Even though interest rates have increased significantly over the last twelve months, purchasing multifamily apartments over the next twelve months is still a great investment strategy. In this blog, we’ll discuss what markets will offer the best returns on your investment. The factors that make these markets the most attractive include rental rates, job growth, population growth, and forecasted rent increases. By the end of this article, you'll have a better idea of where to receive the best ROI for multifamily investing.
Phoenix's Strong Rental Rates Bring Great Opportunities for Multifamily Investing
The Phoenix metro area has been experiencing significant population growth over the past few years, which has resulted in an increased demand for rental properties. Per AZBigMedia:
"Over 277,000 people have moved to Phoenix over the past five years… From the 33 different ways we measure total employment trends, Phoenix is the single best market in our index for overall employment".
Rental rates have been steadily increasing. The average rents in Phoenix rose by 12% between 2017 to 2020 and are expected to rise at a lower percentage than in the previous five years.
Raleigh's Research Triangle Brings Investment Options in Multifamily Sector
The Raleigh metropolitan area is home to the "Research Triangle"; major universities such as North Carolina, North Carolina State, and Duke are located here. Raleigh's tech industry comprises a highly educated workforce and high-salaried positions. This is reflected in the excellent apartment fundamentals that drive the market's demand. These young professionals look for multifamily apartments with excellent amenities and workspaces to fit their work and healthy lifestyles. The average rents for multifamily apartments increased by 5.4% between 2019 and 2020, with a projected increase of over 3% through 2023.
Strong Job Growth in Atlanta = a Top Market for Investing in Multifamily
Atlanta is another metro area with significant job and population growth over the past few years. The city's rental market is growing quickly, with rental rates increasing by 13.4% between 2015 and 2020. Job growth in Atlanta is forecasted to reach 2.4% in 2024, and new apartment development is projected to slow down, which could mean less competition for investors. Atlanta's population continues to grow, and young adults that are primarily renters are growing at a faster rate than the overall population. In addition, Atlanta is home to 17 Fortune 500 firms, including Microsoft, Google, Apple, Visa, and Cisco, providing great job opportunities for young career-minded individuals.
A Hotbed for Multifamily Investing: Dallas-Fort Worth Area
The Dallas-Fort Worth area is one of the fastest growing areas in the country, which can be attributed to a growing economy and excellent job market. Dallas-Fort Worth is expected to add approximately 50,000 jobs in 2023 which is forecasted to lead the nation. 2022 saw double-digit rent growths for all classes of multifamily apartments in the area. The rent growth increases for 2023 and 2024 are expected to be between 3% and 5%. In 2022 employers added over 235,000 jobs. With interest rates rising, many would-be first-time homebuyers will remain renting and wait for the right time for affordability.
2023 & 2024 Look to Be Bright for Multifamily Investors
With so many markets across the country offering great potential in multifamily investing, the opportunities for 2023 and 2024 are abundant. While these areas listed above may be promising, be sure to explore other areas to find the perfect fit for your investment goals. By doing so, you'll be ready to capitalize on the growing demand for quality rental units and set yourself up for long-term success in the multifamily.
If you have questions or would like a consultation about multifamily investing and financing, contact LSG Lending today, and let's make 2023 and 2024 your most profitable.