What to look for in a new market- multifamily!

[Jeffrey Donis]

I have seen a lot of different posts regarding what to look for in a new market. These are some of the things we take into consideration before we expand into a new MSA- 

• 1. Population over 200,000
• 2. Long-term population growth of at least 50% of the national average (preferably more)
• 3. Diverse economy
• 4. Labor participation rate at or above national average
• 5. High relative cap rates
• 6. Pro-business, pro-landlord climate
• 7. Limited risk from climate change
• 8. Close enough to home for you to oversee easily (one-day round-trip preferred)
• 9. “Anchor” is a bonus – not necessary, but great to have. Avoid bad anchors.

Am I missing anything major? Open to any input!

Thanks

Jeffrey Donis

[Taylor L.]

I would put market cap rate much lower on the list, or leave it off the list entirely at this point. Cap rate isn't the same as return. Replace it with vacancy rate trends or rent growth rate.

I would also look at new unit construction rate vs demand predictions. Many markets with growing populations simply are not building enough units to keep up with demand in the future.