20 Best Places to Invest in Multifamily Real Estate
Are you ready to explore the world of multifamily real estate investing? With the rising demand for rental properties, investing in multifamily real estate has become an attractive opportunity for individuals seeking to grow their wealth. With so many locations offering great potential returns on multifamily investment, narrowing down which ones should make your shortlist cannot be easy. To simplify the process, we’ve compiled a list of the top 20 cities and towns that have proven to be prime markets for multifamily investors. These locations boast strong job growth and stronger population trends than other US cities and towns – setting them up as ideal areas for real estate investing. We’ll cover these factors in depth below while exploring each location’s unique benefits, drawbacks, and potential scenarios to help you decide if it is right for your portfolio. Read on to learn more about our top picks!
Why Invest in Multifamily Real Estate?
Real estate has long been a popular investment choice, with multifamily properties being particularly attractive. The advantages of investing in multifamily real estate are many: it can provide consistent cash flow through rental income, offer an excellent hedge against inflation, and be relatively low risk compared to other types of investments. Additionally, the number of tenants living in the property ensures that there is always a steady stream of income, whereas single-family homes may be vacant between tenants. Multifamily properties allow investors to benefit from economies of scale.
The property’s location is key when making money with real estate investments. Locating profitable multifamily investment opportunities requires knowing which markets are attractive and offer the potential for high returns in the future. That’s why we’ve taken the time to research the top 20 cities and towns that have the best potential for multifamily investment.
Each location offers unique benefits, so we will explore them in more depth and provide you with all the information needed to decide which market is right for your portfolio.
Best Places to Invest in Multifamily Real Estate
Here are the top 20 places to invest in multifamily real estate:
1. Salt Lake City, Utah
Salt Lake City’s population is growing rapidly, with the area recording an impressive 5.2% growth rate in 2019 alone. Job growth is also strong, making the city ideal for multifamily investments. It is also noted for its high quality of life, which attracts renters and often yields higher rental incomes. As a bonus, Salt Lake City is known for its low taxes.
2. Huntsville
Huntsville is an ideal place to invest in multifamily real estate, thanks to its favorable job market and attractive population trends. The city offers a diverse range of industries that employ a variety of skilled labor: from tech professionals to aerospace engineers. Additionally, the city’s population has grown steadily over the past decade, increasing demand for rental properties. Huntsville is an ideal location for multifamily real estate investments with low taxes, a thriving economy, and an educated workforce. Additionally, investors can benefit from the city’s low property values compared to its peers.
3. Atlanta, Georgia
Atlanta, Georgia, is an attractive market for multifamily real estate investors due to its booming population growth and strong job market. As one of the fastest-growing cities in the US, Atlanta offers a great opportunity to capitalize on rental demand from new arrivals and current residents looking for housing options. The city’s low cost of living and affordability make it an ideal place for multifamily investors. With a median home price of just $261,000, it’s easy to find properties that offer good cash flow and excellent potential returns in the long-term. Additionally, Atlanta boasts strong infrastructure and amenities, making it an attractive destination for renters.
4. Houston, Texas
Houston, Texas, is a prime market for multifamily real estate investors. Many advantageous factors are driving the growth of this vibrant city, including the booming oil and gas industry, strong job growth, affordable housing prices, and dynamic culture. Houston has seen rapid population growth in recent years due to its business-friendly environment and economic stability. With rental rates rising, multifamily properties in Houston are a great option for long-term returns.
Houston’s strong job growth makes it an attractive market for rental property investors looking to exploit the city’s growing population. The city is home to many large corporations and businesses, making it a great place to own rental properties. Additionally, Houston’s low cost of living means renters can afford more rent than they would in other cities with similar housing markets. This makes investing in multifamily real estate a lucrative option for investors looking to capitalize on the city’s economic growth.
5. Orange County, California
Orange County in California is one of the state’s most attractive real estate markets. Its population has grown rapidly over the past decade, creating an ideal environment for multifamily investors looking to capitalize on its potential. Orange County offers a diverse selection of properties, from single-family homes to larger complexes. It also boasts some of the lowest vacancy rates in the region and consistently high rental prices. In addition, Orange County has a vibrant economy and job market, providing excellent prospects for renters and investors. The strong population growth, low vacancy rates, and strong economic indicators make Orange County an ideal place to invest in multifamily real estate.
It’s important to remember that the cost of living is relatively high in Orange County compared to other parts of California. This means rental prices may not be as high as in other markets, but the potential for ROI is still great.
6. Charlotte, North Carolina
Charlotte, North Carolina, is a great choice for multifamily real estate investors. The city boasts strong job growth and low unemployment rates, while its population grows steadily yearly. Also, rent prices are rising in Charlotte, making it attractive to potential tenants seeking affordable housing. With plenty of amenities nearby and an excellent transportation system, investing in multifamily real estate in Charlotte is guaranteed to bring long-term returns. Finally, the city has a vibrant culture and arts scene with plenty of activities to enjoy year-round. This means that investing in a multifamily property here won’t just be making money – you’ll also experience this vibrant city!
