What are the Best Cities to Invest into Multifamily Housing?

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When it comes to rental property, college towns are some of the best places to invest in—but only if you avoid the negative associations that come with the undergrads. At the low end, you may struggle with student behavior. Undergrads have a reputation to be rowdy, and even destructive, which is a major concern for property owners. College students typically don’t know how to maintain a property. If you invest here, your property may get damaged on a regular basis.

On the other hand, you have middle and high end properties in college towns where you will encounter graduate students, faculty members, and a large portion of administrative staff who keep the university running. These people have steady jobs and are more likely to keep the rental property in good condition. [1]

Another thing investors should take note about grad students, administrators, and faculty is that they are not looking to buy a home. Because their career sometimes involves moving up to another university, they don’t plan to stay in one place. Landlords need to know that college town rental properties have frequent turnover. While this may be inconvenient, it also means there is always a market for the property. Due to consistent demand, investors will not struggle to find new tenants.

Places with colleges and universities typically have more renters. One example is Indiana, a state where most counties have a renter population of less than 25 percent. In counties with a university, the percentage of renters reaches up to 48 percent. [1]

Why BAM Capital Loves College Towns

Real estate properties in college towns offer unique benefits for investors. But in order to capitalize on these opportunities, investors have to understand what makes college towns different from other locations.

In terms of rental prices, properties in college towns are fairly stable. They also provide access to a large tenant market. Because of the high demand for rentals in college towns, the prices remain stable even when other parts of the housing market are failing. Investors can also enjoy fewer vacancies, meaning they don’t have to worry about cash flow. The area basically sells itself—investors can save money on marketing because there are always college employees and students looking for a place to live. [2]

College towns also tend to have endless activities including arts, music, culture, entertainment, and sporting events. There are also plenty of shops and restaurants within walking distance. This is why college towns tend to draw people in.

However, college towns also have their disadvantages, with the biggest one being the frequent tenant turnover. Due to the behavior of college students, rental properties suffer from significant wear and tear. For this reason, BAM Capital does not focus on renting to students. Instead, it takes a different approach when it comes to college town properties. It focuses on renting to labor forces and professionals that work at the university, hospitals, or other establishments that are adjacent to the college. This way, investors can still enjoy a safe investment while reaping the benefits of being in a college town.

The Best Towns Have Growing Economies Supported by a Growing University or College

In order to succeed in multifamily real estate investing, one of the most important factors for success is maintaining cash flow. Real estate properties in college towns have no problem maintaining cash flow because the units are always occupied. This is why some of the best towns when it comes to real estate investing are supported by the presence of a college or a university.

Investing in a college town multifamily property is usually not considered a passive investment. That’s because investors have to take on the role of landlord and then address concerns such as noise complaints, property damage, and roommate conflicts. It is a very hands-on type of real estate investment.

But with BAM Capital, investors can enjoy a passive investment through a multifamily syndication approach. Accredited investors can still invest in college town real estate without having to become a landlord. Before we discuss multifamily syndication with BAM Capital, let us take a closer look at how investors would normally pick a city to invest into multifamily housing.

The Best Cities to Invest Into for Multifamily Housing & Syndication

There are many factors to consider when choosing a college town for real estate investing. Investors may want to look into the financial situation of the college or university in the area. There may be certain economic factors that can affect the demand for housing in that particular college town.

In 2021, the overall outlook for multifamily investing was positive. There were all-time low interest rates, favorable target tenant demographics, and a spike in single-family values that kept would-be homeowners from purchasing their own homes. [3]

CBRE speculated that multifamily demand would rise even further due to “unbundling”, meaning renters would start moving out of their parents’ homes due to new job opportunities allowing them to work remotely and live wherever they want.

For investors who want to look into multifamily investing in college towns, here is a list of the top 25 cities to invest into for multifamily housing and syndication, according to online commercial real estate investing platform CrowdStreet: Raleigh-Durham, Austin, Charlotte, Salt Lake City, Phoenix, Atlanta, Dallas-Fort Worth, Orlando, Nashville, Tampa-St. Petersburg, Boise, Washington D.C., San Antonio, Boston, Seattle, Indianapolis, Denver, Palm Beach, Colorado Springs, Sacramento, Fort Lauderdale, Columbus, Jacksonville, Miami, and San Jose. [3]

Why Choose BAM Capital for Your Multifamily Syndication Deals

If you work with BAM Capital, you no longer need to look for an investment property yourself and go through the tedious process of choosing the best cities and college towns. BAM Capital uses multifamily syndication to bring a safe and passive investment for accredited investors.

Syndication is when multiple investors pool their resources in order to purchase a single real estate property that would otherwise be too expensive to buy. When this strategy is used for a multifamily property such as a condominium, duplex, triplex, or any property with more than one unit, this is called multifamily syndication. [4]

In a syndication deal, a sponsor locates the property, coordinates the financing, and looks for investors who will provide most of the capital. The investors earn money from the cash flow and the equity in real estate. This is a passive investment since the sponsor is also in charge of managing the property once the deal is put together.

Although any type of real estate can be used for a syndication deal, multifamily is currently the most popular—especially multifamily real estate in college towns.

BAM Capital will negotiate the purchasing and financing of high quality multifamily real estate on behalf of passive investors.

This Indianapolis-based company currently has $700M AUM and 5,000 units. BAM Capital has a strong Midwest focus, prioritizing Class A, A-, and B++ multifamily properties because they offer the lowest risk for BAM’s investors. [5]

BAM Capital’s investors love its low-risk investment approach that creates forced appreciation. BAM’s vertical integration model also mitigates investor risk. Schedule a call with BAM Capital and invest today.

 

BAM Multifamily Growth & Income Fund III

BAM Capital created this fund in order to yield consistent and reliable cash flow, long-term appreciation, and accelerated tax benefits. The fund aligns with BAM Capital’s demonstrated track record of successful multifamily investing by continuing to implement our signature investment thesis, now in fund format. The fund aims for greater overall returns and lower risk through a multi-asset diversification strategy.

  • Consistent passive income
    Lower-risk assets with in-place cash flows with the ability to distribute preferred return after acquisition.
  • Significant tax benefits
    A cost segregation analysis allows for accelerated deprecation to years of ownership. This large passive loss gets passed onto investors through a K1.
  • Vertically integrated company
    In-house property management and construction allow for predictable cost reduction and value add.

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