It Was A Good Deal Before The Research

Creating opportunities for success in real estate often involves a lot more than the property or parcel when it comes to determining the potential for an investment or an asset. It often involves a lot more than the rates at the time of the transaction, especially when you consider that a significant rate reduction opens the door for a refinance.

Multi-family opportunities are starting to be stronger than single-family ones, especially as we prepare for the new year and possible changes it will bring. However, researching the overall rental market is becoming an even more important step. New research shows how some cities and areas have much different supply and demand than others. Without researching, real estate investors and developers could be making a very costly mistake.

Earlier this month, I was involved in promoting an off-market deal of land for residential development in the Austin TX area within proximity of two major manufacturing plants. I was all set to include my access to a 100% vertical construction funding plan, which could have resulted in up to 1,200 homes being built for "no money down". Of course, I needed to do my research to make sure the demand was there before putting my stamp of approval with my team.

 

 

Researching the Austin area shows that there are currently (as of Dec. 1, 2024) more than 60,000 apartments under construction. That total is for "under construction" and does not include the thousands of apartments (and single-family rentals) currently functioning. The current number of pending apartments will increase the number of rentals in and around Austin by more than 20%. That fact told me that adding more than 1,000 homes, whether for rent or sale, would be competing with thousands of other options for tenants or buyers. I then found out that average apartment rents in Austin are down by more than 6% over the past two years.

Consequently, my research saved me a lot of time and effort to market an opportunity that would not have been viable. However, my role is to create opportunities in real estate. Miami, Salt Lake City, and Charlotte are two other markets faced with the same issue.

Back to the drawing board. The goal is to find other "positive" opportunities. Kansas City is an example. Rents there currently average $1,165 per month, which is 7% below the national average. Meanwhile, the median income there is $78,000, which tells me there might be room for higher rents. This is where having a research person comes in handy, as he or she could be on the case for you right now. If you don't have a research person or team to help grow your income, let's connect!