Why is dangerous to buy small MF deals in tertiary markets now?

[Leon Lee]

Hi, BPers

By going through all the posts in the forum, I got the impression from some experts that it is dangerous to buy small (<100 units) MF deals in tertiary markets late in the RE cycle like now. Could someone please explain why exactly it is especially risky? Is now the right time to shift from SFH investing to the multifamily world?

Thanks in advance!

Lee

[Phillip Vera]

@Michael Ibekwe and @Leon Lee it amazes me how many people overlook Augusta, GA.  I'm not a fan of the Macon market (Michael mentioned some good points here), but I hear Columbus is decent.  Happy to chat about Augusta, GA.  I'll actually be in Atlanta tomorrow if anyone has time for a late lunch.  

Depending on the criteria, Augusta is a strong, stable, long-term market poised for continued growth.  Several smaller MF deals are popping up, and several large class A units being built.  I would consider Augusta a secondary market, but in regards to the original question, think it's a "safe" market for where we are in the real estate cycle.  After the last crash, we only had about a 5% dip and I actually think there's enough growth to sustain right now.  Unless you're concerned about value for resell and/or debt refinancing, I think many prefer that sector of the market.  I feel as though Augusta gets overlooked due to lower rental rates (although these are rising quickly), but the entry points are also extremely low compared to other national markets.