Investing in multifamily syndications is an amazing way to generate passive income and create generational wealth.
But even as passive investors, you need to know which market offers the best chances of getting you the most desirable returns. This is important to know because you want to invest in a market that's growing.
If you invest in a deal when the market is flat or declining, it will be challenging for the operator to execute the business plan. They will struggle to add value to the property, and they’ll struggle to send you the distributions.
So, how do you know which markets you should invest in and why?
2 Things to Look for in a Market
You want to look for a high-growth market—one that’s growing in population, incomes are increasing, and home values are on the rise.
And, of course, you're looking for markets where you can get a high yield.
There are several different websites you can use to research a market. Focus on these six things:
Those are some ways you can find out where some of the higher-growth markets are. So when an investment opportunity comes across your desk, take some time to do a quick dive into the market it’s in.
Examples of Strong Markets
We invested in Birmingham, which was a low-growth market. That deal was a slog – rents couldn’t be raised, and there was a high rate of delinquency.
We had another one in Little Rock, which at the time was a growing market. But there was a poor labor pool there, and we struggled from a management perspective to find good managers and contractors.
Huntsville is a great example of the perfect market your operators should be investing in. The market started growing significantly about five years ago, and we noticed the impact on our properties—we saw the rents going up.
Everybody was moving to the southeast. Huntsville was a popular destination due to its low cost of living, high quality of life, and increasing population. This led to the ability to charge higher rents, making everything easier.
Find an Operator who Conducts Thorough Market Analysis
One of the best ways to reduce your risk when investing in a syndication is to choose your operating partner wisely. An operating partner with a track record and experience will do an excellent job for you in every aspect.
They’ll select the right market and property in the right submarket for you. They will also manage the property more efficiently.
It’s important to be educated and know how to do a market analysis on a surface level, but at the end of the day, you have to find the right operator because it’ll solve so many problems.
It’s who, not how, and we’d love to be your trusted source.
As an operator of multifamily properties, we've been doing this for a long time and have nearly 2000 units. We have a lot of experience, we’ve looked at a lot of deals and passed on a lot of deals so we protect our investors’ money.
Our superpower is operating multifamily properties. So we'd love to build a relationship with you and earn your trust.
The best way to do that is to use the link below and schedule a call.
Go to https://nighthawkequity.com/join and schedule a call with us.
