Top Multifamily Markets in 2021 and Beyond

Multi-Family and Apartment Investing
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Top Multifamily Markets in 2021 and Beyond

Todd Dexheimer
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes

I hear so many people asking what the best markets to invest in are. First, my answer is look in your own backyard to make sure that is not a good option. If you say, "thanks, but no thanks," to your home market, then you need to dig in:

1. Job creation, 2. Increase in population and future expected growth, 3. Building proposed (permits pulled), 4. Government planning 5. Affordability 6. Absorption rate and vacancy rate. 7. Rent affordability 8. Landlord friendly. One of the other major factors that I look at, is if there is opportunity to buy value add properties, meaning buildings are being sold in the asset class and size that I desire and there are building being sold at a discount due to a problem needing to be solved.

With that said here is my top 11: 

1. Tampa Bay, Florida

2. Jacksonville, Florida

3. Phoenix, Arizona

4. Raleigh, North Carolina

5. Atlanta, Georgia

6. Savannah, Georgia

7. Cincinnati, Ohio

8. Des Moines, Iowa

9. Memphis, Tennessee

10. Huntsville, Alabama

11. San Antonio, Texas

To see my full thoughts check out the articles: 

https://www.biggerpockets.com/...

https://www.biggerpockets.com/...

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Holly Barrett
Real Estate Agent · Dawsonville, GA · Member since 2017 · 206 posts · 144 votes
5y

I invest out of state and self manage remotely. When I had a rental 15 min from my house I physically went there twice a year approx. I figured it might as well be in another state as I could have outsourced those visits to someone else. #s are so much better where we invested than where we reside. I really don’t see a big difference. I use cozy and other tools to vet tenants. I have a trusted handyman show the properties and do walk throughs. I’m not saying it’s not without challenges. The renovation we have been working on has been especially challenging to do from a distance, but it has been a great learning experience and I’m confident my procedure will be tightened up the next time. There are markets out there with very little investor competition, that sounds like opportunity to me! Love those emerging markets.

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  • Erik W.
    Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
    5y

    I too am a fan of looking for diamonds in my own back yard.

    For starters, why would I live in an area that is not a good investment, has a sinking economy, lacks job growth and opportunity, etc.  In short, why would I live somewhere that is "bad" so that I would have to spend time, money, and effort finding somewhere else that is "good?"  Seems counter-intuitive, unless your goal is to minimize your housing expenses by settling for a backwater dump of a town in which to live.  I want to live in and thrive with my community; thus, it makes sense to invest where I live.

    Long distance investing....whew.  Lots of work!  I find enough challenges and opportunities where I'm at!  One of my major goals of investing is FREEDOM.  Traveling all over the place to try to beat out people who are natives in a market seems like much more hassle than would be worth it.  How would I as a newbie with only vague information from the internet accessible to anyone really get the scoop on good deals that local, experienced investors are missing?  I guess some folks have found ways to make it work, but I wonder too how many of them are putting in 90-100 hour weeks to get a moderately better performance vs. just living in a thriving community that already has much of what one is looking for elsewhere?

    Good luck to those who can make it work!

    3Reply
  • Jeffrey Donis
    Investor · Durham, NC · Member since 2020 · 1k+ posts · 691 votes
    5y

    @Erik W.

    I agree! Working in your backyard can make your deals run a lot smoother + if need be allow you to visit the property in a short amount of time v.s having to take a day+.

    I think you make a great point regarding living in an already great area with a rising population and a great economy. I live in the Raleigh/Durham MSA so it is one of our main markets + the Charlotte MSA is only a few hours away.

    0Reply
  • Will Kaufmann
    Flipper/Rehabber · Raleigh, NC · Member since 2018 · 76 posts · 67 votes
    5y

    The Raleigh market is relatively thin as far as available multi-family properties that are not larger apartment buildings. I recall seeing something like 1-2% of our net inventory is mutli versus single and that's incredibly low. We hardly see anything under 10 units hit the market and when it does, it sells very quickly.

    2Reply
  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Todd Dexheimer:

    I hear so many people asking what the best markets to invest in are. First, my answer is look in your own backyard to make sure that is not a good option. If you say, "thanks, but no thanks," to your home market, then you need to dig in:

    1. Job creation, 2. Increase in population and future expected growth, 3. Building proposed (permits pulled), 4. Government planning 5. Affordability 6. Absorption rate and vacancy rate. 7. Rent affordability 8. Landlord friendly. One of the other major factors that I look at, is if there is opportunity to buy value add properties, meaning buildings are being sold in the asset class and size that I desire and there are building being sold at a discount due to a problem needing to be solved.

