Top 5 Best Multifamily Investment Markets 2019

Investing

Top 5 Best Multifamily Investment Markets 2019

January 21, 2019 | by Luke Babich

At A Glance

The real estate market is constantly shifting as populations grow, cities undergo redevelopment, and mass transit lines are installed, among many other factors. Here are our predictions of the top 5 emerging markets for multifamily investing in 2019.

Top 5 Best Multifamily Investment Markets 2019

Updated May 10th, 2019

The real estate investment landscape is constantly changing and new emerging markets are appearing each year. We’ve taken some time to analyze data to help you decide where your next multi-family investment property should be.

The factors we looked at include:

  • Property price (the actual cost to purchase a multifamily property)
  • Price/sqft (the purchase price broken down by $/sqft so we can equally compare)
  • Rental income (the amount you can expect to get for a rental unit)
  • Walk score (how walkable the area is to local attractions, schools, etc.)
  • Cap rate (a calculation investors use to determine profit after expenses)

This is by no means an exhaustive list of criteria to use when evaluating potential investments. We believe they are some of the best indicators, but you should feel free to use these and more to decide what investment is best for you.

Our top five cities include both coasts, the midwest, and the south. There is also a range in price point and rental income for the homes, but we kept this all in perspective when evaluating the data. This should provide a good variety of options for investors across the country.

Based on the factors that we considered, the top 5 best multifamily investment markets for 2019 are: Trenton, NJ, Chattanooga, TN, Chico, CA, Cincinnati, OH, and Norfolk, VA.

1. Trenton, NJ

Lots of people give New Jersey a bad rap, but it is located on the East Coast, near major airports and metropolitan areas. Trenton, NJ ranks first on our list of best investment markets for a variety of reasons. Namely, the purchase price of homes, but also the cap rate. This means you can get a property without a ton of capital and quickly make a profit.

  • Median Property Price: $108,826
  • Price Per Sq/Ft: $55
  • Traditional Rental Income: $1,391
  • Walk Score: 72
  • Cap Rate: 5%

2. Chattanooga, TN

Heading south we find this up and coming city in Tennessee. Home prices here are below the national average, but with a warmer climate and solid rental income, people want to live and rent here. A solid 4% cap rate ensure good return leading us to believe that this is a solid long term investment.

  • Median Property Price: $198,673
  • Price Per Sq/Ft: $85
  • Traditional Rental Income: $1,364
  • Walk Score: 29
  • Cap Rate: 4%

3. Chico, CA

Over on the west coast, Chico is the city to beat. Although property prices are significantly higher, more than double the average home price in the country, you’ll notice that the rents are sky high too. This is an unfortunate situation for renters, but could be a solid investment for someone with the cash to buy a multifamily home.

  • Median Property Price: $709,098
  • Price Per Sq/Ft: $234
  • Traditional Rental Income: $4,826
  • Walk Score: 45
  • Cap Rate: 4%

4. Cincinnati, OH

Out in the midwest is the trending city of Cincinnati. With below average home sale prices and stable rents, this is a market to keep an eye on. Although the cap rate is a little lower than some of our previous cities, the rental income is solid and could lead to a profitable long term investment.

  • Median Property Price: $182,895
  • Price Per Sq/Ft: $67
  • Traditional Rental Income: $1,206
  • Walk Score: 50
  • Cap Rate: 3%

5. Norfolk, VA

Rounding out our top 5 list is Norfolk, VA. A lower property price but higher price per square foot indicates that properties tend to skew on the smaller side, which likely leads to the slightly lower rental income rate. That being said, Norfolk is still a solid investment option.

  • Median Property Price: $176,511
  • Price Per Sq/Ft: $90
  • Traditional Rental Income: $1,198
  • Walk Score: 45
  • Cap Rate: 3%

If none of these cities interest you, don’t worry, there are plenty more in the top 10 or 20 list that may work. Now that you know what factors to look at, you can do your own evaluation of markets near you to determine what areas are best for your next investment.

As with any real estate investing, do your homework, look at the comps, crunch the numbers, and make sure it makes sense for your specific situation. Trying to keep up with the Joneses will not benefit you when it comes to real estate investing.

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