Small Commercial Multifamily Markets

[Allen Tracy]

I'm partnering with a few other investors, all of us currently have some out of state small multifamily properties, and we're starting our research on good markets for small commercial multifamily that we can buy together.  I'm looking for anything between $400k-$1.2mil to start out with and would possibly grow from there.  Since this will be our group's first purchase we'll probably stick to something smaller and a little safer, buy and hold for at least 5 years, but still have some value add.  Maybe C+ neighborhood at the lowest but more in the Bs would be better.  We'd like to add some value, maybe cosmetic rehabs, replace mechanicals or a roof, but nothing too major.  Door count isn't as big of a deal (could be 5, could be 20) as hitting our criteria which we're currently nailing down even further.  We'd lean more towards cashflow but if it's a B neighborhood we'd be happy with a balance of cashflow and equity through value add.

My properties are currently in Columbus, OH but that market is getting expensive and very competitive.  I was going to look into Memphis, TN for my own small multifamily, not sure if it's good for small commercial multifamily.  I've also heard good things about Kansas City for small multifamily but not sure about small commercial.  Another member of our team has properties in Oklahoma City and is interested looking into that area more.

I'm going to start looking into all the stats like population/job growth, etc. but wanted to post on here first to see what others have been seeing in that space.

Any thoughts on the above markets or ones that you would recommend for small commercial multifamily properties?

[Lee Ripma]

@Nicholas D. KC has a stock of 100 year old buildings as well as new construction and everything in between. Neighborhoods were often built at the same time, so you’ll have a whole neighborhood of 60s, 70s, 80s. Certainly can find 60s+ MF. Certainly can find small MF, 4 units, 8 units, 12 units, etc. 
The MSA is growing and affordable although prices have gone up (like everywhere). I like a mix of cash flow and appreciation and KC is great for that.