    With that said here is my top 11: 

    1. Tampa Bay, Florida

    2. Jacksonville, Florida

    3. Phoenix, Arizona

    4. Raleigh, North Carolina

    5. Atlanta, Georgia

    6. Savannah, Georgia

    7. Cincinnati, Ohio

    8. Des Moines, Iowa

    9. Memphis, Tennessee

    10. Huntsville, Alabama

    11. San Antonio, Texas

    To see my full thoughts check out the articles: 

    https://www.biggerpockets.com/...

    https://www.biggerpockets.com/...

     Great post Todd, this is helpful. I invest here in Columbus, OH using the same criteria as mentioned above. 

    1Reply
  • Joshua McMillion
    Rental Property Investor · Madison, AL · Member since 2019 · 487 posts · 658 votes
    5y

    @Todd Dexheimer

    Great article Todd. I invest currently in Huntsville, AL, and have been looking at other markets on your list. I couldn't agree more with your analysis and really liked Mueller's Market Cycle Quadrant. For investors starting out Phase II and III are the most critical. Just because new construction is taking place does not mean the market can sustain the growth. It must be a balance of new residents coming in over steady periods of time. To fast, it drives the market out of the common sense investing range. To slow and the market could crash. Personally, I think Huntsville is in Phase II. 

    Sincerely 

    Josh 

    4Reply
  • Todd Dexheimer
    OP
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Erik W.:

    I too am a fan of looking for diamonds in my own back yard.

    For starters, why would I live in an area that is not a good investment, has a sinking economy, lacks job growth and opportunity, etc.  In short, why would I live somewhere that is "bad" so that I would have to spend time, money, and effort finding somewhere else that is "good?"  Seems counter-intuitive, unless your goal is to minimize your housing expenses by settling for a backwater dump of a town in which to live.  I want to live in and thrive with my community; thus, it makes sense to invest where I live.

    Long distance investing....whew.  Lots of work!  I find enough challenges and opportunities where I'm at!  One of my major goals of investing is FREEDOM.  Traveling all over the place to try to beat out people who are natives in a market seems like much more hassle than would be worth it.  How would I as a newbie with only vague information from the internet accessible to anyone really get the scoop on good deals that local, experienced investors are missing?  I guess some folks have found ways to make it work, but I wonder too how many of them are putting in 90-100 hour weeks to get a moderately better performance vs. just living in a thriving community that already has much of what one is looking for elsewhere?

    Good luck to those who can make it work!

    Why live in those places? Family. My wife will not move, because or family and friends are here. My options are to divorce my wife and leave my kids behind or to invest out of state. I choose the latter.  

    1Reply
  • Todd Dexheimer
    OP
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Will Kaufmann:

    The Raleigh market is relatively thin as far as available multi-family properties that are not larger apartment buildings. I recall seeing something like 1-2% of our net inventory is mutli versus single and that's incredibly low. We hardly see anything under 10 units hit the market and when it does, it sells very quickly.

    This list is for Multifamily (5+ units) and applies mostly to larger buildings.  

    0Reply
  • Darson GranthamBusiness Member
    Realtor · Des Moines · Member since 2018 · 304 posts · 253 votes
    5y

    As many have said above, within 2 hr drive in MOST markets you can find deals that fit your criteria.  As an investor-friendly agent here in Des Moines, I've talked more ppl out of investing in Des Moines and into looking at a market closer to where they live.  Not because I don't believe in Des Moines, but because many ppl see the bright and shiny object of another city and "the grass is always greener" mentality.

    That being said, if you absolutely wont invest somewhere more local, maybe because of the economy or the governmental laws in your state, I can attest, Des Moines does have properties that meet many investor's criteria.  Des Moines ISNT for folks who ONLY want the best cashflow in the nation.  That isn't here. But if you want a combo of growing/appreciating market and properties that can still cashflow.  This may be a good fit.

    Example: Listing today.. a 5 plex center of the city.  Rents for 2850/mo tenants pay many of the utilities.  List price 240K.  I would argue there is still room for another 200-300/mo rent increases and RUBS to set up. 

