Best markets for rehab/value-add multifamily deals?

4 Replies

I'm considering relocating in the near future strictly for the purpose of investing/building a portfolio of rental properties.

I'm specifically interested in using the BRRRR strategy on residential 2-4 unit properties and 5+ unit commercial deals.

I'm looking for assets in desirable C+/B- or better areas so no section 8, high crime or low income type of neighborhoods.

Rents must meet the 1% rule and I'd like to cash flow $200/door after refinancing once the property is rented/stabilized.

I'm trying to find a market where deals are more readily available than here in South Florida where it's very competitive.

If you were gonna pack up and move somewhere strictly to invest in rehab/value-add multifamily where would you go?

Am I looking for a unicorn market that doesn't exist or are there investors here on BP regularly finding these deals?

I should add that I'm looking for deals where I can be all-in at no more than 70% ARV.

This way I'm able to refinance my initial capital back out once it's fully rehabbed/rented.

Which markets have inventory of distressed/undervalued/under-performing multifamily assets?

Apparently nobody is executing the BRRRR strategy on value-add multifamily deals around here!

@Brian Garrett the easy days of finding markets like that are over.  5 years ago they were everywhere. 3 years ago they were everywhere in the Southeast. 3 years ago they were everywhere in the midwest. I think there are still probably some decent markets where you can execute a strategy like that in both the southeast and the midwest but they are smaller markets and harder to find.

If you can find a decent secondary or tertiary market with good population growth where the prices still haven't taken off that would work. But that will take some analysis and honestly I don't think you'll find much.

Instead, maybe look for a smaller market with some kind of catalyst.

@Jeff Kehl I second this. I think you’ve got to find a secondary or tertiary market with a ton of population growth and jobs coming. Think about submarkets that are near places where RE is hot. What about yet unknown markets outside of Salt Lake, Denver, Austin, or Phoenix? If those markets are growing population growth is coming! Also you could find a stable smaller town where there is a stocks of small multis. Take a look at demographic data and consider a road trip!