List of good multi-family markets

Multi-Family and Apartment Investing
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List of good multi-family markets

Hedi B.
Property Manager · Los Angeles, CA · Member since 2019 · 11 posts · 4 votes

Hi all,

I just listened to BP podcast episode 227 with Joe Fairless. Joe went from a few SFRs to $130M by the time he was 35 years old.

In the episode, Joe unpacks three indicators that help him find "good" multi-family markets. He explains that some of these data points are easier to get access to than others, and based on some very light research this still seems to be the case. 

I personally love finding and putting together useful datasets, GIS maps, and organizing data that lives in different places, especially when the end product means a more insightful and accessible source of information.

My question to you is: if I can bring together the data for the indicators Joe shares and present it in a digestible format (ex: Excel CSV file), would you be interested in a copy of the dataset? 

Here is a summary of the three indicators Joe uses to qualify multi-family markets and a few details he shares about them in episode 227.

1. Unemployment, including how it's trending and vs. national average.

2. Employment diversity. Joe believes no one employer or industry should make up more than 15-20% of jobs. Based on some preliminary research, this data looks fragmented and lives on different county and/or city labor statistic webpages.

3. Supply and demand. Joe recommends looking at absorption rates based on existing and upcoming inventory. He mentions that you may need access to a platform like CoStar or receive this information from your RE agent or a property management company.

My goal is to get as granular and go as wide as possible, offering the data at the city or metro level, and, if it's not too much of hassle, ideally nationwide.

Let me know your thoughts, if you have any questions, suggestions, or if you know where all this data might already exist - which would spare me and possibly others a lot of data wrangling :)

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Charles Seaman
Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
6y

@Hedi B. The Milken Institute produces an annual report on the best-performing cities.  It focuses largely on job growth and high-paying jobs, amongst other things.  It doesn't include the supply and demand information, but it can be easily obtained through CoStar like Joe said.  There's a link below to the most recent report if you want to check it out.  The new report will probably come out somewhere around late December.

2018 Best-Performing Cities Report

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  • Charles Seaman
    Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
    6y

    @Hedi B. The Milken Institute produces an annual report on the best-performing cities.  It focuses largely on job growth and high-paying jobs, amongst other things.  It doesn't include the supply and demand information, but it can be easily obtained through CoStar like Joe said.  There's a link below to the most recent report if you want to check it out.  The new report will probably come out somewhere around late December.

    2018 Best-Performing Cities Report

    4Reply
  • Charles Seaman
    Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
    6y

    @Hedi B. The Milken Institute produces an annual report on the best-performing cities.  It focuses largely on job growth and high-paying jobs, amongst other things.  It doesn't include the supply and demand information, but it can be easily obtained through CoStar like Joe said.  There's a link below to the most recent report if you want to check it out.  The new report will probably come out somewhere around late December.

    2018 Best-Performing Cities Report

    0Reply
  • Joseph Firmin
    Rental Property Investor · Smyrna, GA · Member since 2018 · 974 posts · 645 votes
    6y

    Michael Blank also mentions reports that can provide some of this information. That said - to answer your question - yes. I'd be interested in seeing that data. Thanks!

    1Reply
  • Taylor L.
    Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
    6y

    I'm one of Joe's coaching clients, and based on my experience researching these factors - you should research the numbers yourself. Government data sources are a good place to start. There are sources that do their own research, which is helpful to back up your research and helpful to present to your investors. 

    1Reply
  • Hedi B.
    OP
    Property Manager · Los Angeles, CA · Member since 2019 · 11 posts · 4 votes
    6y
    Originally posted by @Charles Seaman:

    @Hedi B. The Milken Institute produces an annual report on the best-performing cities.  It focuses largely on job growth and high-paying jobs, amongst other things.  It doesn't include the supply and demand information, but it can be easily obtained through CoStar like Joe said.  There's a link below to the most recent report if you want to check it out.  The new report will probably come out somewhere around late December.

    2018 Best-Performing Cities Report

    Thanks for the Milken report Charles! 

    Agreed - it would be helpful to layer some absorption rate (and population growth) stats to determine supply and demand.

    1Reply
  • Charles Seaman
    Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
    6y

    You're welcome @Hedi B.

    0Reply
  • Hedi B.
    OP
    Property Manager · Los Angeles, CA · Member since 2019 · 11 posts · 4 votes
    6y
    Originally posted by @Joseph Firmin:

    Michael Blank also mentions reports that can provide some of this information. That said - to answer your question - yes. I'd be interested in seeing that data. Thanks!

    Hadn’t heard of Michael Blank. Thanks for the info Joseph! 

    I found an article on Michael’s website where he recommends looking at employment growth and good returns. For anybody interested, Michael also lists his 12 top markets for multi-family investing in this article. Here’s the link (fyi - this article was published in Aug 2019 - so pretty recent): https://themichaelblank.com/vi...

