What To Look For In A Market When Investing In Multi-Family Real Estate

Posted August 4, 2017

The world is a big place. It can be difficult to narrow down which market(s) you want to invest in. Everyone would love to invest in a market that has just begun it’s ascent IE a buyer’s market. Buy low, sell high. That will always be the goal with any investment especially real estate. So how do you identify a strong/emerging market? Below are some of the leading indicators you should be looking for.

Population Growth

Population growth is 1 of the 2 key factors you should consider when researching a market. More people will require more housing, that’s not rocket science (see supply and demand). You will want to identify the last (5) years of population growth for any given market along with the projected (5) years. At the time of this blog Dallas/Fort Worth is one of THE BEST real estate investing markets in the country. Why? Because from 2010-2017 the DFW population experienced 18% growth with another 10% growth projected over the next 8-10 years. That’s the type of growth you want to see.

Job Growth

The 2nd key factor you should be aware of when researching a market is job growth. As I mentioned above, population growth drives markets and population growth is driven by jobs. People will always go to where the jobs are. Is Toyota relocating a factory that will bring in 15,000 jobs to a city? Is there a new multi-billion dollar mixed use development in the works that will create 25,000 jobs over the next 5 years? These are the types of things you want to see happening in a market, major events that are bringing in tens of thousands of jobs. When this occurs, not only do people need to move to the market to fill those jobs but more jobs needs to be created to service those people. More barber shops, grocery stores, yoga studios etc. Always follow the jobs. Job growth should be one of your leading indicators of a given market. Ideally you want to see a minimum of 2% year over year job increase for the previous 2 years as a starting point.

Additional/Important Factors to Consider

If you had to pick the two most important factors in determining a strong/emerging real estate market it would be population and job growth in my opinion. But those items only begin to paint the picture of a market. Once you determine the population and job growth, it’s time to dive in and take a closer look at the market and consider the following as well.

Local Major employers and diversification
Is the city/market local government investing in itself? Redeveloping, new infrastructure etc.
Proximity to major highways, airports, universities shopping centers and public transportation
Average house hold income of the immediate area
School systems
Local Leadership

Contact us today for more free information on market research or how you can invest in Multi-Family Properties with SNA Capital.

Edward Noseworthy

Ed has been actively involved in commercial real estate development and construction since 2005. Ed began his career as a Master Electrician licensed in multiple states and grew to become an Operation/Sales Manager overseeing large construction projects throughout New England for a large, regional construction firm. Ed brings a wealth of construction and operations management experience.