Invest Where It Makes Sense

Real estate, like any other market or business, depends on supply and demand. While many real estate investors may feel more comfortable investing locally in their city, it may not always be the best decision from an investment standpoint.

Invest in places that make sense so you can afford to live in places that don’t make sense.

So, where are the places that make the most sense to invest in? The two graphics below highlight the state population growth rates between 2010-2017 and net migration between states between 2016-2017.

State Population Growth Rates
Net Migration Between States

Demographic trends from 1990-2015 have shown regional rates of population change for the South (41.8%) and West (44%) compared to the Northeast (10.7%) and the Midwest (13.8%).

When looking at rates of population change over the same time period by state, Texas ranks first (61.7%), followed by Georgia (57.7%) and Florida (56.7%). It is no surprise that real estate markets in these respective states have been doing well.

There has been a sizable demographic shift in population towards the South/West, and where the people are, they are always making a demographic impact.

It is no accident that our current portfolio holds properties in Texas, Florida, Georgia, Tennessee, and Arizona! By investing where it makes sense and where the population demands it, we can mitigate risk by placing ourselves on the favorable side of the equation.

How about the supply side? Inventory growth leaders from the table below correlate to match the demographic shifts to meet the demand.

https://www.realpage.com/analytics/topics/multifamily-research-trends/apartment-supply/

https://www.realpage.com/analytics/topics/multifamily-research-trends/apartment-supply/

It can be time consuming and to be honest, as busy professionals, we often do not have the time to stay atop these market trends.

When we invest through syndications, we can leverage the industry knowledge and experience of the sponsorship teams. As passive investors, syndications can allow for us to diversify out of our local markets and invest where it makes sense.