7. Washington, DC
Washington, DC, is one of the most attractive markets for multifamily real estate investments in the US. The city boasts a strong job market and high population growth rates, making it an ideal place to invest. Rents are also rising in Washington, DC – a sign that demand for rental properties is high and likely to stay that way. Washington, DC, has many universities, government offices, and international organizations, providing a steady stream of tenants. Investing in multifamily properties in this area can offer investors excellent returns. However, property prices are relatively high – so it’s important to research before investing here.
8. Williamsburg, VA
Williamsburg, VA, is an ideal location for multifamily real estate investors. It boasts a strong job market and a growing population, with median home prices remaining relatively low despite its popularity. The city also offers access to plenty of amenities and attractions that make it attractive to renters wanting proximity to all the comforts of modern life. Williamsburg is located only two hours from Washington, DC, making it an accessible and desirable option for those looking to invest in multifamily properties. Williamsburg also has a strong Airbnb market, which may benefit investors looking to maximize their returns.
9. Dania Beach, FL
Dania Beach in South Florida is an excellent market for multifamily real estate investors. Located just south of Fort Lauderdale, the city boasts many residents from other states and countries looking for rental housing. Additionally, its proximity to Miami makes it attractive to those interested in city living without the costs of living in such an expensive city. Dania Beach is ideal for multifamily real estate investors with its beautiful beaches and growing job market. It offers high rental demand with higher occupancy rates than the state average and potentially lucrative rent appreciation over time.
10. Melbourne, FL
Melbourne, Florida, is an ideal location for multifamily real estate investors. With a population of nearly 80,000 and rising, Melbourne has strong job growth prospects and a large potential tenant pool. Additionally, it offers low-interest rates on mortgages and other loan products that make investing here attractive. Melbourne also boasts several nice amenities, such as parks and cultural attractions, that set it apart from other markets. The city is home to numerous universities and colleges and a thriving tech industry that can offer potential tenants plenty of employment opportunities. Investors looking for steady income streams in this area should consider investing in properties near Melbourne International Airport or the nearby cruise ship port.
11. Carmel, IN
A Booming Suburb of Indianapolis with Great Job Opportunities and Affordable Homes.
Located in the heart of Hamilton County, Carmel is a vibrant suburb of Indianapolis that offers residents an array of amenities and job opportunities. It has become one of the fastest-growing cities in Indiana and has seen remarkable growth over the last decade. Home prices in Carmel remain affordable and its low crime rate makes it an attractive option for multifamily investors. With a strong job market, many new commercial developments, and plenty of green space, Carmel is an ideal city to invest in multifamily real estate.
12. Alexandria, VA
Alexandria, Virginia, is a great city for multifamily real estate investments. It is located on the Potomac River in Northern Virginia and has a strong job market bolstered by its proximity to Washington, D.C. The city features low crime rates and excellent public schools, making it ideal for raising families or renting out family-sized units. Alexandria also has a diverse population, making it attractive to prospective tenants. With its strong job growth and numerous amenities, Alexandria is an excellent choice for multifamily investors looking to benefit from the growing demand for rental units in this area.
13. Palm Springs, CA
Palm Springs, CA, is a popular tourist destination and prime market for multifamily real estate investors. The city has seen substantial population growth in recent years, and job opportunities are plentiful in industries ranging from hospitality to tech. Its mild climate and sunny skies make it an attractive place to live, while its high rental yields provide attractive returns on investment for landlords. Palm Springs also has a strong and vibrant arts scene, home to many of the nation’s top celebrities. With high rental demand and potential appreciation, Palm Springs is ideal for multifamily real estate investors.
14. San Antonio, Texas
San Antonio, Texas, is an attractive market for multifamily real estate investors due to its strong job growth and vibrant economy. With a population of 1.5 million, the city offers an ideal opportunity to invest in a thriving metropolis while still receiving the benefits of owning rental properties in a relatively small city. The area boasts numerous attractions, including SeaWorld San Antonio, Six Flags Fiesta Texas, and the historic Alamo. Additionally, San Antonio’s low cost of living and mild climate make it an attractive destination for both renters and multifamily investors. Investing in multifamily real estate in San Antonio will be a profitable venture with a median two-bedroom rental rate of around $1,000 per month and plenty of jobs in the area.
15. Boise, Idaho
Boise, Idaho, is a great place to invest in multifamily real estate. The city boasts impressive job growth and has been ranked one of the most livable cities in the US by U.S. News & World Report for its low unemployment rate and high quality of life. The cost of living is relatively affordable, yet a strong rental market makes it a great place to invest in. Additionally, Boise is close to ski resorts and other recreational activities, making it a desirable destination for potential renters. With its low cost of living and vibrant culture, Boise offers attractive prospects for multifamily real estate investors.
