BP Community: What State/Cities are best for MF properties?

9 Replies

BP Community: What State/Cities are best for MF properties?

I have talked to several agents across multiple States and many of the Agents I talk to seem to be pushing me towards SFH? I hear a lot of MF's in this City or Neighborhood don't seem to work, if I were you I would get into SFHs.

Do you think this is because MF inventory is less than the SFH inventory in certain markets and therefore they are pushing towards a greater chance on SFH sale? 

Or should I listen to them and look for markets where MF deals make more sense? If that is the case...

What State/Cities are best for MF properties?

Thanks in advance! 

It depends on the size when you say multifamily.  If you are talking quads or less, than your brokers may have a point.  If you are talking about larger units, I think your brokers don't have access to these type of properties.  If you ask a multifamily broker the same question, they are going to give you a different answer.  Ask investors instead.

I would say the markets that make SFH rental dynamics attractive are similar to what makes MF attractive. Location, employment, population growth, new jobs, etc... Once you pick an area, then you can focus on whether you want SFH or MF. But I think the dynamics are similar since they are competing for the same rental base.

I personally looked at SFH first but when I realized how many I would need to buy in order to accomplish my goals, I couldn't physically close that many deals in a year. That's why I decided to do multifamily originally.

Hello @Luke Chung I am looking at MF quads. 

My goals is leverage MF buy and hold strategy to achieve my goals too. My plan is to start small quads and go bigger as I build my experience, cash flow and equity. 

I just thought it weird that I have had two similar conversions with two different agents in two different market in the last three days. I am in the Market research phase trying to find the right growth market that I want to invest in?

To to recommendations to research? 

Thanks

@Richard Naimy They are saying that because A) it's easier for them to sell a SFH. B) they know you're a beginner and they don't want to invest the time needed on MF. C) they sell SFH 99% of the time unless a MF falls into their lap. They know right now they could show you a half dozen SFH "deals" but currently have zero MF. D) they don't know what they are talking about. Most realtors don't own ANY real estate.

@Richard Naimy I have some episodes on my channel on YouTube (Luke Chung) that gives my advice on how to look for properties and what markets.  If you are interested, check out Episode 12 and Episode 43.  Hope that helps.

Salesmen typically try and sell what they have in inventory and badmouth the items they don't have access to. This goes for salesmen selling anything.

I am not saying they are lying, I have just found this to be true.

I think it depends because opportunities are everywhere for Multifamily.
For example my quad I acquired was in Phoenix. The seller had bought the property with the intention to sell it for the appreciation and not the rent income. Seller had tenants who were paying low rents, I saw an opportunity and placed an offer then I got the property and increased the rents based on market rates.

My 2cents - it totally depends on the market in that area. Here in FLorida, in the 2010-2015, I sold almost exclusively SF investor homes (about 200 of them, to investors from Cali, and abroad), and as values rose, and ROI's dropped, I found the natural progression was toward multi, to get worthwhile returns for my clients. So 4 units became the smallest I dealt with for a while, and I'm squarely in multifamily now. Further, because permitting for construction of multifam buildings are non-existent in the $750-$1000 per month range, this is a solid category to buy in, here in FL, because overbuilding won't dilute values or rents.... so the economics of each area are huge in determining which markets to invest in. Of course, we salespeople often recommend what we know best - and I may be no different ;) - but again, smart investors always look at the best options in the nation, and decide where the best place to put our investment dollars are... factoring in the returns, the potential for appreciation, and most importantly, the strength of the team on the ground. I'd love to connect with you Richard, if you'd like to learn about the Florida market.

@Todd Dexheimer thanks for sharing the two great articles, exactly what I was looking for. 

I appreciate your help and support. 

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