Average Cost per Unit - Apartments

Multi-Family and Apartment Investing
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Average Cost per Unit - Apartments

Bryce Witcher
Rental Property Investor · Phoenix, AZ · Member since 2020 · 23 posts · 7 votes

Hi Guys:

I'm trying find some market data and need help. I want to fill in the missing info indicated my the question marks below. According to the latest Marcus & Millichap report, 2020 North America Multifamily Investment Forecast, page 66, I was able to find some of the data I was looking for. Does anyone have the missing info?

Thanks.

Market Average Apartment Cost per Unit


Boston $301,469
Charlotte $121,026
Chicago $153,565
Cincinnati $54,082
Cleveland $61,043
Columbus $72,024
Dallas/Fort Worth $110,745




Akron, Ohio ?
Augusta, Ga. ?
Birmingham, Ala. ?
Dayton, Ohio ?
Fayetteville, Ark. ?
Little Rock, Ark. ?
Memphis, TN ?
Oklahoma City, Okla. ?
Scranton-Wilkes-Barre, PA ?
Toledo, Ohio ?
Tulsa, OK ?
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Greg Dickerson
Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
6y
Originally posted by @Bryce Witcher:

Hi Guys:

I'm trying find some market data and need help. I want to fill in the missing info indicated my the question marks below. According to the latest Marcus & Millichap report, 2020 North America Multifamily Investment Forecast, page 66, I was able to find some of the data I was looking for. Does anyone have the missing info?

Thanks.

Market Average Apartment Cost per Unit


Boston $301,469
Charlotte $121,026
Chicago $153,565
Cincinnati $54,082
Cleveland $61,043
Columbus $72,024
Dallas/Fort Worth $110,745




Akron, Ohio ?
Augusta, Ga. ?
Birmingham, Ala. ?
Dayton, Ohio ?
Fayetteville, Ark. ?
Little Rock, Ark. ?
Memphis, TN ?
Oklahoma City, Okla. ?
Scranton-Wilkes-Barre, PA ?
Toledo, Ohio ?
Tulsa, OK ?

Averages are meaningless in terms of market study or analysis. Kind of like relying on Zillow's Zestimate to determine the value of a property. Everything within a certain radius is used to generate an average without regard to type, style, class, age, condition, specific location etc. There are way to many variables and every deal needs to be evaluated individually. That being said you can use google search,  Loppnet, Crexi and Costar among other to find out that information.

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  • Hadar OrkibiPro Member
    Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
    6y

    Hi @Bryce Witcher I didn't click on your link, but from reading what you posted i think the question is and answers are very broad!  The question doesn't specify what asset class within the location. 

    0Reply
  • Greg Dickerson
    Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Bryce Witcher:

    Hi Guys:

    I'm trying find some market data and need help. I want to fill in the missing info indicated my the question marks below. According to the latest Marcus & Millichap report, 2020 North America Multifamily Investment Forecast, page 66, I was able to find some of the data I was looking for. Does anyone have the missing info?

    Thanks.

    Market Average Apartment Cost per Unit


    Boston $301,469
    Charlotte $121,026
    Chicago $153,565
    Cincinnati $54,082
    Cleveland $61,043
    Columbus $72,024
    Dallas/Fort Worth $110,745




    Akron, Ohio ?
    Augusta, Ga. ?
    Birmingham, Ala. ?
    Dayton, Ohio ?
    Fayetteville, Ark. ?
    Little Rock, Ark. ?
    Memphis, TN ?
    Oklahoma City, Okla. ?
    Scranton-Wilkes-Barre, PA ?
    Toledo, Ohio ?
    Tulsa, OK ?

    Averages are meaningless in terms of market study or analysis. Kind of like relying on Zillow's Zestimate to determine the value of a property. Everything within a certain radius is used to generate an average without regard to type, style, class, age, condition, specific location etc. There are way to many variables and every deal needs to be evaluated individually. That being said you can use google search,  Loppnet, Crexi and Costar among other to find out that information.