16. Inland Empire, California
The Inland Empire in California is one of the most affordable markets for multifamily real estate. This region, located east of Los Angeles, offers a lower cost of living than many other major cities in the state and strong job growth, making it an ideal investment opportunity. The Inland Empire boasts housing prices that are more affordable than those found in surrounding areas, making it an attractive place to invest in multifamily properties. As the area expands, rental prices will likely remain stable or grow, making this an excellent choice for long-term real estate investors.
17. Dallas, Texas
Dallas, Texas, is a great multifamily real estate investment area due to its strong job growth and favorable population trends. With many large employers in the area, the economy is expected to remain robust and provide plenty of opportunities for rental income. Additionally, Dallas’s housing market is relatively affordable compared to other parts of the country, making it easier to purchase multifamily property. Dallas has numerous cultural attractions and amenities, making it an attractive place to rent and live. As such, the area boasts strong potential for long-term rental income growth. With all these benefits combined, real estate investors should consider Dallas a prime market for multifamily investing.
18. Charlotte, North Carolina
Charlotte, North Carolina, is an attractive market for multifamily real estate investors. With strong job growth and a booming population, Charlotte has become one of the most sought-after cities in the US for multifamily investments. Property values have increased over recent years, making it an ideal location to invest in rental units. Investors can benefit from low taxes, affordable housing, and strong tenant demand. Additionally, the influx of big businesses to Charlotte has provided abundant job opportunities and further boosted rental demand in this market.
19. Kansas City, Missouri
The city has experienced strong job growth and population gains in recent years, and the emergence of an attractive downtown area has attracted new businesses and residents. Additionally, Kansas City offers investors low property taxes and an attractive rental market with low vacancy rates. Despite its relatively affordable housing prices, there are still opportunities for cash flow in multifamily investments. As such, Kansas City is an excellent place for investors looking to add a profitable asset to their portfolio.
20. Albuquerque, New Mexico
Albuquerque is the largest city in New Mexico and has a booming job market. The city has seen a 3.6% increase in rental occupancy over the last year, making it an attractive location for multifamily investors looking to capitalize on increasing demand for rental properties. Additionally, Albuquerque’s cost of living is 8% below the national average, allowing investors to maximize their returns on investment. Albuquerque is a very safe city with low crime rates, making it attractive for families and other potential tenants. Albuquerque is an excellent market for multifamily investors looking to make a long-term play.
Pros of Multifamily Real Estate Investments:
Multifamily investments provide a steady cash flow from rental income, allowing investors to generate passive income and build wealth over time.
Investors can take advantage of favorable tax laws regarding multifamily properties, such as depreciation or interest expense deductions.
Multifamily properties can appreciate over time, providing investors with capital gains when they sell the property.
Multifamily investments allow investors to use leverage to purchase more properties than they could afford with cash alone, allowing them to grow their portfolios faster and generate greater returns on investment.
Multifamily investments allow investors to benefit from economies of scale by purchasing multiple units in one building and managing them as a single property.
By leveraging tenant diversity, multifamily properties can provide investors greater security against rental vacancies or market downturns.
The liquidity of multifamily investments is higher than other real estate investments, such as single-family homes, making it easier for investors to exit their positions when necessary.
Cons of Multifamily Real Estate Investment:
The upfront costs of purchasing multifamily properties can be high, and investors may need financing.
Multifamily investments require more management than single-family homes, as investors must manage tenants and the property.
Finding a tenant for each unit can be time-consuming, and managing multiple tenants can be more difficult.
Repairs and maintenance can be costly, as multifamily buildings typically require more repairs than single-family homes.
Multifamily investments are often illiquid, meaning investors may have to wait a long time to exit their positions.
The market for multifamily investments can be volatile, making it difficult to predict future rental income or property values.
Rental income can be unpredictable due to tenant turnover and changing rental rates.
FAQs
What is a good ROI for multifamily?
In general, a good return on investment for multifamily property can range from 6%-12%, depending on the specific market. Many times higher returns are possible with renovations or value-add investments. Researching the local market and understanding the potential ROI before investing in multifamily real estate is important.
What is a cap rate when it comes to multifamily properties?
The cap rate is a metric that measures the potential return on investment for an income-producing property. It is calculated by dividing a property’s net operating income (NOI) by its current market value. Generally, higher cap rates indicate more profitable investments. Multifamily properties typically have cap rates between 4% and 6%, but this can vary depending on the local market and the specifics of the property.
Is now a good time to invest in multifamily?
That depends on various factors, including the real estate market in your area. Researching the local market and understanding the potential returns before investing in any real estate is always a good idea. In many parts of the country, multifamily properties are still attractive investments due to low-interest rates and other favorable conditions.