Buying Multifamily out of State

4 Replies

I live in NYC. 

I need to buy my first multifamily property.

I have sponsors and investors for deals up to $7M

What should I focus on and why?

I expect to be investing out of state due to compressed local cap rates.

Anyone's input is appreciated!

@Brian Keeler DC, Atlanta, or wherever Amazon decides to build Headquarters 2. I personally witnessed what Amazon can do to a city. My wife and I increased our net worth by more than $250k in 2 years and our investments continue growing at a 15%+ clip. Amazon has gone from 5,000 to 50,000 employees in 8 years and anytime you add 50,000 6 figure jobs, it naturally increases rental rates and overall real estate value. I could be wrong, but I don't see Amazon disappearing anytime soon... I just wish we were in a position to buy more in the Seattle area 5+ years ago! Good luck.

@Brian Keeler Where to invest will depend entirely on your need for appreciation expectation vs. cashflow. For instance, if you want pure appreciation expectation (AE) then i would out your window :) NYC, San Francisco, Seattle, Boston, Miami, Honolulu, and maybe Denver and Austin. If you want pure cashflow then i'd consider certain areas of Chicago, Toledo, Memphis, Kansas City, Columbus, Cleveland and Detroit.

A nice but arguable in-the-middle would be something like Bellingham, WA (yes, i have a biased opinion), Spokane, WA, Ann Arbor, MI, Arlington, TX, Grand Rapids, MI.  

While the whole amazon thing is going to be great for one city, rest assured that once it's decided values will increase 20 - 25% overnight.  That city might be worth a small allocation of funds but it's very risky investing in any single asset, or location.  

@Brian Keeler I second what @Patrick Britton stated about your primary goals. In addition, your expertise matters as well. You just said this will be your first multifamily. So if you don't want to risk your investors' money and relationships then you should consider partnering up with someone experienced. This can be achieved by you being in different capacities. You can offer a syndicator to bring capital or to bring a deal or something else they need in exchange for you being on GP side.

@Brian Keeler Great question. My firm and I invest heavily in multi-family projects in the midwest. What you should focus on and why is a BIG question. Feel free to PM and we can set up a call to discuss further. 

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