    On market, this deal is fairly common, off-market the numbers can get even better if you are patient and choose an agent who networks with owners who want to sell (and their agents) 

    [email protected]515-612-6013
    4Reply
  • Erik W.
    Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
    5y

    @Todd Dexheimer, you've given one of the (few) reasons that make sense to investing outside of one's living area.  *grins

    I would think the amount of time necessary to become an expert in any given large market like the one's you've listed, to maintain ongoing business relationships, and monitor the progress of a significant project would be more than my wife would tolerate.  But everyone's got their level of what they tolerate.  

    My advice above wasn't to you specifically so much as it was to any investor in general to consider this before pulling the trigger on the oft-touted route to wealth we hear so much of on the BP podcasts. 

    "Go West (or East or North or South), young man!" was the motto in the 1800's for how to seek one's fortune, and while today it is true there are certainly more profitable markets than the one I currently live in, I've found that I can still do very well and it keeps me home for supper every night.

    Again, good luck to those who can make the long-distance thing work!

    1Reply
  • Todd Dexheimer
    OP
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Erik W.:

    @Todd Dexheimer, you've given one of the (few) reasons that make sense to investing outside of one's living area.  *grins

    I would think the amount of time necessary to become an expert in any given large market like the one's you've listed, to maintain ongoing business relationships, and monitor the progress of a significant project would be more than my wife would tolerate.  But everyone's got their level of what they tolerate.  

    My advice above wasn't to you specifically so much as it was to any investor in general to consider this before pulling the trigger on the oft-touted route to wealth we hear so much of on the BP podcasts. 

    "Go West (or East or North or South), young man!" was the motto in the 1800's for how to seek one's fortune, and while today it is true there are certainly more profitable markets than the one I currently live in, I've found that I can still do very well and it keeps me home for supper every night.

    Again, good luck to those who can make the long-distance thing work!

    Going out of state has allowed me to become a much better business owner. It forced me to give up doing everything myself and focus on building a strong team. The travel is the only part that takes away from family time for me. When I was buying in state, I was working 60-80 hours/week. Now that I am out of state, I am down to 35-45 hours/week and has made me much more effective. 

    With that said, investing out of state is not for a newer investor, unless they have a partner in the area. My first out of state adventure as 8 years after I started in the business. 

    1Reply
  • Tanvir Sattar
    Rental Property Investor · Cincinnati, OH · Member since 2020 · 380 posts · 588 votes
    5y

    @Todd Dexheimer great insight! Happy to see Cincinnati made your list. 

    3Reply
  • Erik W.
    Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
    5y

    @Todd Dexheimer, again, more power to those who do this. 

    Certainly, I am not trying to tell you or anyone else to do things "my" way, which is local.  But I think it is interesting to discuss the topic. For example, by way of comparison, I only spend about 3-4 hours per week managing a portfolio of 44 units, and also a 77 unit self-storage facility.  I have done precisely what you say and made myself a better businessman through outsourcing and automation.  That strategy applies regardless of proximity.  It can (and should!) be done whether you live 1,000 miles away or 5 miles away if you intend on scaling at all.  Granted, you were forced to do it or go nuts, which I suppose is one advantage, but I had the same come to terms moment when I went past 15 units.  I was running ragged trying to keep up and realized it was time to get efficient or I'd have to stop growing.  

    So I'm going to make a guess that if I can manage 44 units plus a self-storage facility on 3-4 hours a week, if I worked your 35-40 hours / week then my systems could still handle between 200-300 units, maybe more.

    I outsource 100% of my maintenance and about 80% of my management is automated thru use of website, forms, electronic applications and leases.  There's always room to improve, certainly, and that's part of what makes this business fun and challenging!  We're now implementing 100% automated leasing and move in walk-thru inspections...without having me or anyone else from my team present.  Fun times!

    All the best to you, Sir!  Keep growing and thriving.

    1Reply
  • Elin Trinh
    Honolulu · Member since 2020 · 134 posts · 51 votes
    5y

    @Todd Dexheimer I am looking to invest out of state too.  I live in Oahu and I am having a hard time finding deals that meet my criteria.  I reading 'Long Distance Real Estate Investing' by David Greene.  Your episode really helped too.  thanks!!

    1Reply
  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    @Todd Dexheimer This is a wildly complex algorithm that would require a team to assemble...if you've got the formula down to figure this list out, you're a star...that said, it feels like an opinion or worse, you're pulling data from a public source to reach your list...which really doesn't help anyone. 

    937-979-7000
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  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    Yeah...costar reports, seriously....

