How do we target our markets? What do we look for?
Each city and state has different laws and regulations. Just because a state may have high job or population growth does not mean we will invest anywhere in the state. We look at each market and sub-market to determine where to invest.
There are several key factors we have when choosing our markets:
High job growth
High population growth
Low cost of living
Median Household Income
High Job Growth
We target markets that have high job growth. Businesses have been relocating or building headquarters and offices in business friendly states that offer lower taxes and a lower cost of living. Our markets have benefited from the mass relocation and new offices. With high job growth, an influx of new talent arrives bringing their families with them.
High Population Growth
In many cases, population growth is due to high job growth but there are other reasons as well. Good universities, family-friendly locations, entertainment venues, and other factors can lure people to certain areas. We look for markets that have a net positive migration, that is, more people moving in than leaving.
Low Cost of Living
While low cost of living is relative, we look for where people are moving. In recent years, businesses have been moving their headquarters and offices to areas that have a lower cost of living. Housing costs are also less expensive. Looking at markets with a low cost of living ensures we have a steady tenant base.
Median Household Income
When looking at the median household income, we look at the 1, 3, and 5 mile radius of the property. We want to ensure that the sub-market can support our value-add play and can support the changes we make. We look for a median HHI of around $50,000 or more.
When we look at our markets, we look for a diverse economy. We do not look at properties unless there are multiple major industries in a market. The reason we do this is because we do not want an incident to impact our tenant base. Let’s say that manufacturing goes under in a market. We would not be greatly affected by that as there would be many other industries that the market is known for.
There are some markets that are landlord-friendly, and others are tenant-friendly. We look for markets that are landlord-friendly. Landlord-friendly means there are better tax rates, the eviction process is ‘easy’ (we do not evict unless a tenant breaks the lease, even then, we try to work with them first!), ease of regulations, and have friendly landlord rights.
The markets we look at have many advantages to investing in apartments. These are growing markets, with diverse economies in a landlord-friendly environment. To learn more about why we love multifamily as an investment, please visit our Knowledge Center. To find out how you can passively invest with our team, please schedule a time or contact us, and we will reach out to you.