    On another note, Michael shares an interesting statement I noticed to be true in at least one market I looked at: the often hard to justify cost of building B and C class multi family properties.

    In Miami, for example, building such a project west of the I-95 (less desirable but cheaper neighborhoods to buy lots) can cost more than what someone has paid for a similar, existing property. You really see this when you recalculate sale price/unit on multi-parcel transfers.
     

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  • Hedi B.
    OP
    Property Manager · Los Angeles, CA · Member since 2019 · 11 posts · 4 votes
    6y
    Originally posted by @Taylor L.:

    I'm one of Joe's coaching clients, and based on my experience researching these factors - you should research the numbers yourself. Government data sources are a good place to start. There are sources that do their own research, which is helpful to back up your research and helpful to present to your investors. 

    I’m by nature a do your own research, believe it when you see it kind of guy, so this totally works for me.

    Btw, how was your experience being coached with Joe? Any learnings you’re willing to share here that helped you operate at a higher level?
       

    0Reply
  • Taylor L.
    Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
    6y
    Originally posted by @Hedi B.:
    Originally posted by @Taylor L.:

    I'm one of Joe's coaching clients, and based on my experience researching these factors - you should research the numbers yourself. Government data sources are a good place to start. There are sources that do their own research, which is helpful to back up your research and helpful to present to your investors. 

    I’m by nature a do your own research, believe it when you see it kind of guy, so this totally works for me.

    Btw, how was your experience being coached with Joe? Any learnings you’re willing to share here that helped you operate at a higher level?
       

    Compared to other coaching programs, we get significantly more access to "The guy," as Joe's students. Joe's approach to the business is different in many ways from the other guys out there. Few, if any other programs encourage their students to become thought leaders as much as Joe does. He probably has the strongest brand building expertise of any of the multifamily thought leaders out there.

    1Reply
  • Tj Hines
    Specialist · Tampa, FL · Member since 2012 · 933 posts · 492 votes
    6y

    @Hedi B. There are a ton of good markets out there. You're smart for looking outside of Cali.

    We tend to focus our efforts in markets located in the Southeast and a red beam dot on the Florida markets and different sub markets located with in the florida markets

    1Reply
  • Erik Hatch
    Rental Property Investor · USA · Member since 2018 · 325 posts · 222 votes
    6y

    @Charles Seaman is there a 2019 report yet?

    1Reply
  • Charles Seaman
    Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
    6y

    @Erik Hatch not yet.  It'll probably be released in December or January.

    1Reply
  • Jasmine Hu
    Rental Property Investor · Tysons, VA · Member since 2015 · 73 posts · 45 votes
    6y

    @Charles Seaman hi could you please share 2017 report? I feel most likely the cities on the list will repeat. The key is to see the Change, not the list itself.

    Plus for  people who just starts this apt thing,  Very valuable to invest locally even if the return is lower. For me I focus investing my own money , sometime with friends as minor partner. Each partner brings some value, I don’t plan to charge general partner fee yet I do have controlling vote rights.

    2Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    6y

    One thing folks need to remember - many folks were smart/lucky enough to start investing when prices were REALLY low during and after the Great Recession and grew their wealth more than might be possible today. Also is that number assets minus liabilities or just the value of his assets? 

    Keep this in mind when looking at what others have done in the past. 

    That said, the best market is the one you know. It is totally possible to make money in any market. 

    The indicators he specified are the general indicators that CRE investors use. However! For someone just starting out I would suggest investing in what you know. If you live in a high price area you may need to start small and build over time. I suggest finding a CRE agent that will help you understand your local market.

    I lived in the Bay Area of CA and knew I would have a hard time there, so I spent 6 months researching close by areas that might better fit my goals - I settled on Oregon and moved up here and have not looked back! 

    Good luck in whatever you decide to do. Remember that no one will take care of your money better than you and that most folks want to make money off you so keep that in mind too!  :)

    1Reply
  • Hedi B.
    OP
    Property Manager · Los Angeles, CA · Member since 2019 · 11 posts · 4 votes
    6y
    Originally posted by @Jasmine Hu:

    @Charles Seaman hi could you please share 2017 report? I feel most likely the cities on the list will repeat. The key is to see the Change, not the list itself.

    Plus for  people who just starts this apt thing,  Very valuable to invest locally even if the return is lower. For me I focus investing my own money , sometime with friends as minor partner. Each partner brings some value, I don’t plan to charge general partner fee yet I do have controlling vote rights.

    The 2018 report includes tables that reflect change in ranking from 2017 to 2018 for a number of MSAs. Also, there are a number of cities on the 2018 report that are ranked based on data from as far back as 2011 all the way to 2018, so it looks like performance from prior years has been factored in.


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