    937-979-7000
    Realize Multifamily Group11 Review
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  • Todd Dexheimer
    OP
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Brandon Sturgill:

    @Todd Dexheimer This is a wildly complex algorithm that would require a team to assemble...if you've got the formula down to figure this list out, you're a star...that said, it feels like an opinion or worse, you're pulling data from a public source to reach your list...which really doesn't help anyone. 

    Yeah, that makes sense. No one is successful investing out of state, just too complex...

    Not sure how I figured it out and how the many other connections of mine have figured it out? 

    2Reply
  • Todd Dexheimer
    OP
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Brandon Sturgill:

    Yeah...costar reports, seriously....

    Yeah, if you can get access to CoStar, that is a great resource. There are many public websites including broker websites, government websites, etc that are free and are a great place to start. Once you dial in a market, then paying for detailed data makes a lot of sense. Until then, though save your money. 

    1Reply
  • Holly Barrett
    Real Estate Agent · Dawsonville, GA · Member since 2017 · 206 posts · 144 votes
    5y

    I invest out of state and self manage remotely. When I had a rental 15 min from my house I physically went there twice a year approx. I figured it might as well be in another state as I could have outsourced those visits to someone else. #s are so much better where we invested than where we reside. I really don’t see a big difference. I use cozy and other tools to vet tenants. I have a trusted handyman show the properties and do walk throughs. I’m not saying it’s not without challenges. The renovation we have been working on has been especially challenging to do from a distance, but it has been a great learning experience and I’m confident my procedure will be tightened up the next time. There are markets out there with very little investor competition, that sounds like opportunity to me! Love those emerging markets.

    5Reply
  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    @Todd Dexheimer I was out of line and I apologize...I should not have attacked the post...this is supposed to be a positive environment.

    937-979-7000
    Realize Multifamily Group11 Review
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  • Lee Yoder
    Rental Property Investor · Lebanon, OH · Member since 2016 · 224 posts · 228 votes
    5y

    Great info @Todd Dexheimer! Thanks for sharing. I totally agree with a lot of the points you've made about investing out of state. For me, the most important team member to find in order to get started is a broker that can bring you off market deals. Otherwise, you can build a team, but you won't ever get a deal for your team to operate. Especially in these markets you've listed. 

    1Reply
  • Todd Dexheimer
    OP
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    5y

    @Lee Yoder I agree with the broker relationships. You have to be able to find properties. The comes down to the availability of properties that fit your criteria and relationships with the brokers in the market. Also, another huge factor in the property management company. I have decided not to invest in certain markets because I could not find a PM that I trusted. 

    1Reply
  • Toby Khan
    Investor · Minnesota & Kansas · Member since 2020 · 176 posts · 75 votes
    5y

    I invest out of state as well and have been for few years now. My local market got out of hands where the numbers didn't make sense (still doesn't). I highly recommend David Greene's long distance investing book however when I started going out of state that book didn't exist. It took me building a team to get started there, being in tech industry (for my day job) I use flow charts a lot when architecting software so below is the flow chart that I came up with that helped a lot of my friends to go out of state as far as team building goes-

    Connect with local banks (called 12 banks)>once bank is ready(not all banks lend to out of state investors from my experience)>connect with local property managers>connect with local handy man (other investors in the area share those info)>off market deals come from banks or property manager.

    Also I lived in the state and am a bit familiar with some of those towns when I was in college. It wasn't a smooth beginning but as time went on things got much easier. Now I don't spend much time on managing as the property management takes care of majority of it. I visit the town couple times a year & connect with local investors over coffee or lunch-100% of my deals out of state have been off market till date. 

    I also recommend for someone going out of state not to take on rehab projects-it will be a lot of work unless you are ready to spend a ton of time. In my opinion start small and very less rehab-should set someone for success. 

    0Reply
  • Selina Hillenmayer
    Rental Property Investor · NJ · Member since 2019 · 43 posts · 14 votes
    5y

    @Todd Dexheimer. You mentioned having a good property management team as a must have.  I agree!  Do you invest in Huntsville and know of any that manage larger properties...upwards of 50+ units.

    1Reply
  • Caleb Bryant
    Rental Property Investor · Huntsville, AL · Member since 2015 · 401 posts · 309 votes
    5y

    This is an excellent list and a great filter for finding good markets, thanks for sharing. Love seeing Huntsville on the list!

    1Reply
  • Bonny Drago
    Rental Property Investor · Thousand Oaks, CA · Member since 2019 · 18 posts · 5 votes
    5y

    @Todd Dexheimer I live in California outside of LA , nothing around here?? I am a newbie and afraid to go out of state

    0Reply
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