Best Place to invest in Apartment / Multi Family in 2017

[Shital Thakkar]

Hi,

What is the best place to invest in Apartment/Multi family in 2017.

I know this is very broad spectrum... i am looking for... area with...

• Good Cap Rate 8-9%
• Stable growing economy

[David Thompson]

Shital,

Shopping by cap rate ?  If you study deeply into this area, cap rates are influenced by lots of factors including interest rates, demand and credit availability.  It may come as a surprise to many investors but you can make a killing on value add apartments in 5-6 cap space while losing your shirt in 8-9 caps.   IMO, you would be better served by not making that a primary criteria to buy.  Instead, look top down for where the population and jobs have been going and where they are continuing to go in the next 3-5 years.  "Acres of Diamonds" is a classic story about wanting to look elsewhere when there are diamonds in your own back yard.  You are in Dallas, you are there.  

We purchased a 320 unit and a 296 unit in North Dallas in the past four months and will likely make another purchase in Q4.  We look nationwide and continue to find this one of the most dynamic markets in the country.  Don't buy anything (i.e market price or A properties which have a tendency to get overbuilt).  Continue to look for value add only and B/C.  Ensure your numbers are conservative and that includes exiting in 3-5 years at a rising cap rate.  Competition is intense and driving cap rates down.  Interest rates are stable and slightly rising.  Cap rates will go where they want to go but we believe an upward moderate forecast would make sense.   Numbers can still work if you buy relatively good value where you can make improvements.   Find the best submarkets w/n the best markets and ride the strength of demand.