Best cities to invest in (Multifamily)

38 Replies

I might be biased as I am in Charlotte area and would suggest the adjacent city Gastonia, NC as a good investment place. Gastonia is close to Charlotte, it is absorbing the overflow from Charlotte. The house price has ramp up too much as Charlotte does. In addition, there is a silver light rail line project has been approved. The line runs from Gastonia to Charlotte uptown. So I believe it is a good place to invest. Good luck. 

I follow the old story/proverb to "dig for diamonds in your own back yard," so I invest in the city/metropolitan area in which I live.

The reasoning behind this are many.  I will cover several of the ones I think are key to understanding this strategy.

1) You can more easily keep an eye on a property that is near where you live.

2) You can know the land lord / tenant law in your one state easier than several states.  The same is true of judges, who will make or break your case when it comes time to enforce your leases.

3) You can more easily develop and maintain face-to-face relationships with contractors, investors, agents and city leadership in your area.

4) Even if you hire a manager, you will have to inspect how your manager is performing in person at lease 3-4 times per year until you have several years experience with that person/company.  We call this "managing the manager."  It's a lot less expensive and time consuming to be close by vs. flying all over the place.

5) It is often easier to attract "local money" to local projects when you live in that location as well.  It shows you have a vested stake in the community.  Some people won't care, but others will.

6) It requires less time and effort to maintain current knowledge of local politics, development, and economic trends in one area close by vs. many areas scattered all over.

To decide if you want to invest outside your area, you must find a rate of return in a market that more than adjusts for the extra time, expense, and hassle factor of you having to deal with all the above.  Some investors claim to do that, but it can be hard to measure. Too, what is it worth to be at home with your family, friends, and community each night vs. a "road warrior" investors travel the country and missing out on the joys and triumph in your home town?  To me, I live where I like to be surrounded by the people I love.  For a VERY SUBSTANTIAL GAIN, I would consider brief out of town trips, but this out of town investing seems to require a lot more than that.

We each have to decide.  I hope the factors I've laid out will benefit as you make your decision.

I agree first invest in your home market.  Watching over properties that are close to home is much easier than traveling. I am fortunate to be living in Atlanta a market that has not stopped expanding in the last 35 years.  This growth has created many opportunities. 

Look for cities with a growth in population that is supported by business development.  Like Wenda Wang mentioned above, Charlotte, Atlanta, Nashville, Greenville, etc.  are all great markets to invest in.  I also invest in these markets via a syndication.  Finding a good syndicator is a great way to invest in markets that you are not living in and seeking out opportunities.

Hey @Zaid Bender , I'm working out of Nashville so I'm responding with a little bias but the business growth throughout the greater Nashville area makes it a top investment location. Nashville's current construction for office space is one of the highest in the country allowing heavy relocation for larger companies to open new offices/HQs. Post Covid, with more people looking to go back to work, Nashville has positioned itself to be a top current investment for long term appreciation. 

Invest in high growth markets. Ask yourself, would you want to live in that city? Or own a business in that city? An apartment complex is a business so pick your markets wisely. 

I'm also huge on Central FL and want to move there within ~5 years or so.  For me this includes Tampa/St Pete/Sarasota/Ft Myers/Orlando and also up north in Jacksonville.

Can't argue with population, job, and income growth in the past 5 years in addition to the 2-3 year outlook.  The downside is apartment prices reflect this :)

Markets that are in landlord friendly states.  Markets that are growth, but don't just look at % growth.  The market needs to be large enough that it will be fairly easy for the property to sell in the future.  

As remote work becomes permanent and out of state is okay, does it make sense to scope out the markets that are most attractive to tech and remote workers? Per this article see the excerpt below on the top cities.  I also found the second article helpful as it ranked the top cities for remote work based on criteria like broadband speed and affordability highlighting some cities/markets not on my radar.

The key beneficiaries of this year’s tech migration are less buzzy cities like Madison, Wisconsin; Richmond, Virginia; and Sacramento, California. These places don’t get much play in the news, but they’re attracting tech talent at significantly higher rates than they were last year.

If you'd like to continue to work remotely post-pandemic, here are the best and worst cities to live in, according to a new report from LawnStarter.

We are actively targeting projects in growing markets in Indiana (our backyard), Lexington, KY, Huntsville, AL, several growing markets in Michigan, and several growing markets in Ohio. 

Who is attending the MFIN conference? Neal Bawa gave a shout out to Indianapolis a couple times. I can see Indy gaining a lot of attention in the coming years. Especially if Neal Bawa keeps mentioning it :) 

Texas continues to dominate in the large multifamily space. Most of the sunbelt states remain very attractive for multifamily investors right now. 

For Texas specifically, we are seeing many employer groups move their HQs to Texas along with their workforce and the pandemic has only increased corporate relos to Texas. In addition, there are many other reasons driving the growth such as no state tax income and a very landlord and business-friendly state. 

Plus, everything is bigger in Texas!!! 😊 

Thanks for this thread. Can folks suggest what data you look at for starting multi family out of state investors and we’re you get it. I’m targeting cash flow and strong cash rates for the long term.

@Marc Rice Why are you so bullish on multifamily in Columbus, OH? I am not saying it is a bad market, but just curious about your rationale. 

Originally posted by @Bastian Kneuse :

@Marc Rice Why are you so bullish on multifamily in Columbus, OH? I am not saying it is a bad market, but just curious about your rationale. 

As an investor, agent, and seeing the growth first hand since 2015 here in Columbus, it continues to grow with great appreciation and cash flow. The barriers to entry are very low here with homes starting at $50k and multi-family around $100k. Overall it is just a great growing market with lots of companies moving here and a strong education system as well.