8 Tips for Choosing the Best Multifamily Markets Today

The multifamily property market has been on the rise in recent years, with more and more investors looking to get in on the action. This is good news for those who are already involved in the market, as prices have been increasing and opportunities for making a profit are becoming more plentiful. However, it can also be a bit daunting to try and figure out what’s going on in such a complex and rapidly-changing market. In this blog post, we look at how to identify the best multifamily markets and offer some tips for success. So, if you’re interested in learning more just keep reading!

Photo of a real estate agent with two buyers evaluating an investment property

State of the Multifamily Property Market

As a real estate investor, you are always looking for the next big opportunity. And right now, the multifamily property market is heating up. Let’s take a closer look at what’s happening in this market and see if it’s the right opportunity for you.

  • The multifamily investment industry has been on a positive trajectory for years now. The growth of rentals in urban and suburban areas is an indication that this trend will continue, especially with millennials moving into these types of homes as well.
  • With lower interest rates, financing a multifamily investment becomes more affordable. In addition, investors are seeing great potential in this type of investment. Multifamily properties are trending up and offer a return on investment due to price increases caused as affected by inflation rates.
  • Multifamily investors are shifting to invest in states or locations that offer fewer government restrictions. The best cities for multifamily investing provide opportunities for healthy returns on investments with little risks involved.

How to Choose the Best Multifamily Markets in 2022

Photo of a street with several multifamily properties

Which markets are primed for success in the growing real estate markets in 2022? There are several strategies for investing in real estate as a whole. Here are some tips to help you choose the best multifamily investments. 

1. Consider the Economic and Job Health of the Markets

Cities with a robust economy and plenty of jobs will be more likely to experience sustained rental demand growth. A favorable job market will help to ensure that residents are able to afford their rent payments. 

2. Research the Quality of Schools and Crime Rates

A low crime rate and a good school district can help to attract families to an apartment complex. Families with school-age children tend to rent for the long term, so they are looking for stability and good schools. A good way to research the quality of schools is to look at test scores and graduation rates. You can also look at reviews from parents and students. Another factor to consider is the safety of the schools. You can research this by looking at crime statistics in the area.

3. Check out the Public Transportation Options

Location is always an important factor to consider when choosing a place to live, and this is especially true for those who rely on public transportation. Transportation infrastructure affects how easy it is for people to get around. For urban dwellers, having reliable and convenient public transportation can mean the difference between a long commute and a short one. Research the public transportation options in each area. Bus schedules, train lines, and even ride-sharing services can all impact how easily residents are able to get around

4. Focus on Larger Metropolitan Areas

The best markets for multifamily investing should have a population that is growing, as this indicates a strong demand for rental market growth and expansion. Population growth signals more opportunity for Investing in multifamily properties than in smaller cities or towns. If the population in an area is stagnant or declining, it is likely that rents will not increase and it may be difficult to find tenants. On the other hand, if an area is experiencing population growth, it is more likely that rents will rise as demand for housing increases.

5. Choose a Market That Has a Good Mix of Rental Property Types

Different types of multifamily rental properties address different markets. Student housing and senior citizen housing are two examples of specialized multifamily housing that each has its own unique needs. Consider the types of properties that will best fit the market you want to address. For instance, if you want to invest in a city with a large student population, then student housing would be a good option.

6. Research the Average Rent Prices and Vacancy Rates

Markets, where rents are rapidly increasing, may be good candidates for investing in multifamily properties, as they indicate growing demand from tenants. Rental rates will give you an idea of how much rent you can expect to charge for your units. Vacancy rates are also important factors to consider as these will indicate the level of demand in the rental market.

7. Be Analytical

Weigh all of your options before making a decision. Make the best decision by leveraging insights and advice from real estate experts. Research the local real estate market conditions and the overall stability of the real estate market. The multifamily investment experts at Holdfolio can guide your way through the process of choosing the best market for your investment.

8. Ask other Investors for their Insights on these Markets

Making the best possible choice when selecting multifamily markets requires gathering as much information as possible—and that includes asking other investors for their insights. Other investors may have already done extensive research on certain markets and can offer valuable insights into which ones are likely to provide the best returns. Talking to other investors can also help you get a better understanding of the risk involved in investing in a particular market. 

Key Takeaways

The multifamily markets forecast for 2022 looks positive, but there are still some areas that offer more potential than others. By working with a real estate expert, you can narrow down your search and study the best multifamily markets 2022 has to offer. Which of these factors is most important to you when looking at potential markets?

Tre Pryor, Realtor

Tre Pryor is the leading real estate expert in the city of Louisville. He is a multi-million dollar producer and consistently ranks in the top 1% of Louisville Realtors for homes sold. Tre Pryor has the highest possible rating—5.0 stars on Google—by his clients and is routinely interviewed by the local NBC news. Tre Pryor is a member of the RE/MAX Hall of Fame.