    3Reply
  • Bryce Witcher
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2020 · 23 posts · 7 votes
    6y
    Thank you for some of the answers so far to my multi-family asset class questions. I am trying to gain some sort of market intelligence for these cities. I have been doing Google searches and going to Loopnet (and CoStar properties) and Crexi. That info just is not available... that is... unless I am missing something.
    0Reply
  • Hadar OrkibiPro Member
    Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
    6y

    @Bryce Witcher did you try to talk to local Brokers and fellow investors?

    Some larger Brokerage offer quarterly reports... they are very insightful.

    As mentioned, its almost irresponsible to answer, its juts not going to be anywhere near accurate.

    0Reply
  • Account Closed
    Real Estate Investor · Dallas, TX · Member since 2016 · 38 posts · 17 votes
    6y

    I think BP has a new "insights" service - not sure what pricing structure is like but might be worth a shot to ask them to do the research. 

    1Reply
  • Bryce Witcher
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2020 · 23 posts · 7 votes
    6y

    @Account Closed That is also a really awesome suggestion that had not occurred to me for some reason. I will contact the bigger brokers in those areas for more info.

    THANKS!

    1Reply
  • Hadar OrkibiPro Member
    Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
    6y

    @Bryce Witcher first you research A/ the market, you form the relationships and then put an investment plan...

    You cant put the cart before the horse... 

    0Reply
  • Bryce Witcher
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2020 · 23 posts · 7 votes
    6y

    @Hadar Orkibi  You are absolutely correct and wise about not putting the cart before the horse. I'm glad you mentioned that. The purpose of this exercise is to determine which 5 or 6 MSAs to prioritize above the rest first in order to then do a deep dive on the specific area's demographics, job growth, rents, vacancy levels, and other data. It would be great to be able to specialize in all the areas I mentioned, but from a time perspective, I want to be able to do my market research, and form the much-needed relationships with brokers and property managers, with the best prospects first. Thanks!

    0Reply
  • Hadar OrkibiPro Member
    Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
    6y

    @Bryce Witcher the first 2 points then is Price to rent ratio and Landlord friendly states.....

    1Reply
  • Bryce Witcher
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2020 · 23 posts · 7 votes
    6y

    @Hadar Orkibi Yes. Boston for example has average rent of $2,409 divided by average cost per unit of $304,206, giving us price to rent ratio of .8%. Contrast that with Cincinnati: $980 average rent divided by average cost per unit of $54,082, yielding 1.8%.

    Using this analysis will tell me that I should focus my time and energy on Cincinnati before Boston. I will then need to gather those same numbers for the question marked cities above to determine where the generalized opportunities might be.
    1Reply
  • Hadar OrkibiPro Member
    Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
    6y

    Once you are done with choosing a market, work 1 market hard and become an expert in that market. 

    1Reply
  • Bryce Witcher
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2020 · 23 posts · 7 votes
    6y

    @Hadar Orkibi More insightful advice. Thanks!!

    0Reply
  • Alex Forest
    Rental Property Investor · Henrico, VA · Member since 2019 · 265 posts · 155 votes
    6y

    @Bryce Witcher Searching for price to rent ratio may lead you to some of what you're looking for.  There are others that have compiled and done work in this area, using federal data like Bureau of Labor Statistics, analyzing several dozen cities and metro areas.  And the underlying prices may be available along with it. Depending on what you're looking for, knowing how rent compares to price provides a useful basis for comparison. Also, folks have looked at historical trends over time which can speak to affordability at a point in time, and over under value.

    0Reply
  • Hadar OrkibiPro Member
    Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
    6y

    @Bryce Witcher the bottom line is that you need to choose a market that fits your investment strategy.

    Are you a cash flow player or value add?

    Are you OK with no long term strong appreciation like some linear markets preform? or are you after long term appreciation? 

    One thing to keep in mined that every market has a sub market or neighborhood that outperforms... so horses for courses.. 

    0Reply
  • Bryce Witcher
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2020 · 23 posts · 7 votes
    6y

    @Alex Forest Yes, that is exactly the type of info I'm looking for. I spent several hours over the past few days on the Bureau of Labor Statistics, Bureau of Economic Analysis, Census Bureau, and U.S. Department of Commerce websites. I wasn't able to get what I'm looking for. Any specific ideas or links?

