are there jobs in the area? Are companies moving in (or out) of the area?
4. Available Inventory; How many buildings are for sale? What is the average cost per door by class? How quickly do they move?
5. Exit; After you get a deal under contract, how many people are also chasing the deal? If you understand this, you just found the people that will buy the deal from you when you are ready to sell.
You can lose a lot of money in real estate if you don’t do your research. You need to learn all you can about multifamily real estate so you can become an informed investor or a master syndicator. It doesn’t matter if you are working on your first deal or your 100th – staying sharp is important and being engaged with the market is key! Know WHERE you are buying and WHY you are buying.
Another thing to note is that multifamily real estate investing is a team sport. Go to live events and network with others. Who knows…you may even find your next deal at your very next networking event!