Top 10 Markets for Multifamily Real Estate Returns

[Ellie Perlman]

As we continue to navigate through these recent economic changes, there’s been a multitude of speculation on what the impact will be on real estate investing. Granted, being a multifamily syndicator and investor myself, I am biased; yet, when it comes to real estate investing, multifamily continues to live up to its reputation of being one of the historically safest and most reliable asset classes there is.

According to the Newmark Knight Frank 1Q2020 US Multifamily Capital Markets Report, multifamily total returns averaged 5.10% in the last year. The key to capitalizing on this is selecting the strongest and highest performing markets. I personally focus on opportunities in Texas, Florida, and Georgia, where average returns can commonly range from 7%-9% or more. When a strategy for maximizing returns is effectively implemented, a multifamily investment can prove profitable even through economic shifts, as we are seeing in our current portfolio.

Which markets are leading the charge? Here are the top 10 markets in the last 12 months for returns on multifamily investments:

10. Seattle, WA

Overall Population: 637,850

Annual Total Return: 6.02%

Average 2 BR Rent: $1,690

Mean Income: $67,365

9. Palm Beach, FL

Overall Population: 8,344

Annual Total Return: 6.04%

Average 2 BR Rent: $1,418

Mean Income: $105,700

8. Minneapolis, MN

Overall Population: 394424

Annual Total Return: 6.70%

Average 2 BR Rent: $1,150

Mean Income: $50,767

7. Atlanta, GA

Overall Population: 440,641

Annual Total Return: 6.80%

Average 2 BR Rent: $1,190

Mean Income: $46,439

6. Denver, CO

Overall Population: 633,777

Annual Total Return: 7.73%

Average 2 BR Rent: $1,350

Mean Income: $51,800

5. Charlotte, NC

Overall Population: 774,807

Annual Total Return: 8.07%

Average 2 BR Rent: $1,140

Mean Income: $53,274

4. Tampa, FL

Overall Population: 348,934

Annual Total Return: 8.24%

Average 2 BR Rent: $1,280 Mean Income: $43,740

3. Orlando, FL

Overall Population: 250,224

Annual Total Return: 8.54%

Average 2 BR Rent: $1,280

Mean Income: $41,901

2. Austin, TX

Overall Population: $864,218

Annual Total Return: 8.69%

Average 2 BR Rent: $1,461

Mean Income: $55,216

1. Phoenix, AZ

Overall Population: 1,490,758

Annual Total Return: 13.73%

Average 2 BR Rent: $1,100

Mean Income: $46,881

Sources:

Newmark Knight Frank 1Q2020 US Multifamily Capital Markets Report

http://www.usa.com/

https://www.apartmentlist.com/

[Dan Burstain]

I think it is a nice list and thank you for sharing it.  The only thing it is missing is year over year.  I think the Annual Total Return is more of a roller coaster ride for cities like Phoenix and those in Florida vs. what you see in Austin with the consistent steady rise.  Austin was over the housing crisis about 15 months after it hit there where some cities like Phoenix have just gotten back to those numbers in the past year or two.  So investment timing and selling is critical in those cities.