There are a few tangible indicators that commercial real estate investors look at before a city can be termed as good for the buy and hold development strategy. They are listed as follows.
Job growth tops the list as the most pertinent factor as far as a livable city is concerned; once a city is livable, investing in it becomes viable. A city should be able to create jobs as this then translates to a healthy economy. This then means that investors and developers can build units and tenants will not have trouble paying the rent.
Population increase will be driven by job growth. It goes without saying that when people move to a city and find jobs, they will need places to live long-term and even premises to start their business. A healthy population also means low vacancy rates and well performing rental properties. So check where the increase in population is happening.
Affordability comes into play especially when deciding on how much to charge for rent. In cities where the economy is thriving but owning a home is expensive, many will opt for the alternative of a paying a higher rent for a decent place of living.
As a property investor take note of new construction and buildings coming into the housing market. As the population grows, demand for rental increases and supply for buy and hold real estate should be at per with the demand. Be sure to conduct an analysis and find out the type of rental property on demand, e.g. single-family and multi-family, and which is likely to offer good returns on your investment.
The above factors are essential if you want to guarantee your investment will be lucrative and, therefore, will also generate good rental income which is the essence of buy and hold multifamily investments.
So which cities best have the above factors? Down below are a few cities we inspected while keeping those factors in mind.
Atlanta, which is the pulse of Georgia, is not in the cultural heart of the Southeast but is a robust economic center and the center of transportation. Atlanta has consistently ranked high amongst the top best cities for consideration by property investors. People have been moving in droves to Atlanta owing to the recent job growth in the city.
Known fondly as the land of Mickey Mouse, Orlando thrives when America, in general, is stable since its economy is mainly hinged on tourism. Not only has its population grown by 7.6% in the last three years, but it has also had a 7.1% increase in job growth over the past two years. In 2017, the home prices increased by 9%. Market experts forecast an increase of 33% by the start of 2021.
Des Moines, Iowa
Iowa was ranked as the most affordable city to live in by the U.S. News and World Report in their recent roundup of cities that are most livable. Real estate experts anticipate an increase in rental rates for three-bedroom apartments by 6.8%, compared to the 2.6% increase in the previous year.
Tennessee’s most famous city is one that spells nothing but prosperity. It is no surprise considering Forbes ranked Nashville in the Best Big Cities for jobs and other sources aver that an average of 100 new people move to Nashville every day.
Raleigh and Durham, North Carolina
North Carolina is the home to three major U.S. Universities: North Carolina State University, Duke University and North Carolina-Chapel Hill University. It has a fairly low cost of living that has seen population growth mainly due to migration. All these make it a robust market for multifamily investments; Raleigh and Durham which are about 25 miles apart have real estate markets with an impressive ability to absorb new units.
Salt Lake City, Utah
It’s probably the most business-friendly city thanks to the fact that compared to many other cities, it is relatively inexpensive. This has thus translated to a strong economy, and in the third quarter of 2018, CRE developers had 6,500 new multifamily units developed.
The multifamily market in this city is on a higher trajectory than any other city around the country. In Denver, it is all about the lifestyle; owing to its strong economy and educated workplace, the rents in Denver have steadily increased over the past five years by 60%.