Investing in multifamily real estate can be an exciting and lucrative experience. Like most investments, it comes with its own risks. You can minimize this risk by conducting due diligence on a property. Analyzing the multifamily target market is equally, or perhaps, even more important. In fact, many investors select their target markets before they look for specific properties.
Below we will discuss the top Multifamily Target Market Criteria.
HOW TO SELECT A TARGET MARKET
Selecting a target market is important for more a variety of reasons. If your target market is not well defined, your market will be too broad. This will make it challenging to identify good deals. In addition, it will also make it harder to acquire the level of detail required to make informed decisions. On the other hand, the target market cannot be too small. If it is, you will have issues identifying properties that meet your requirements. It’s better to narrow down your search to specific submarkets within a Metropolitan Statistical Area (MSA). For newer investors, it also makes sense to look at the market you live in or have lived in. This helps with another critical aspect of multifamily investing: building your multifamily investment team.
Selecting good target markets boils down to a few key themes:
- People
- Jobs
- Money/Economy
- Real Estate Market Cycle
- Crime
- Types of businesses in the general area