    @Hadar Orkibi Cash flow with value-add component. It is important, especially at this time in the cycle, to ensure that the properties perform well and can weather any down turns. I need to find the primary markets (outside of Arizona) before diving into the sub markets. Like you said... Be the expert.

    0Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    6y

    It would be a nice to see a breakdown by asset class 

    [email protected]786-494-6766
    Section 8 Launch52 Reviews
    WebsiteView Page
    0Reply
  • Will FraserPro Member
    Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
    6y

    This is a "painting with broad strokes" kind of discussion as other have pointed out.  Nevertheless I'll throw out some numbers from the always useful Price Edwards Annual Analysis from 2019:

    • Class A packed a higher punch than previous years at $117,775 value per unit.
    • Class B, also up substantially from previous years, traded at $97,372 per unit.
    • Class C showed a (imagine this) increase from previous years to a $48,267 value per unit.
    0Reply
  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    6y

    Depending on where you want to buy, I'd call an apt broker in that area.  Ask him for avg price RANGE and then comp sales at each price to get an idea.  Make sure he understands you have funds and are serious, otherwise, may not return your call.

    I'm in Portland.  I've sold stuff in 2019 <$100K/unit and there is stuff going for $400K/unit.

    I'd probably say $175K/unit average, then I'd send you what you get for $100K/$150K/$200K/$250K per unit.

    0Reply
  • Hadar OrkibiPro Member
    Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
    6y

    @Will Fraser. Are these stabilised numbers or value add? 
    dated apartments that need money spent on them to turn them around? 

    0Reply
  • Adriel Hsu
    Investor · Beaumont, TX · Member since 2016 · 171 posts · 277 votes
    6y

    If you are looking specifically for Class C value add, those markets you listed with ? should be between $55,000 - $80,000 per door

    1Reply
  • Bryce Witcher
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2020 · 23 posts · 7 votes
    6y

    @Adriel Hsu Yes. That is what I am hoping to find, as those cities have lower costs of housing/living.

    @Will Fraser Thank you for those numbers. I'm assuming those are for Oklahoma City and not Tulsa. I will check into the Price Edwards Annual Analysis.

    @Steve Morris Excellent tip. Thanks.

    0Reply
  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    6y

    Don't focus so much on price, but return, growth potential, stability, rent affordability, etc.

    Also, a cheap market appreciates slower. A 5% increase on $60,000/unit is $3,000, where it's $15,000 on a $300,000/unit apartment. Same goes with rental rates. 
     

    See my article on what to look for when picking a market: https://www.biggerpockets.com/member-blogs/10145/83188-finding-emerging-markets

    0Reply
  • Bryce Witcher
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2020 · 23 posts · 7 votes
    6y

    @Todd Dexheimer Right. Those points are very important. In this case it will be forced appreciation. I don't think we are in the Phase 3 Hypersupply quadrant just yet, but just in case, our next investments need to be able to weather that storm. Very good article.

    0Reply
  • Ryan Hayhurst
    Rental Property Investor · Oklahoma City, OK · Member since 2020 · 24 posts · 16 votes
    6y

    @Todd Dexheimer Todd, that was a great article, thanks for publishing. Based on your analysis what would list as the top 5 markets to invest in smaller MFs (< 50 units)?

    0Reply
  • Todd Pultz
    Rental Property Investor · Dayton, OH · Member since 2019 · 293 posts · 440 votes
    6y

    @Bryce Witcher I think most others said it, but I never look at price per door, rather I’m looking for the return and cash flow. In Dayton, OH we have a unique market where C class can sell for 12k a door or 40k per door, so it is extremely hard to use that as a factor. The biggest hurdle in these smaller affordable markets is forcing appreciation for refi or Brrrrrr. It works if your going to sell, but because the market still has many distressed properties selling to guys like me, our comps stink and it’s hard to get an accurate appraisal. For us, if the cash flow is right and the debt service is right, we buy. If either are out of line, we pass. If you need any information in this area, let me know! Have a great one!

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