The Best Market for Apartment Investing

I love NY. I live here and even though I get my heart broken by the Jets, I am a proud New Yorker. Do you know how many apartment buildings I own in NY? None. Not one. I use a phrase that I heard a long time ago:

“Love where you live, invest where it makes sense”

Many new apartment investors often want to invest close to home. Being able to drive over to your investment property should not appear on your list of criteria when determining if an investment is worthwhile. It’s no longer wise to just play in your backyard; you have to find the multifamily markets that offer the biggest upside. This is what we teach our apartment coaching clients to look for:

The Market Look for apartment markets that have positive long-term outlooks for employment and economic growth, rent trends, and appreciation (both forced and market appreciation). You want to make sure that you stay away from markets where job growth is significantly declining, and where corporations that are in a long-term downward cycle affect the local industry.

How to find the right Apartment Market

It’s critical that the markets you choose fit your investment criteria. We don’t recommend that anyone pick a market first and force a strategy into that market.

Strategy always should push the markets that you go into. It’s no surprise that in the NY Metro area markets where we are located, deals that can support double-digit cash flow returns are few and far between and most times you will find a better market for your strategy other than where you live. That’s just how we started.

It wasn’t until we went out-of-state and started doing in-depth research on market demographics that our business really took off.

There are a few key areas you need to research to determine if a market is right for your given strategies. This is the information we use and the exact same process we take ourselves through to pick our successful markets.

A few key points to remember:

• It does not have to be the “hottest” market to invest in

• Look where you live, invest where it makes sense!

• Not everyone can invest in their own backyard

• Any market you decide on needs to have positive fundamentals

Your key research areas will be:

• Population Trends

• Demographic Profile

• Employment

• Comparative Advantages

• Local Governments

• Market Fundamentals

• Vacancy and Rent Growth

Population Trends

We dial in from a “top down” approach analyzing data in the following way:

• State Level

• Metropolitan Statistical Area level (MSA)

• MSA’s larger than 200,000 – County level

• City level

• 10 Year Historical – 5 Year Forecast