What is multifamily investing?
Multifamily investing is a type of real estate investment wherein you buy a property that has multiple housing units, such as an apartment building, condo or townhouses. Multifamily investments are quite popular because of their steady income flow and resilience during economic slowdown.
When you invest in a multifamily unit, one or two vacancies don’t disrupt your income. Also, it is convenient to hire and pay a professional property manager who will take care of day to day maintenance and rent collection, while you focus on important activities like tracking performance and marketing.
According to a report by Avison, occupancy in multifamily increased by 14.6% in the United States in 2023. Class A buildings showed a greater growth in occupancy than Class B and Class C buildings. Multifamily investments are becoming increasingly popular in the US. With several public and private grants for financing multifamily investments, they have also become more accessible to people.
In this article, we will first look at what factors you should consider while selecting a state or city for investing. Then we will go through different states that are a good option for multifamily investing. We will look at every state’s demographics, employment rates, income, and what makes it an attractive investment opportunity.
Things to consider for a multifamily investment
Property investments are all about location. Factors like surroundings, amenities, social demographic of the neighborhood, local laws and regulations, legal requirements for property ownership, and zoning rules have a central influence on how well you can manage and earn from a property.
Economic growth and job market, population growth, local real estate market trends, infrastructure and amenities, property taxes, cost of living, and your own risk tolerance, are certain things you should assess before making an investment.
Best states for multifamily investing
Utah
Utah, especially Salt Lake City, is an attractive location for multifamily investment because of its growing population. Utah had a population of 1.2 million as of 2021. The median household income ranges between $20,000 to $60,000. It has a lower poverty rate, 7 %, compared to California, Texas, Washington and Arizona.
Salt Lake City in Utah is especially suitable for multifamily investment. This place has a growing and diverse population involved in different forms of employment, and the city’s economy is driven by technology, healthcare, and finance sectors. Rising demand and competitive prices have led to strong rental yields from real estate.
North Carolina
As of 2022, North Carolina had a population of 10,698, 973. With a median household income between $30,000 and $ 60,000, the number of housing units has steadily increased in the past decade. As of 2020, there were approximately 4 to 5 million housing units in North Carolina.
Among all the places in North Carolina, Charlotte has a diverse, growing economy. There is significant growth in employment and rental rates. Excellent transportation and convenient availability of amenities has made it fairly popular among multifamily real estate investors.
Idaho
As of 2022, Idaho had a population of 1,939,033, with a median individual income ranging between $20,000 to $25,000, and a median household income ranging between $30,000 to $50,000. With a steady increase over the past decade, Idaho currently has about 600,000 housing units.
Agriculture, manufacturing and technology form the backbone of Idaho’s economy. Healthcare and education is also growing, with a number of universities and colleges attracting students from all over the country. An opportunity for multifamily investment in Idaho is certainly worth looking into.
Florida
With a population of approximately 22 million, citizens in Florida have a median household income ranging between $30,000 and $70,000. While the poverty and unemployment rates in Florida are a bit concerning, the number of housing units is on par with other states like Pennslyvania, Illinois, Ohio, Georgia and North Carolina.
Robus rental demand and economic stability is observed in Florida’s multifamily market. More specifically, Orlando, with its tourism business booming, has become a niche location for real estate investment. The lack of economic diversity is nonetheless compensated by a surge in demand for multifamily housing units.
California
The population of California was about 39 million, as of 2022. With a median household income between $40,000 and $80,000, and between 10 to 15 million housing units, this market is ripe for multifamily housing investments. With a majority college educated and married population, the demand for multifamily housing can only be expected to increase.
Orange County and Inland Empire, specifically, are areas of interest. Both places are attractive locations for people who migrate due to employment opportunities. According to a report by Multi-Housing News from October 2023, Orange County had a 96.6% occupancy rate for multifamily housing, as of July 2023, with a 0.7 % increase in rent rates.
Georgia
With a modest population of 3 million, and a steady decline in fertility rates since 2012, Georgia looks like a risky market at first glance. One would expect declining demand for housing, as the pool of prospective applicants seems to shrink.
But Atlanta, Georgia shows promise with an influx of migrants due to the relatively low cost of living and affordability compared to neighboring states. Strong infrastructure and amenities add to its appeal. With the growing residential and commercial projects, it is reasonable to expect that the value of multifamily units will appreciate in the future.
Washington DC
A population of approximately 600,000 that is majorly college educated and unmarried, multifamily investments are not an easy decision to make. But there are around 300,000 housing units, and residents have a median household between $50,000 to $100,000.
A strong job market and a growing population are resulting in soaring rents and high demand for rental property. While the real estate market is booming in Washington DC, the multifamily market, specifically, is going to be tough to bet on.
If you are a real estate investor who wants to venture into multifamily housing units, property location is definitely a crucial factor that will determine your return on investment. We hope this article gave you a snapshot of investment opportunity in various US states. Continuous research and professional help can be a game changer in picking an ideal location for your real estate investment. Good luck!
