When it comes to investing in multi-family properties, there are two key factors to consider: expense growth versus rent growth. In other words, prime investment opportunities will be in markets where expenses are low and rents are high or at the very least, rental prices exceed expenses. With expenses outpacing rent prices in major markets like New York, LA and Washington DC, smaller markets are the name of the game in 2019. Here are the top 5 markets for multi-family property investing through the end of 2019.
1. Trenton, NJ
With a price-to-rent ratio of 7, a walk score of 72 and a generous cap rate of 5%, Trenton, NJ is far and away the #1 market for investment. With a median property price of $108,826 it is also an attractive option for smaller investors that don’t want to partner with a large investment group or take on a high level of risk. With a walk score that high, it also shows the promise of being an area with significant growth potential.
2. Chico, CA
With a price-to-rent ratio of 12, a walk score of 45, and a cap rate of 4%, Chico, CA is also primed for multi-family investment. The caveat to this, however, is that with the median property price hovering just under $710,000 it may not be the best option for smaller investors.
3. Columbus, OH
A walk score of 41, a price-to-rent ratio of 12 and a cap rate of 3% all make Columbus an attractive area for investment but what really sets it apart is the recent 23% increase in rental prices. With median property prices hovering at around $185,000, Columbus is a prime location for all levels of investment.
4. Chattanooga, TN
With a generous cap rate of 4% and a median property price of just under $200,000, Chattanooga is also a good choice for investing. That being said, Chattanooga only has a walk score of 29 which doesn’t make it a really prime area for growth. It’s a good investment for now, but may not have legs for the long haul.
5. Cincinnati, OH
Cincinnati may not be quite as attractive as Columbus but it still has plenty to offer. With roughly the same cap rate, walk score, price-to-rent ratio and median property prices Cincinnati is almost a dead ringer for Columbus in terms of investment opportunity. What makes Columbus the more attractive option, however, is the significant recent increase in rental prices.