What Makes a Good Apartment Investing Market?

Occupancy numbers only tell a partial story about a market. A market with high occupancy rates might just mean inventory is low. Occupancy numbers don’t tell you how quickly rents are growing. Nor do they tell you if the legal environment in the market is more favorable to tenants or landlords. Still, you are going to find that healthy markets usually have consistently strong occupancy numbers.

I am often asked what data we look at when evaluating a market. While we look at almost 20 data points as part of our initial market screen, I can tell you a market MUST have a healthy jobs outlook or else we pass. Here is an encouraging take on the most recent employment data.

Freddie Mac is a major player in the multifamily sector. How major? In the last 5 years they have backed over $80,000,000,000 (that’s billion) in multifamily loans. In the first quarter of 2014, they secured loans that purchased apartment projects totaling over 51,000 units.

A wise old man once told me “If you see bad news on the front page, it’s too late to do anything about it.” This report on mortgage activity gives me a good feeling that we won’t be seeing bad news about multifamily on the front page anytime soon.

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