Top 10 Markets for Multifamily Real Estate Returns

Multi-Family and Apartment Investing
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Top 10 Markets for Multifamily Real Estate Returns

Ellie Perlman
Multifamily investor 路 Boston, MA 路 Member since 2017 路 281 posts 路 521 votes

As we continue to navigate through these recent economic changes, there鈥檚 been a multitude of speculation on what the impact will be on real estate investing. Granted, being a multifamily syndicator and investor myself, I am biased; yet, when it comes to real estate investing, multifamily continues to live up to its reputation of being one of the historically safest and most reliable asset classes there is.

According to the Newmark Knight Frank 1Q2020 US Multifamily Capital Markets Report, multifamily total returns averaged 5.10% in the last year. The key to capitalizing on this is selecting the strongest and highest performing markets. I personally focus on opportunities in Texas, Florida, and Georgia, where average returns can commonly range from 7%-9% or more. When a strategy for maximizing returns is effectively implemented, a multifamily investment can prove profitable even through economic shifts, as we are seeing in our current portfolio.

Which markets are leading the charge? Here are the top 10 markets in the last 12 months for returns on multifamily investments:

10. Seattle, WA

Overall Population: 637,850

Annual Total Return: 6.02%

Average 2 BR Rent: $1,690

Mean Income: $67,365

9. Palm Beach, FL

Overall Population: 8,344

Annual Total Return: 6.04%

Average 2 BR Rent: $1,418

Mean Income: $105,700

8. Minneapolis, MN

Overall Population: 394424

Annual Total Return: 6.70%

Average 2 BR Rent: $1,150

Mean Income: $50,767

7. Atlanta, GA

Overall Population: 440,641

Annual Total Return: 6.80%

Average 2 BR Rent: $1,190

Mean Income: $46,439

6. Denver, CO

Overall Population: 633,777

Annual Total Return: 7.73%

Average 2 BR Rent: $1,350

Mean Income: $51,800

5. Charlotte, NC

Overall Population: 774,807

Annual Total Return: 8.07%

Average 2 BR Rent: $1,140

Mean Income: $53,274

4. Tampa, FL

Overall Population: 348,934

Annual Total Return: 8.24%

Average 2 BR Rent: $1,280 Mean Income: $43,740

3. Orlando, FL

Overall Population: 250,224

Annual Total Return: 8.54%

Average 2 BR Rent: $1,280

Mean Income: $41,901

2. Austin, TX

Overall Population: $864,218

Annual Total Return: 8.69%

Average 2 BR Rent: $1,461

Mean Income: $55,216

1. Phoenix, AZ

Overall Population: 1,490,758

Annual Total Return: 13.73%

Average 2 BR Rent: $1,100

Mean Income: $46,881

Sources:

Newmark Knight Frank 1Q2020 US Multifamily Capital Markets Report

http://www.usa.com/

https://www.apartmentlist.com/

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Dan BurstainBusiness Member
Real Estate Agent 路 Austin, TX 路 Member since 2014 路 360 posts 路 331 votes
6y

I think it is a nice list and thank you for sharing it.  The only thing it is missing is year over year.  I think the Annual Total Return is more of a roller coaster ride for cities like Phoenix and those in Florida vs. what you see in Austin with the consistent steady rise.  Austin was over the housing crisis about 15 months after it hit there where some cities like Phoenix have just gotten back to those numbers in the past year or two.  So investment timing and selling is critical in those cities.

[email protected]512-588-3260
Dan Burstain, Investment Realtor51 Review
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  • Dan BurstainBusiness Member
    Real Estate Agent 路 Austin, TX 路 Member since 2014 路 360 posts 路 331 votes
    6y

    I think it is a nice list and thank you for sharing it.  The only thing it is missing is year over year.  I think the Annual Total Return is more of a roller coaster ride for cities like Phoenix and those in Florida vs. what you see in Austin with the consistent steady rise.  Austin was over the housing crisis about 15 months after it hit there where some cities like Phoenix have just gotten back to those numbers in the past year or two.  So investment timing and selling is critical in those cities.

    [email protected]512-588-3260
    Dan Burstain, Investment Realtor51 Review
    WebsiteView Page
    6Reply
  • LeAnn RileyBusiness Member
    Real Estate Broker 路 Minneapolis, MN 路 Member since 2015 路 116 posts 路 67 votes
    6y

    Yeah! Minneapolis made the list. Thanks. We have so much adversity going on right now. 

    The market is HOT, HOT, HOT. Listings are flying with 10 to 20 offers within a few days, not enough inventory. People moving toward the suburbs. Rents are remaining high and landlords report payments at above 97%. Also, the county has put in place programs to help those who are struggling to pay rent. The big dive is in commercial properties and larger multifamily properties. Proactive landlords are the winners. Communicate with your tenants and it's much easier to solve issues on the front end, rather than the back end. Still have to wait until July 12 on the eviction moratorium.

    8. Minneapolis, MN

    Overall Population: 394424

    Annual Total Return: 6.70%

    Average 2 BR Rent: $1,150

    Mean Income: $50,767

    0Reply
  • Matt Berklacy
    Rental Property Investor | Realtor 路 Jacksonville FL | Savannah Ga |Raleigh NC 路 Member since 2017 路 467 posts 路 161 votes
    6y

    馃

    0Reply
  • Ray Mulli
    Investor 路 Minneapolis, MN 路 Member since 2014 路 133 posts 路 29 votes
    6y
    Originally posted by @LeAnn Riley:

    Yeah! Minneapolis made the list. Thanks. We have so much adversity going on right now. 

    The market is HOT, HOT, HOT. Listings are flying with 10 to 20 offers within a few days, not enough inventory. People moving toward the suburbs. Rents are remaining high and landlords report payments at above 97%. Also, the county has put in place programs to help those who are struggling to pay rent. The big dive is in commercial properties and larger multifamily properties. Proactive landlords are the winners. Communicate with your tenants and it's much easier to solve issues on the front end, rather than the back end. Still have to wait until July 12 on the eviction moratorium.

    8. Minneapolis, MN

    Overall Population: 394424

    Annual Total Return: 6.70%

    Average 2 BR Rent: $1,150

    Mean Income: $50,767

     Moving to suburbs did you say......

    This is available for lease option 

    https://www.zillow.com/homedet...

    0Reply
  • Bruce Runn
    Investor 路 Minneapolis, MN 路 Member since 2014 路 743 posts 路 927 votes
    6y

    @LeAnn Riley

    Moving to the suburbs?  LOL-that pitch doesn't hold water.

    0Reply
  • James Hamling
    Real Estate Broker 路 Minneapolis, MN 路 Member since 2011 路 5k+ posts 路 6k+ votes
    6y
    Originally posted by @Bruce Runn:

    @LeAnn Riley

    Moving to the suburbs?  LOL-that pitch doesn't hold water.

     I believe people are moving to the suburbs, I don't see it in any significant or marked increase to what it was before though.... so your both right, lol. 

    1Reply
  • Charlie Rushton
    Real Estate Investor 路 Dallas, TX 路 Member since 2015 路 50 posts 路 11 votes
    6y

    Ellie, Great info and thanks for the post. Currently looking the PHX market so good to know looking in the right places.

    0Reply
  • Ben Leybovich
    Rental Property Investor 路 Phoenix/Lima, Arizona/OH 路 Member since 2012 路 4k+ posts 路 4k+ votes
    6y

    Hmm Phoenix looks pretty good. @Ellie Perlman - where are you buying right now?

    0Reply
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