Best cities to buy multifamily building for buy-and-hold purpose.

38 Replies

I am planning to buy a multifamily building/complex of around 4 to 25 units with in next few months. So far I have a few Single family and townhouses and have a good experience of managing them. Any advice on BEST CITIES for buying multifamily building for buy and hold purpose?

Great question-I am on same boat. Looking forward to seeing responses. 

Oklahoma City metro area

Updated 5 months ago

Oklahoma City metro is where the good demographics are. I would not suggest areas like Shawnee due to their demographics being questionable, at best.

@Syed Naqvi   @April Chim you are playing the same game the big boy private equity and REIT boys are on a smaller scale. So just follow their lead and leverage off of their research. Actually reading their annual reports will teach you a lot. The two key things to look for are population and job growth. More people with more and higher quality jobs are want you should look for.

Based on that, your best bet is the gateway cities like New York, LA, Seattle, Boston. But if you also introduce things like cost of living, weather and quality of life you want to look at places like texas, colorado, florida, georgia, tennessee and the carolinas.

@Syed Naqvi   I've never been, but you might want to attend Brad Sumrok camp here in Dallas.

https://www.bradsumrok.com/    I would think locations would be discussed.

@Bruce Lynn

Brad does indeed talk about his favorite 5-10 markets at his weekend seminar. I strongly recommend it to anyone considering jumping into multifamily. He favors markets in landlord-friendly, business-friendly states, with strong population growth, strong job growth, and a lower than average cost of living. 

Those criteria would rule out the gateway cities suggested above, but it really depends on what your goals are. Are you looking for cash flow? Appreciation? Do you want to be a hands-on manager, or hire a professional manager? Do you prefer to be driving distance to your home, or are you willing to invest out of state? Do you want to have working class tenants or own upscale apartment complexes with all the latest amenities? Your response to these questions will point you to where you want to invest. 

Hi Everyone, 

Jacksonville FL is a perfect area to invest in especially in multi family properties. Duplex sell for around $80K and triplex, fourplex, and so forth sell for above $100K. However, these homes are not in a desirable market where buyers may not want to invest in but they are affordable whereas buying a duplex or another multi family home in Jacksonville in a better desirable location would cost above $200K. That is what I have seen in the market including properties that have sold and are for sell in the MLS. :)

Jacksonville is a great investment area for many types of real estate investments. The recent housing data shows that SFH permits continue to rise, while multifamily continues to decline.  Multifamily had led the charge, but the latest data points out that people still want to own a home. As wages rise, this will become more true around the country as well as in Jacksonville. Watch the data over the next few months to get an idea of where the housing market is headed.

@Syed Naqvi @April Chim

With Tier I Markets peaking, for MFH investments, we will continue to focus on Tier II and Tier III markets with resilient economies buoyed by employers and universities. 

Here are a few new markets on our watch list:

Fort Worth, Texas

Home to more than 7 million people and growing, the Dallas/Fort-Worth area has added an average of ~100,000 jobs/year since 2010. Local leaders have made attracting large employers a high priority, and major corporations such as AT&T, American Airlines, and Lockheed Martin call the metroplex home. With the University of Texas at Arlington, Texas Christian University, and the University of North Texas also located in the region, there is no shortage of well-educated millennials eager to stay after graduation.

Raleigh, North Carolina

The metro area surrounding Raleigh, NC has been one of the fastest growing in the country. Since 2010, the city’s population has increased ~15%. USA Today recently named Raleigh the third best place in the U.S. for business and careers, most notably in the technology and life sciences sectors. Nearby tier one universities with deep talent pools include NC State University, the University of North Carolina at Chapel Hill, and Duke University. They provide a solid foundation that continues to fuel innovation and prosperity in the region. Additionally, Red Hat (headquartered in Raleigh) and Citrix are both major employers in the area. Technology giants like these, along with Research Triangle Park (which includes neighboring anchor cities Durham and Chapel Hill), have been catalysts in the area’s continued revitalization and economic growth.

