CPI Blog

Selecting Strong Real Estate Investment Markets

Selecting Strong Real Estate Investment Markets

by | Feb 13, 2021

Hello Investor,
A widely known saying when it comes to selecting real estate is that “it’s all about location, location, location.”

Although many people understand the truth of this saying, many people don’t actually understand what makes a good location for a multifamily investment. Here are some of the key things that CPI Capital assesses when determining the strength of a market:

  1. Unemployment
    It is important to understand the employment rate in the market you are investing in. A low unemployment rate, that is decreasing is ideal for a market. Tenants need jobs to be able to earn an income in order to pay rent, so it is crucial for multifamily investors to invest in markets with low unemployment rates.
  2. Population
    A growing population in a market is ideal for multifamily investors because it means it can help increase the demand for rental properties. Researching historical data to make sure that there is a trend of a growing population in your market contributes to a strong investment.
  3. Diversified Industries
    Just looking at unemployment rates can be misleading and not tell the whole story of the strength of a market. It’s important to have a market that also has diversity of industries for employment. For example, if there is only one major industry in a market, and that industry suffers, so does the employment rate. Make sure to invest in markets that have numerous large industries, with no one industry employing more than 25% of the employed population.
  4. Employers
    It is important to invest in cities that have numerous companies that employ the population. You don’t want to invest in a market with only one or two major companies that employ the majority of the market. If that company were to shut down, downsize, or move its location to another city, that could have major negative effects on the market.
  5. Supply and Demand
    A major factor to consider for a market is that there should be favourable supply and demand of multifamily properties. A low and decreasing vacancy rate indicates a strong market with high demand for multifamily rentals. You do not want to be investing in areas where vacancy rates are trending upwards, because this could mean the population is shrinking or the market is being oversupplied with too many newly built multifamily properties.

By evaluating the data for all these factors, it allows investors to make more informed and data-driven decisions about where are the best markets to invest. CPI Capital has looked into these factors when determining the key markets to invest in across Texas, and high growth markets such as Phoenix, Arizona. If you want to get access to our exclusive investment opportunities in these strong high growth markets, sign up for our Exclusive Investors Club.

– Ava Benesocky
CEO, Co-Founder Canadian Passive Investing

– August Biniaz
Chief Strategy Officer, Co-Founder Canadian Passive Investing

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