“Location, location, location” is one of the most common phrases you’ll hear when you’re ready to buy real estate. This concept is true for every type of real estate, particularly multi-family properties.
The right location can considerably impact your investment and what type of return you receive on it. Location can impact everything from demand and rent growth to property appreciation and tenant stability.
Multi-family real estate investments are showing considerable promise in many areas around the country. If you’re trying to determine what markets are suitable for you, following trends and real estate gurus like Patrick Carroll may help you to make solid decisions about your investment.
Demand for Rentals in Urban Areas
Urban areas are experiencing high demand for rental housing. This demand is driven by a host of factors, but job growth potential and lifestyle preferences are the most common. Cities that have diverse employment sectors are showing considerable promise. Look at areas with healthcare, technology, and finance industries that are stable or growing. Young professionals in these areas, including those who are just starting their families, may prefer to rent over own.
Affordability and Cost of Living
The cost of living is another consideration that needs to factor into your decision. The unstable housing market has many people seeking out affordable living arrangements. Finding an area where demand is high for rentals, but other cost of living variables are lower is beneficial. Economic growth and affordability can make areas like Charlotte or Tampa ideal for some individuals who want to invest in multi-family properties.
Population Growth and Demographic Trends
Population growth in a city, especially if there’s a large influx of younger professionals, is a good signal that multi-family properties are a good investment. Taking a look at the demographic trends of potential target areas can clue you into the likelihood of investments in multi-family housing being successful.
Supply and Demand Imbalances
Supply and demand of multi-family housing options are sometimes imbalanced. When cities are experiencing lower construction rates while the population is growing, there’s going to be an inevitable need for apartments, condos, and townhouses. These can present lucrative opportunities if you want to invest in multifamily properties.
The strength of a local economy plays a critical role in determining the success of a multi-family investment. Look for markets with strong job growth, low unemployment, and a diversified economy. Cities with a mix of industries, such as tech, healthcare, and education, tend to weather economic downturns more effectively, which makes them ideal for real estate investments.
