Best cities to invest in (Multifamily)

[Zaid Bender]

What city or cities would you want to invest in (Multifamily Real Estate) in 2021 and why? 

[Erik W.]

I follow the old story/proverb to "dig for diamonds in your own back yard," so I invest in the city/metropolitan area in which I live.

The reasoning behind this are many.  I will cover several of the ones I think are key to understanding this strategy.

1) You can more easily keep an eye on a property that is near where you live.

2) You can know the land lord / tenant law in your one state easier than several states.  The same is true of judges, who will make or break your case when it comes time to enforce your leases.

3) You can more easily develop and maintain face-to-face relationships with contractors, investors, agents and city leadership in your area.

4) Even if you hire a manager, you will have to inspect how your manager is performing in person at lease 3-4 times per year until you have several years experience with that person/company.  We call this "managing the manager."  It's a lot less expensive and time consuming to be close by vs. flying all over the place.

5) It is often easier to attract "local money" to local projects when you live in that location as well.  It shows you have a vested stake in the community.  Some people won't care, but others will.

6) It requires less time and effort to maintain current knowledge of local politics, development, and economic trends in one area close by vs. many areas scattered all over.

To decide if you want to invest outside your area, you must find a rate of return in a market that more than adjusts for the extra time, expense, and hassle factor of you having to deal with all the above.  Some investors claim to do that, but it can be hard to measure. Too, what is it worth to be at home with your family, friends, and community each night vs. a "road warrior" investors travel the country and missing out on the joys and triumph in your home town?  To me, I live where I like to be surrounded by the people I love.  For a VERY SUBSTANTIAL GAIN, I would consider brief out of town trips, but this out of town investing seems to require a lot more than that.

We each have to decide.  I hope the factors I've laid out will benefit as you make your decision.