Analyzing markets question

[Dan Wentworth]

I'm new to apartment investing & currently researching how to determine the best markets to invest. Trying to calculate supply/demand of a market & looking for a reliable resource helping me determine the current number of multifamily units in a particular city?  Thanks in advance for any suggestions.

[Erik W.]

@Dan Wentworth, hi and welcome to BP!

You've asked a BIG question...probably THEE big question when it comes to apartment investing.  Don't take this the wrong way, please, but I would be surprised if anyone here is willing the share the latest hot market and how to scoup deals out of it.  More likely, they are going after those deals right now.

MF market returns have compressed significantly in the past several years: that is to say, it's hard to find anything easily that goes above a 6 CAP unless it is a mega-disaster that seasoned rehabbers aren't willing to touch. I share this to explain paragraph 1: deals are so rare that experienced investors are not likely to give them away. Rather, they are actively pursuing them and competing with other seasoned investors. In the spirit of friendly helpfulness of our community, I'll share some general tips that may help:

1) Look for a city with a variety of economic pluses including: a diverse employer based (i.e. no one or two major industries dominate the market), a desirable climate, easy access to nationwide transportation (airports, interstate highways), low overall crime rate, growing demographic of younger families and singles.

2) Find off market deals.  This is where the rubber meets the road.  You're going to have to dig and dig DEEP.  No one is going to hand you a place with $500,000 or more of built in equity.  More than likely, they will list with a commercial broker who will price it close to fair market value, leaving you little room to perform a value add.  So you have to catch that person BEFORE they decide to list it, but right about the time the idea of selling has already started to creep into the back of their mind.

3) Have your money ready to go.  When you find that Seller in #2, they aren't going to want to dither while you try to put together millions in capital.  Have your money lined up in advance, whether that is personal funds, investor funds, traditional bank funding, or a combination of all 3.

Curious, how much experience do you have in real estate investing in general?  What kinds of properties and what have been your successful strategies to date?