Which could be the best US spots for multifamily investments in 2022?

Dana on May 24, 2022

Which could be the best US spots for multifamily investments in 2022?

 

The multifamily sector had an incredible year in 2021, with a record level of $335 billion invested in multifamily assets—nearly twice the volume of 2019.

Average rents in almost all major U.S. areas have risen above pre-pandemic levels, boosted by the economic recovery, changes in spending and saving patterns, and the opportunity for many to work from home or remotely.

With tremendous yearly rent growth leading to massive appreciation in 2021, the favorable outlook for multifamily real estate in 2022 is set to continue.

Which could be the best US spots for multifamily investments in 2022?

Multifamily investment in Q1 2022 hit an all-time high, marking the strongest first quarter on record and increasing 56% year-over-year to $63 billion, bringing the trailing four-quarter total to $374 billion.

Another record was set in the absorption rate, as a record four-quarter absorption hit a total of 695,100 units in Q1, an increase of 12% over the previous quarter and up 77% from the previous annual high set in 2000.

With $29.2 billion in total volume, Dallas/Ft. Worth led the way in multifamily investment during the last four quarters, accounting for nearly 8% of the US total. Atlanta came in second with $21.4 billion, up 150.1 percent year over year, followed by $17.7 billion in New York.

Business-friendly policies, favorable taxes, four-season lifestyles, rising natality and migration rates, broad and powerful labor market, influx of new businesses and booming local economy are the key characteristics that a multifamily hot spot should possess. In order to discover hidden gems in the market, investors might want to take into account the historical rental rates, job, population and income growth; supply and demand; recent migration changes; and housing affordability in the area.

Booming markets with the strongest and fastest growing fundamentals include Boise, Phoenix, Houston, Dallas, Las Vegas, Atlanta, Tucson, Austin, Charlotte, Richmond, Durham/Raleigh, Nashville, Tampa, and Jacksonville. These markets encompass incredible opportunities for rent growth, investment, and development and tick all the boxes on the characteristics that real estate investors look for when identifying an attractive market and lucrative investment opportunities.

Multifamily housing is a very popular option among baby boomers that downsize and millennials that like the flexibility that comes with renting. With growing number of remote working opportunities, secondary and tertiary markets are also gaining popularity.

Due to the massive demand for multifamily housing for Class A properties in primary markets, demand is incredibly strong for Class B and Class C multifamily properties as well.

Investors can find attractive opportunities for value-add renovations that will justify higher rents. Reinvesting in a property through improvements amenity upgrades will likely create attractive returns and future cash flow right after the property repositioning, while renovated rental units enriched with modern relevant amenities tend to attract new renters with higher purchasing power that tend to stay longer.

In this respect, investors need to be aware of the loss-to-lease risk when automatically selecting the lowest bidder. Although this might sound intuitive, the risk of additional costs and delays that will have detrimental effect on the future returns and cash flows of real estate investors is just not worth it.

When selecting a trusted general contractor with a proven nationwide track record in repositioning of B, C, and D-Class properties in primary and secondary markets, real estate investors will make sure that they will receive the best value for their money that will not only provide them with peace of mind, but it will maximize their ROI and cash flows in the years to come.

 

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Please contact us to learn how we can best help you to turn your next investment project into a success.

Email: [email protected]

Telephone: (954) 570-0300

Address: 850 SE 7th Street, Deerfield Beach FL 33441

 

About Adivo Construction

We are a national general contractor with over 50 years of combined construction expertise specializing in the value-add improvements of apartment communities.

Our mission is to assist our clients in finding the right balance between capital expenditure and appreciation potential by designing and executing customized renovation programs that are focused on increasing cash flow return and overall return on investment.

We have completed over 100 repositioning projects for publicly traded and privately held domestic and foreign companies in states such as Florida, Texas, Kentucky, Oklahoma, Georgia, South Carolina, Utah, North Carolina, Tennessee, Indiana, Michigan, Missouri, Arkansas, Ohio, Arizona, Nebraska, and Kansas.

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