Where are my MFH investors going in 2019?

Question

Curious on the BP pro opinions on where they are planning to invest this year?

I have a friend who got in a few years ago in Vegas and has seen nice returns, but it seems some of the big players are selling off now and moving elsewhere. Some parts of Texas...

I know some were big on Nashville some time back, but maybe that has also hit its end...

I plan on diving in to a 10-15 unit sometime soon and would love to hear others opinions!

Thanks!

Dan Handford · Answer

@Eric Schultz Don’t forget about Greenville South Carolina!

Kay Kay Singh · Answer

@Tyler H. As several experts have already given their best opinions but I will also give you my two cents.As you say you have $250K to invest ,there are several options available for you.1.You can find a good off market small deal from Mom and Dad operators in an emerging market like Dallas ,Atlanta or their suburbs which is going to be a little hard to manage and no economy of sale ,not much tax benefits and so on.2.You can do a joint venture with some one to get a little bigger property .3. You can partner with a syndicator in a large property and take all those benefits that you can in a smaller property like onsite property management,Cost Segregation and depreciation etc.4. You could invest passively in $50K each in 5 different markets and different Operators and diversify among markets and mitigate your risk and still take the benefit of depreciation and scalability etc.Now it is up-to you what your goals are and where you are in the life cycle and your risk factor.

Alina Trigub · Answer

@Tyler H.While most agree that the recession is coming, no one would be able to give you an exact date. Since the recessions are usually hyper-local, you need to pick a market you want to concentrate on and learn it inside and out to time your investment straggly correctly. Here's an article to help you guide in that direction: https://www.biggerpockets.com/member-blogs/10850/8...

Charles Kao · Answer

@Tyler H. What I would I do is probably different than what you should do. 250k is alotof money to do damage but I'd just buy the best investment you can and not focus on just 10-12 units. If you own a small portfolio of small multis you probably have the savvy to manage a multi, and you might be able to get an apartment owner to land contract you an apartment building. For us every deal so far although that likely will changewe go in 100 percent capable of closing the deal without investors. It just so happens that we have not had to as investors recognize the deals and also recognizing I am not as "proven"as some other syndicators I gave them themmore equity. If you own 10-12 units whether its12 SFH or one 12 unit I think an apartment owner would realize you have the savvy to manage 40-70 units. A dealI am working on now on land contract for 66 units the sellers did not entertain it at all but after getting to know me and have their CPA reiterate the benefits of a land contract that I communicated they now are willing to do 10 percent down. I alsolooked at the opportunities of financing. I found a lender that does 100 percent financingand another that does 90 LTV so I lookfor deals that meet their criteria because my spending power increases. If you just focus on finding good deals AND how to execute on them you will be fine.

Eric Schultz · Answer

Tyler H. I’m an LP in some syndication deals and can tell you which metros these larger sophisticated operators are still making it happen on value add 200+ unit properties in 2019: Phoenix, Dallas, Houston, Atlanta

Charles Kao · Answer

@Tyler H.Why specifically a 10-15 unit and why not bigger. I'm not a big fan of 10-12 units because you don't get much scale yet you have to do commercial financing so you don't really realize the benefits of multi except the education on how to execute value add strategies and navigating commercial financing. At this point everybody is performing well because the market is appreciating like crazy but we'll see what happens with a slowdown. I personally am looking at primary or secondary markets with diverse job force as this market approaches what I believe is the top. I am not as bullish on the DFW market as others because with all the growth in population there is even more building but with that being said there is a lack of Class B rentals so if I did thats where I would go.

Theo Hicks · Answer

Tampa, Orlando, Jacksonville, and possibly Tallahassee.

Eric Schultz · Answer

Dan Handford Nice! Tyler H. San Antonio is another that is starting to gain some popularity.

Josh Oaten · Answer

@Tyler H.Phoenix, Arizona is great market for multifamily investors. - 7% rent growth,- top 5 in job growth - Massive population growth due to Californians making the move here- Low cost of living and Phoenix is coming along as a completely evolved and new city to what it was back in 2008.

Jordan Hadley · Answer

Nashville has still yet to peak, with Amazon bringing over 5,000 jobs within the next two years it really couldn't be a better time to invest. We have deals all over the new soccer club coming in as well as the new Amazon HQ.