Learning to evaluate markets and submarkets

[Salvator Lorick]

Hello everyone,

Just curious as to how some of you evaluate the markets and submarkets you are thinking about getting into? thank you in advance for your help 

[Joshua Ferrari]

As a multifamily syndicator, here is some of the data points that we look for in the deal, and in the market, in order to be sure that the deal is a good one:

- Market Performance: Rent Growth, Market Vacancy, Long-Term Vacancy Average, Adverse Cycle Occupancy Bottom, Median Income, Employment Pool, Rent to Cost of Ownership, Income to Housing Cost Ratio, Market Rankings, Construction/Absorption Ratio, Pricing, Cap Rates, Trends in Capital Market, Etc.

- Forecasted Market Performance of the Same

- Property Specific Performance: Asking Rents, Actual Rents, Vacancy, New Lease Trade-Outs, Average Vacant Days, Lease Terms, Retention Rates, Renewal Trade-Outs, Sales Record, Renovations Completed, Market Comparable Amenities based on Class of Asset, Revenue, Rent Roll, Trailing 12 Months of Operating Expenses, Property Taxes, Property Insurance, Market Trends of Specific Floor Plans, Etc.

This is but a few of the major things we look at to be sure we are providing our investors with a solid investment that brings healthy returns.

I would recommend starting local if you're just starting out. Investing in your own backyard will give you such a leg up on the out of state competition. Plus, you can visit the property, be hands on, walkthrough the property, and get to experience the whole process with boots on the ground in case anything goes awry. (Which it will.)