Why I like the Southeast for Multifamily Investments

[Michael Blank]

We strategically focus our multifamily investments in the Southeast region of the US for two key reasons:

Lower Costs - Properties are less expensive to acquire in the Southeast than in other parts of the country. Simply put, we can buy more NOI and rent for our dollar invested here versus other regions. This allows us to maximize returns.

Strong Growth - The Southeast, especially cities like Huntsville, Atlanta, and throughout the Carolinas, are experiencing rapid population and job growth. Huntsville for example has more STEM and tech jobs per capita than anywhere in the US. Major employers are flocking to these markets, bringing new residents and renters. This fuels the demand for multifamily housing.

Concentrating investments in one market allows you to scale faster, reduce costs, build relationships with brokers and acquire off-market deals. 

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Have you found similar success in a different market? Chime in. 

[Percy N.]

@Michael Blank, we like Secondary markets in the Southeast that fly below the radar as well.

Interesting you mention Huntsville, AL as an example - we started investing in Huntsville around 2019 and have done approximately 7 projects there (spanning ~1,100 units). In fact, this got some attention and put us on the front page of the Huntsville Business Journal.

We now have a Multifamily fund that focuses on 3-4 similar markets and the goal is to have enough dry powder to pick up good deals quickly, thereby benefiting the investors in the fund. e.g. Our last purchase in the fund was a newly constructed 98 unit Built-to-Rent community with room for an additional 120 units, that we were able to get at a 6% cap rate (a significant discount to the market).

Hope to buy a few more deals similar to this one in the fund. 

Happy to exchange notes for those interested in investing in this area. 

[Aaron Shoemaker]

@Michael Blank Thanks for the post. Question- do you think cap rates have increased similarly in the Southeast as the rest of the country, or is it less so because of the advantages you've described?

[Steve Kontos]

I am a big fan of the Southeast region. Here are some my favorite reasons why:
1. Real estate laws that make sense.
2. Better value for your investment dollars.
3. Business and real estate incentives.

[Kurtis Eaton]

I know it's been a minute since you posted this but I'm just reading it. Have you done any MF student housing in the Southeast? I'd be interested to hear which areas you favor for that if so...

Kurt

[Robert Rixer]

Curious, what kinds of entry cap rates are you looking at in places like Huntsville, Atlanta and the Carolinas?

[Sandra Morrison]

@Kurtis Eaton I have student housing in more northern state but my son is at UAH in Huntsville so the area is on my radar.

[Percy N.]

Quote from @Sandra Morrison:

@Kurtis Eaton I have student housing in more northern state but my son is at UAH in Huntsville so the area is on my radar.

We owned 3 properties right across the university. Exited all 3 of those and have 3 current ones in the greater Huntsville MSA.

Also working on some opportunities in NC not far from some universities.