I’m trying to find out a good way to identify good markets for investing in apartment buildings.
This seems a little tricky because in NJ, only war zones seem to cash flow. All the reading I’ve done so far says to avoid the ghetto’s. This leads me to think it might be better to venture out of state. I’m trying to find a little direction of how I can narrow down what market areas to investigate further.
An ideal state (area) would be one in which:
-has a high employment rate
-high demand for rentals
-cheap acquisition price
-ability to evict quickly
Would anyone like to share some info about taking the next steps?
thanks in advance!
The top growth states in the country currently include Nevada, Arizona, Texas, Florida, Utah, Idaho, North Carolina, Georgia, Colorado and South Carolina.
Look at these states cities and determine your best markets based on income, employment, landlord friendly, and cash flow!
thanks GR I appreciate your feedback. this looks like a good place to start
Gee you didn’t put North Dakota on that list? Property prices are climbing but they are not out of reach.
I did not put North Dakota on that list because although North Dakota is growing by 7 percent per year, the fact North Dakota's population is only 680k people means North Dakota is only growing by 47k people per year which is statistically only about 25k adults.
Now even though the states on my list are not growing by 7 percent they are states with large populations when weighed against population verses growth rate those states have more adults moving to those states than the number of adults moving into North Dakota.
There is very little if no REI presence in the Dakota’s, virtually no hard money lenders and likely no sustainability long term for a stable population at this growth rate as once the oil boom ends (This does not mean there won’t be oil jobs in North Dakota) it is likely all of the “demand jobs” will be terminated and maintenance jobs will become the lions share of the market.
As an investor I am looking for markets where there is the most demand for the products I buy or create and there are statistically more renters and buyers in other states because the population is significantly larger even though growth is smaller.
A 4.7 percent growth rate in a state with 1m in population is the same equivalent number of men, women and children moving into North Dakota, except you don’t quite have as harsh a winter in the southern US and long term those states on my list will stay stable while the boom in North Dakota will come and go.
Like I said earlier North Dakota will probable always have drill rigs and drillers, geologists, tool pushers and derrick hands but like other oil states the actual boom creating job demand will end as wells are put into production and production rather than exploration will become the norm.
Historically there is no where on earth where a boom has stayed stable long term, as a boom is just that, a boom!
You may be right about the population only growing by 7% per year. I suspect that the growth rate is only growing by 7% is because there is a severe shortage of housing. Many of the workers can not bring their family’s here because of that shortage. Hard money lenders are few and far between but personally I have not directly tried contacting any of them, although I did use one out of Penn about 8 years ago. Banks here are traditionally very conservative, which drives me nuts, local banks will only lend 60 - 70% LTV and they really don’t like investors refinancing properties. Yes the winters are brutal, we have had 3 rough ones in a row.
With the newest studies completed they expect to be drilling for another 15-20 years. Yes, that could slow down if Oil drops below $70 a barrel, $50 a barrel is about the break even point. The market for rentals is very high, in my opinion, because many of the workers that have come here have had financial problems back home and can’t qualify for a home purchase. The news articles I have read have said they will need at least one person for each well in operation. It’s kind of funny because many of the wells drilled in the 70’s are still pumping oil.
Yes, with every boom there is a bust. I lived in Williston in the mid 80’s when they had their last bust and it wasn’t pretty. You could buy a decent townhouse for $6K now that same townhouse is selling for $130K+. With any real estate investment you must plan your exit strategy. We have been trying to only take out 10 year mortgages with plans of paying them off in 5 years. Our long term strategy is to sell our single family residences in about 3 years and build some multifamily units on some acreage we purchased about 5 years ago.
I have been enjoying the great appreciation rates!!! I don’t have any statistical data, but I would guess that they have been about 15% per year for the past 5 years. Another great fact has been ND has had the lowest foreclosure rate in the nation. That translates into profit for buy and hold investors. There was just an announcement about an investment firm out of MN planning to invest a large sum in housing and commercial properties in the State. In my opinion ND is a great place to invest!
The sad thing about this growth is that many of the oil companies purchased and built many of the new houses in Williston and Dickenson areas for their employee’s. My guess is they will make a huge profit on those houses when they start liquidating them.