SS174: Location, Location, Location: Finding the Ideal Multifamily Property

SS174: Location, Location, Location: Finding the Ideal Multifamily Property

The location of your multifamily property is crucial to its success. In this episode, Charles discusses how to identify great neighborhoods to invest in.

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Talking Points:

  • I have done several episodes on choosing the right markets, most notably episodes SS1 and SS2.
  • In this episode, I want to discuss finding the right location and neighborhood within that market.
  • Before we begin looking into the specifics for identifying a good neighborhood, I want to review the 4 main things we look for in an overall market. Landlord-friendly state, county, and city: population growth, diversified job growth, and a decrease in crime. We review these stats over the past 20 years to understand the market’s trajectory.
  • As we dig into the submarket, we want to ensure it is growing, with a thriving job market and local economy. You can check the same stats you did for the market, population growth, diversified job growth, and a decrease in crime over the past 20 years. As we get more local, we want to really make sure the job market is diverse, with many industries and employers.
  • As we drill down more. We want to map out the different school districts. Where are the best schools in the city? There are several free websites you can use online that provide this information. Then, review the crime map of the city, and the income map of the city. These maps are usually color-coded and easy to read. You can cross reference the school districts, crime, and income maps to identify where to invest.
    • Why is this information important?
    • Number 1 is that good school districts are key to keeping tenants for many years. The crime map is important because it is difficult to rent to and keep good tenants in high-crime areas. Usually, these tenants leave when they can afford to live in a better area. Income is important because we want to ensure people living in the area can afford the rent at our property. We want to see that the median income is at least 3 times the projected rent within a 1-mile radius of our target neighborhoods.
  • Next, we want to verify that homes are not comparable in price to the apartments we will purchase in the area. If you can purchase a home for $100k or $150k, and the apartments you are looking at purchasing are $80k-$100k per unit, it will be difficult to find renters since the barrier to purchasing is very low. Compare this to purchasing apartments for $80k or $100k per unit, where the median home price of the area or city is $250k. it will be a huge jump for your tenants to go from renters to property owners, ensuring a solid tenant base.
  • As we drill down further, what do we want to see in the neighborhood?
    • 1st off is that you want to see the property types you want to purchase. If you want to purchase a 50-unit apartment complex, and there are none, you need to change the section of the city you are looking in or the city/market altogether. If, on the other hand, you want to purchase a 5–10-unit apartment complex, and there are dozens of them in the neighborhoods you are targeting, this will reinforce that you are on the right track.
    • I want to purchase properties near retail areas and national retailers but not on busy roads. National retailers perform in-depth market research before establishing locations and primarily invest in growing areas. Going further, I want my multifamily property surrounded by other residential properties, preferably single-family and small multifamily properties.
    • Is there any development happening in the areas? Are properties being renovated? Have properties been renovated recently? Is there money being invested in the area? Are properties being maintained? If most are, this is a great sign, and for the others, these are properties you should reach out to see if the owners want to sell.
  • All of this research can be done in less than an hour online; however, when you are serious about investing in a city and specific neighborhoods within that city, the next step is to drive them. Afterward, you will know exactly where you want to invest, which will make you more confident with real estate brokers, and they are more willing to take you seriously and work with you.

Transcript:

Charles:
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing location, location, location, finding the ideal multi-family property.

Charles:
I’ve done several episodes on choosing the right markets, most notably SS one and SS two. In this episode, I want to discuss finding the right location in neighborhood within that market. Now, before we begin looking into the specifics for identifying a good neighborhood, I wanna review the four main things we look for in an overall market. Number one is landlord friendly, state, county, and city. And why we look for all three is because rules and regulations around landlords, tenants, and rentals can differ from the city level, county level, and state level. So you wanna make sure that all three of those are landlord friendly. Two is population growth, three is diversified job growth and four is a decrease in crime. We review these stats over the past 20 years to understand where the market has been and what its trajectory is into the future.

Charles:
Now, as we dig into the submarket, we want to ensure it is growing with a thriving job market and local economy. Now you can check the same stats you did for the overall market, the population growth, diversified job growth, and a decrease in crime over the past 20 years. But as we get more local, we wanna really make sure that the job market is diverse with many industries and employers near where you’re gonna be buying properties. Now as we drill down more, we wanna map out the different school districts. Where are the best schools in the city? There are several free websites you can use that provide this information, and then review the crime map of the city and income map of the city. Now these maps are usually color coded and easy to read, and you can cross reference the school district’s crime and income maps to identify where to invest.

Charles:
So why is this information important? Well, number one is that good school districts are key to keeping tenants for many years. The crime map is important because it is difficult to rent and keep good tenants in high crime areas. Usually these tenants will leave right when they can afford to live in a better area. And income is important because we wanna ensure people living in the area can afford the rent. At our property, we want to see that the median income is at least three times the projected rent within a one mile radius of the target neighborhoods we’re looking at. Next, we want to verify that homes are not comparable in price to the apartments we’ll purchase in the area. So if you can purchase a home for a hundred thousand or $150,000 and the apartments you’re looking at are 80 to a hundred thousand dollars per unit, it’ll be difficult to find renters since the barrier to purchasing is very low.

Charles:
Compare this to purchasing apartments for 80 or a hundred thousand dollars per unit, where the median home price of the area or city is $250,000. It’ll be a huge jump for your, your renters to go from renters to property owners, ensuring a solid tenant base. Now, as we drill down further, we want to see in the neighborhood a few different things. First off is that you wanna see the property types you’ll wanna purchase. If you wanna purchase 50 unit apartment complexes, there are none. You need to change the section of the city you’re looking in or the city market altogether. If on the other hand, you wanna purchase a five to 10 unit apartment complex and there are dozens of them in the neighborhoods you are targeting, this will reinforce that you are on the right track. Now, I wanna purchase properties near retail areas and national retailers, but not on busy roads.

Charles:
National retailers perform in in-depth market research before establishing locations and primarily invest in growing areas. Going further, I want my multi-family properties surrounded by other residential properties, preferably single family and small multifamily properties. Is there any development happening in the areas? Are properties being renovated? Have properties been renovated recently? Is there money being invested in the area? Are the properties being maintained? And if most are, this is a great sign and for others, these are the properties you should reach out to and see if the owners wanna sell. So all this research can be done in less than an hour online. However, when you’re serious about investing in the city and specific neighborhoods within that city, the next step is to actually drive them Afterwards. You’ll know exactly where you wanna invest, where you wanna avoid, but it will make it much easier and it’ll make you more confident when you’re working with real estate brokers.

Charles:
And when you’re putting in offers and real estate, brokers are more willing to take you seriously and work with you and send you deals if they know that you’re serious about buying properties. So I hope you enjoyed. Please remember to rate, review, subscribe, submit comments and potential show topics@globalinvestorspodcast.com. If you’re interested in actively investing in real estate, please check out our courses and mentoring programs@syndicationsuperstars.com. That is syndication superstars.com. Look forward to two more episodes next week. See you then.

Charles:
Have you always wanted to invest in real estate, but didn’t have the time, didn’t know where to find the deals, couldn’t get the funding and didn’t want tenants calling you. Since 2006, I’ve been buying income producing properties and great locations that provide us with consistent passive income. While we wait for appreciation in the future and take advantage of tax laws while we’re waiting and unlike your financial advisor, we invest alongside our investors in every property we purchase. Check out to investwithharborside.com. If you like the idea of investing real estate, if you like the idea of passive income partner with us at investwithharborside.com, that’s investwithharborside.com.

Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.

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