How to identify the future best performing multifamily markets ahead of other real estate investors?

Dana on August 29, 2022

How to identify the future best performing multifamily markets ahead of other real estate investors?


The most successful multifamily investors are the those that make strategic steps different than what most of the market is doing.

There are more than 71,000 multifamily apartment buildings in the US with more than 100 apartments and the investment strategy, market selection and the multifamily class will be the key ROI differentiator for real estate investors.

How can multifamily investors choose the future best performing markets where they have the best chance of generating attractive investment returns ahead of other investors?

Apartment Supply


The best avenue for real estate investors looking to invest in both existing multifamily buildings and constructing new assets is one where future supply is predicted to fall short of future demand.


Real estate investors should calculate the anticipated new unit delivery rate as a percentage of the current inventory. They should look for areas in each market where additional supply can be constrained by zoning restrictions, a lack of suitable land, or a greater cost to construct new units.


Demand and rising economic activity


The expansion of the population and the number of jobs available are the best predictors of future housing demand.


Over the past ten years, new households have increased in all of the areas where we invest by over 10%, and it is anticipated that they will continue to grow faster than the rest of the nation in the years to come.


The creation of new jobs has been the main engine of expansion in these markets nearly always. Renters with the necessary qualifications make up a disproportionate fraction of the population in markets that draw a wide range of economically stable jobs with competitive pay levels.




We must consider affordability while estimating demand. Focusing on areas with rents that are less than 25% of local salaries guarantees that tenants will be able to pay their rent.


The typical essential worker will still be able to afford the new higher rent if an investor implements a value-added company plan (nurses, teachers, police officers, construction workers, office administration, manufacturing).


In a similar manner, the cost difference between renting and buying a home is an important factor.  For many members of the middle class, homeownership has become unaffordable due to rising housing prices and mortgage rates.


Rent demand will likely remain high in a market where there is a significant difference between rents and homeownership costs (mortgage, property taxes, and insurance).


Rent regulations

Assessing a market’s political and regulatory climate in addition to the data research provides an important direction to the greatest potential for investment possibilities.


Areas that can continue to draw businesses, create jobs, and ultimately encourage additional in-migration to the area because of lower taxes and a supportive regulatory environment.


The market’s regulatory environment for housing is also crucial. Local or regional growth and/or development restrictions are seen favorably because they may place a cap on the supply of future competitive goods and services. On the other hand, places with rent control laws might hurt investor returns.


Personalized filtering criteria and careful selection of submarkets and neighborhoods

The multifamily market continues to attract strong investor interest. With careful analysis from top to bottom and some strategic relationships, investors can still identify the best deals that yield strong risk-adjusted returns and avoid making critical mistakes.


The best performing multifamily markets in recent years have been situated in the Sunbelt ranging from Dallas, Houston, Austin, San Antonio, Seattle, Phoenix and Salt Lake City to Tampa, Durham/Raleigh, Charlotte, Atlanta and Jacksonville. However, within target market, investors must apply additional finer filtering criteria based on their risk tolerance, investments style, targeted returns and investment horizon to determine the specific submarkets and neighborhoods that best fit their investment profile.

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Telephone: (954) 570-0300

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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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