Best place to start investing -multifamily.

31 Replies

I’m starting to invest and doing it at a distance in multifamily. I’m trying to narrow down where to start building a team and analyze deals.

I’m think of outside of Denver, outside Indianapolis and Ohio -outside of Columbus/cinnci.

If you were a starting out and doing it at a distance, where would you start and why?

I know I’ll get questions based on experience, how much money do I have etc- ready to answer as I have many options.

Denver seems like a terrible place to start. That market has been sky-rocketing for years and I think it's starting to cool off, which is a bad time to jump in.

I would look at smaller markets within 30 minutes of a major market that is still on the upswing.

Why not boise? 

If I were to invest at a distance it would be places where I have boots on the ground. Primarily other places I've lived before, know the neighborhoods and have some kind of network.

@Joe Moffett - welcome!

When you say multi-family, do you mean residential (2-4 units) or commercial (5+ units).

Whatever direction you go, you'll want to look for solid economic fundamentals and, as you said, a great team.

I've been investing in Indianapolis this year and am personally a fan of that market.

I'd agree with @Nathan G. - Denver would be a challenging place to start. It's been overheated for years and I imagine cash flowing there would be a real challenge.

Also, what about your local market? Starting out long distance investing is not for the faint of heart. I cut my teeth investing in my local market, and then branched out once I had a decent grasp of what constituted a good investment.

Originally posted by @Joe Moffett :

I’m starting to invest and doing it at a distance in multifamily. I’m trying to narrow down where to start building a team and analyze deals.

I’m think of outside of Denver, outside Indianapolis and Ohio -outside of Columbus/cinnci.

If you were a starting out and doing it at a distance, where would you start and why?

I know I’ll get questions based on experience, how much money do I have etc- ready to answer as I have many options.

 Cincinnati Ohio is great since that's where I invest in :)

Rents are increasing, cap rates are still high and still getting compressed so there are still MF opportunities

There's a report in Washington Post that says that by the year 2040, 8 states will have 50% of America's population. Will those states be good to invest in? Not necessarily but that study is a good place to start:

https://www.washingtonpost.com/news/politics/wp/2018/07/12/in-about-20-years-half-the-population-will-live-in-eight-states/

@Joe Moffett

I would stack up your short list against the following key indicators-- population and job growth, diversified job market, business friendliness, market cycle @ the local level. As other folks above mentioned, familiarity with the area and/or strong partners should also factor into your decision. 

@Joe Moffett get started in a market you or your partners know really well. You can find good deals anywhere based on how much effort you put in. Getting an average deal in an area you don’t know inside and out will probably not be a good way to start.

@Nathan G. - I appreciate your input. Only reason I considered it was because I have boots on the ground there and one day want a winter home out there.

@Nick Baldo - yes its for my first one. 

@Emilio Ramirez - The market here is sky rocketing and others have a lower barrier for entry so I can do more with my funds. Only thing I have here is agents which I feel I can build those relationships anywhere.

@Andrew Davis - Yes, 2-4 units to start. I like Indy and Ohio. Ohio I have boots on the ground too. Its more of a challenge in the boise market to find off market deals. Cant do direct mail, bandit signs. Can connect with agents and brokers and divorce attorneys which I plan to do. I know its not ideal to start at a distance but maybe Im missing something?

@Michael Blank Really appreciate it. Very interesting article!!

@Pamela Villa  Thank you. Definitely will be looking more into this. 

Appreciate all the feedback.

@Remington Lyman - I appreciate it. Lets connect.

@Genna Golden - that was my thought process about Denver. Good distinction.

@Danny Randazzo - Totally agree. I just don't know any market well. Maybe my small local market but not to well. I figured if I picked a market or two and studied everything about it and connected with others I could own it. Am I off? I do have a buddy in Ohio I may partner with. 

One of my mentors suggested I don't partner with a buddy in Ohio and I can do it on my own. Im curious to everyones thoughts on partnership? Or should I create a post on it. Either way I will make it happen - I see partnership as a way to spread risk and grow together. With clear outcomes and roles. An agreement for all aspects would be addressed with an attorney.

@Joe Moffett I second Columbus, Ohio as I am heavily vested in the market here personally. The market is on fire right now and we’re seeing major brands flooding our market (Google, Facebook) and other major national brands are already headquartered here (Nationwide, Cardinal Health, Big Lots, L Brands, Ohio State, and more). Columbus has been dishing out a lot of incentives to national brands to attract them and its working. And even better, year over year we’re seeing the city retain its talent from the dozens of colleges in Columbus and surrounding suburbs. Columbus is no longer a college town, it’s a burgeoning city! Worth a look!

I would recommend looking into Indianapolis, it affordable and has lots of growth happening. I work with a lot of out-of-state investors, I'm an investor here myself too. 

@Joe Moffett First, I'd make sure that I have strong partners in that market after my initial due diligence on the market fundamentals. 

For smaller MF, I think OH is a good place to start. For larger MF assets, I'd look at the great state of TX with the exception of DFW, of course. 

Originally posted by @Ola Dantis :

@Joe Moffett First, I'd make sure that I have strong partners in that market after my initial due diligence on the market fundamentals. 

For smaller MF, I think OH is a good place to start. For larger MF assets, I'd look at the great state of TX with the exception of DFW, of course. 

Texas is great, I like most of the southeast. Larger markets still have good fundamentals but may be overpriced, so secondary and tertiary can still make sense. 

@Joe Moffett you can absolutely study, learn and network in any market you decide to invest in, it just takes a little longer to build the knowledge and network. As far as partnering, you need to decide what your goals are. For example, if you want to do a few deals a year then doing it alone is reasonable but if you want to scale a business then having a partner or two will get more and or get you further faster. I don't think you need to sign any partnership docs or build websites, etc. I think you just partner on a deal by deal basis when the team finds a great opportunity. 

@Joe Moffett We've done a fair amount in Kansas City. KC in one market where you can get MF in decent neighborhoods. A lot of the multi families in many markets are in the hood and don't perform.

@Mike D'Arrigo piggy backing what he said, KC is a cheaper market compared to others and returns are good. There has been more OOS investors in this market but many opportunities. I work with many OOS to get multi and commercial properties.