Chattanooga, Tennessee

Chattanooga proudly touts its “Gig City" badge. When the city built the fastest internet in the U.S., it attracted new businesses to the region. According to an independent study conducted by the University of Tennessee in 2015, this helped add roughly $865M to the local economy since 2010. With its 140-acre downtown “Innovation District” anchored by the Edney Innovation Center and its budding start-up scene, Chattanooga is reshaping itself as a technology solutions hub.

Chicago has proven to be extremely lucrative for Buy & Holds. With larger businesses like GOOGLE, McDonalds, potentially Amazon (fingers crossed), etc. coming to the city, the city & surrounding neighborhoods are guaranteed to grow.

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Take a look at this very simple analysis. The metros below are ranked based on the pace of employment growth over the past year (as of October). Also included is the change in average apartment prices ($1M+) since the prior peak in 2006-2007. The top two- Ft. Lauderdale and Riverside-San Bernardino look compelling. Not only are they the top two fastest growing job markets in the country (among major metros), but they both have room to run in terms of price appreciation.

@Cameron Judd I am not sure what questionable demographics you speak of, but you may want to provide statistics to support your claim. OKC encompasses 620 sq/miles. So if your going to encourage out of state investors to buy in OKC you may want to give them more specific advise. I agree that parts of OKC are great places to invest. But if you haven't yet noticed, hedge funds are buying a large amount of SFR's at retail prices. Making it more difficult for both local and out of state investors to find deals.

I will always say that San Antonio is an excellent market for Cashflow. I live here and work with a lot of investors and most of the times you can get cap rates between 12 and 18% . This is not only with single family homes but with duplex and multi-family as well .  I am a realtor here so let me know if you need any assistance here

Please let me add one more city and that is Boston, MA for multi-family buildings. The price is high over there but appreciation wise it looks like a good choice. Any comments are welcome! Thanks.

Hello, @Yousif Abudra , Hello all on this thread..

Does anyone have info on Riverside, California as far as what the Duplex, Tri, and Quads go for?

I appreciate any ballpark price range in advance.

Happy Thanksgiving, everyone!

Best of profits!  $$$

714-470-4152

@Daniel F. Harb In a not so nice area, you can find a duplex in Riverside starting in the 400’s.

Wow. Thank you,@Brittney Johnson . I guess my head is in other States where it seems one can buy a duplex, Tri, or Quad for maybe the $100K to $175K level. Definitely not in California, of course. Right?

Thank you so much for reaching out, Happy Thanksgiving!

~Daniel

714-470-4152

Most definitely Indiana should be in the top ten for rental Buy and holds! So many benefits for owning property in that state. The cash on cash return numbers are high. Combine that with low taxes and landlord friendly laws and you have yourself a winner! the ARVs aren’t as high as some areas of Chicago but Northwest Indiana is very close to Chicago if you want to hang out downtown. 

You will find duplexes in Fort Worth starting in the 150s and up. Renting for around 800 each side. It’s getting more difficult to find these at that price range. Off market of course. MLS will be much higher.
Fourplexes in Tarant County (Fort Worth and surrounding area) will start in the 250s and up. Renting for 700 or more each unit.
Sometimes you find a distressed seller selling for less. But it’s getting harder. And on MLS, prices are at least 20-30% more than that. With high competition because more eyes see those compared to off market deals.

We have also bought duplexes in Indianapolis. You can get those starting at 40-60k. But rents will be in the 500-600 range per unit. Haven’t had success with fourplexes in Indy yet.

Originally posted by @Syed Naqvi :

Considering the above responses and an online research I am able to short list the following cities:

OKC Metro OK, Jacksonville FL, Fort Worth TX, Dallas TX, Orlando FL, San Antonio TX.

Thanks to all for your suggestions. 

Any other advise or guidance on this topic would be greatly appreciated..!!

 Interesting insights, i am also looking out for similar info to eventually venture into multi-family investments.

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