Why We Picked These Markets To Invest In!
- Sam Khairi
- Mar 28, 2021
- 5 min read
For decades, real estate investors across the nation strived to invest in the best cities possible for the highest returns, stable growth, and a positive future. The growth of these cities is paramount for decades of positive returns.
In this article we'll go over the markets that we feel provide some of the strongest value for investors in the future. Keeping in mind we're not going through a thorough evaluation of all markets - these are only select few for us to look at outside the major states such as Texas and Florida.
Our pick are:
Atlanta is the largest city in Georgia, with a population of about 525,000 as of 2020, a significant increase when compared to 2010, when the population was about 420,000. Its metropolitan area has more than 6 million residents and is one of the fastest growing cities in America. The median household income in 2019 is $59,948 and has been increasing in recent years. Based on a research report from Berkadia, Atlanta is projected to experience a 1.2% population increase in population to 6,222,500 and had a capitalization rate of 5.4% in 2020. The city also had a price per unit of $149,825 in 2020, a 12.1% increase from when compared to 2019.
Atlanta has had more than 500,000 jobs added since 2011. Companies such as Delta, Home Depot, Coca Cola, Porsche, Chick-fil-a and many other large employers have their headquarters in Atlanta, employing 10’s of thousands of employees and will continue to employ thousands more as the companies grow. Not including 2020, the city’s job market continued to grow at a rate of 1% - 2% per year. The median home price in Atlanta is about $310,000 with rent averaging about $1,500 per month, a 2% increase from the previous year of 2019.
Augusta, GA is also an interesting city about 150 miles east of Atlanta Georgia. The city has a population of about 200,000. The median income is about $44,000 per year with the median home price of about $191,000 and the median home rent is $940 per month, increasing 7% from the previous year.
The Augusta area saw a 3.5% job growth in 2019 when compared to the previous year. The projected 10 year job growth is 38.5%, higher than the national average of 33.5%. The job growth in the city is mainly attributed to the city’s Georgia Cyber Training, US Army Cyber command, long term healthcare facilities and the universities in the area that employ 10’s of thousands of people. The city also has a military base, Fort Gordon Army Base, with approximately 31,000 civilian and military employees and about $1.2 billion economic output.
Nashville, Tennessee is another thriving city that is also a focus of real estate investors due to its growth and future potential. The city has a population of about 700,000 and growing every year with the median household income is $63,462 per year. Real estate prices average about $360,000 for all types of housing and the median rent in the city is just under $1,200. A CBRE report calculated the city is expected to rebound in 2021 from the global pandemic and increase economic output by 6.1%. Amazon has leased 1,000,000 sq. ft. of office space and is expected to employ 5,000 people to start. The report also expects the multiplier effect of the Amazon office to bring in an additional 13,000 jobs to the city, not taking into account amazon hiring more employees in the years to come.
The city has several major industries that employ significant amounts of the population, such as Automotive, healthcare management, insurance, finance and higher education. The city has many company headquarters, such as AT&T, Caterpillar Financial, Dollar General, State Farm Insurance, Verizon Wireless and Tractor Supply Co., all of which currently have high paying positions and will continue to grow in the years to come. Tourism is also an important aspect of the Nashville economy, with more than 16 million visitors in 2019, an increase of 6% over the previous year. The tourism economy employs a major portion of the residents in the forms of hotels, restaurant and general hospitality and service based jobs.
Phoenix Arizona is the city that has attracted the most new residents in the United States 4 years in a row, adding about 20,000 – 30,000 new residents per year and has a total population of about 1.7 million. The median household income in the city is $46,881 per year, with the average home price in phoenix being about $335,000 and the average rent being $1,141 per month. According to a forecast by Berkadia, the capitalization rate for phoenix units is expected to be about 5% with employment add being a total of 2,227,900 in 2021, an increase of 3.4% over 2020.
Phoenix has several important and thriving industries that contribute billions to its economy, ranging from health, technology, energy and construction, all of which are expected to grow between 35% - 50% by 2026. The city has 6 fortune 500 headquarters, Avent, Freeport-McMoRan, Insight Enterprises, Republic Services, Magellan Health, and ON Semiconductor. Other notable mentions for major companies in the city are Charles Schwab, Farmers Insurance, and Vanguard.
Huntsville, Alabama is another city that many real estate investors have invested in, from single family homes to large multifamily complexes. The median household income is $55,305 per year. The median home price is about $255,000 and the median rent is $946 per month in 2019, an increase of 8% from the previous year.
The economy of Huntsville, Alabama is quite diverse, with technology development, manufacturing, aerospace, defense, information technology and energy. The defense industry is a significant portion of the economy, with tenants being the U.S. Army Space and Missile Defense Command, U.S. Army Aviation & Missile Command, and the Defense Department’s Missile Defense Agency. The city is also home to 12 research and industrial parts, including the Cummings Research Park. This segment of the market employs more than 30,000 people and has more than 300 companies, with most Aerospace companies in America being represented in the research park and surrounding areas.
Real estate investing, particularly in the multifamily sector, requires significant capital and skill to achieve. This includes finding, researching and being able to pin point the best cities to invest in the United States, with the cities listed being some of the best, most robust and solid investment locations an investor can invest in. This is due to the cities offering a strong base of growth for major investments of all sizes, not just multifamily.
The cities offer tremendous future growth in regard to income, job growth and population growth, all of which are need to fully support multifamily projects and portfolios that can be comprised of hundreds of units, especially with increasing yearly rents.
We're excited to share our future deals with you all. We also have resources to help with further educating yourself on real estate investments such as our free eBook.
Sam Khairi
Afto Capital
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