Finding A Good Multifamily Market To Invest In

A lot of conversation is happening, that you don't know where to start to invest, you can't find where you want to invest and of course the easiest solution is invest in your backyard and it can seem comforting to say, oh I can't find any deals here, so I'm going to go halfway across the country and look for deals, but if you actually put the time in, you can find great deals in your area.

It doesn't matter where you are, I was recently at an event and it was pretty funny that the people in New York were saying what the people in California were doing or so lucky because they had all the good deals, when the people in California was saying that New York had all the good deals and then there was people in Texas saying, well Texas was overheating so they were looking in Oklahoma and the people in Oklahoma we're looking in Texas.

So you just can never be satisfied if you don't choose to be satisfied, however if you are going to select a market out of your general area, here are a few points or a few ideas to point you in the right direction and we start with the high-level approach, it comes down to just looking at data and can be available from all types of areas and all different platforms from the Census Bureau to go into county records and state records and local records to sites like city data, can give you all of this data and what we look for is, we're looking for areas that have population growth, we want to see that of course, more people are moving to the area then less people are moving out of it.

For us personally, we want to look at MSA’s that have over 250,000 people in them, we want to make sure that when we have apartment complexes there are actually enough people to fill those complexes and we're not going to be in a town of three or four thousand where our 100 unit apartment complex makes up a big chunk of the available property for someone to live, past that we are looking at jobs and job diversity, what kind of jobs are available and how much of a particular sector makes up the job market, we don't want to be in a steel town, where the steel town goes out of business and everything in the town takes a big hit, so for us we want to make sure that one sector doesn't make up more than 20% of the available jobs or workforce. Another point we look for is new construction and this really comes down to submarkets in a certain area so if you're in a city we're going to look at the submarkets and we want to look at the available units within a certain submarket, especially for the type of assets that we're looking for, so if we're looking for C assets, we want to see how many available properties they are and how many units are in within that submarket, however we do want to take a look at new construction and you can go to the cities to see permitting to see what's actually going to be coming online, because if a ton of building is happening at some point there's going to be too many places for people to live and then everybody's going to have to take a cut as property owners because you're going to be given concessions.

I was reading Sam Szell's book and he was saying that it's always funny because when there's a ton of available money out there, people just start building and they continue to build and build and build without actually looking at how many houses do we need for this certain area, how many places to live do we need for the certain area and that's where we get in trouble, we overbuilt and then on that fact there are too many places to live and then as a property owner we all get crunched. So take a look at how many units are coming online in the next six 12,18,24 months because this is how long you're going to have your property in your area and you want to see what else is going to be affecting you.

Lastly you want to be looking at your boots and the grounds, who do you know and how can they be useful to you if you are investing out of your market and this can be as simple as having friends and family in an area that can run buy properties to give you an idea or a context of the area to building out teams of property managers of inspectors of contractors brokers of cost segregation people to lawyers where you're going to have to fill out this entire team's when you do find a property and you're a thousand miles away, you can take immediate action, so these are just a few of the high-level things that you can look at when searching for a market, but again, you get to roll this out the window and you can start tomorrow and just start in your town, start in your area and find the submarkets that really fill the gaps for the type of properties you're looking at. Every area that you are in has the opportunity, you just have to look for it.

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