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Is Inventory Drying Up in Your Primary Investment Market?

Inventory DryingUp Universal

Here are the Top 10 Secondary Rental Markets.

By Mario Navarrete, Relationship Manager

What an incredible year 2017 was for the rental market and its investors. Not only did we see record-breaking funding of single-family rental portfolios, but we also witnessed our investors make a bigger push into the multi-family space; which is still going strong as I write this. Furthermore, we saw the GSEs, Fannie Mae and Freddie Mac, take their first leap into wrapping SFR securitizations; the ladder with Corevest on a $202 million transaction (CAFL 2017-2). In paraphrasing our CEO, Beth O’Brien, she said partnering with Freddie Mac will provide enhanced liquidity in a very important part of the US housing market which will ultimately increase opportunities for families to find places to live in the communities they want to be in.

That being said, with our last 5 securitizations totaling well over $1 billion, we’re starting to hear rumblings from our borrowers that inventory in their primary markets is starting to dry up. As such, I thought we’d start to talk about possible secondary markets that are showing positive signs of becoming or already being a solid option if investors find themselves in a similar position. As I composed this list, I first looked at our files and what we’re seeing come through our office, then compared that to my online research. Interestingly enough, 6 of the 10 MSAs I chose ranked in the top places to live by U.S. News and World Report.

Without further ado and in alphabetical order, here is my list of the top 10 secondary markets and their respective points to consider when considering if any of these MSAs are ones you wish to invest in for 2018.

Austin – Population 947,890 (2016)

  1. Great job growth/creation led by high-tech and internet-based corporations
  2. Continued development
  3. Continued population growth
  4. Increased rents
  5. Rated #1 best place to live by U.S News & World Report

Boston – Population 673,184 (2016)

  1. Thanks to the Healthcare industry, population growth has been 2.7%
  2. Over 17% of the population make more than 100k
  3. Job growth at 2%
  4. Low vacancy rates at 1.4%
  5. Increased rents
  6. Ranked #8 top places to live by U.S News & World Report

D.C. – Population 681,170 (2016)

  1. Low vacancy
  2. Always healthy job sector
  3. Over 21% make over 100k a year
  4. Average rents at $2,502 for a 2 bedroom and $2,422 for a 3 bedroom
  5. Ranked #4 top places to live by U.S News & World Report

Des Moines – Population 215,472 (2016)

  1. Most affordable by U.S. News & World report
  2. Low vacancy
  3. Increased rents
  4. Increased jobs
  5. Increased renters and income in Polk County, both at 8% (US average at 3%) according to Local Market Monitor, Inc.
  6. Ranked #9 top places to live by U.S News & World Report

Nashville – Population 684,410

  1. Growing population (Nearly triple the US average)
  2. Economy and job growth (2.7%)
  3. Unemployment is down 40 bps from a year ago and still well below the US average.
  4. Ranked No. 1 single family housing market in the U.S. by both Ten-X Research and Zillow in 2017

Phoenix – Population 1.615 Million (2016)

  1. Increased rents (7% y-o-y)
  2. Job growth
  3. Increased income
  4. Continued development
  5. Steady Appreciation

Salt Lake City – Population 193,744

  1. Thriving economy
  2. Expanding labor force
  3. Increased rents
  4. Low vacancy
  5. 3% job growth.

San Antonio – Population 1.493 Million (2016)

  1. Top 3 places to retire by U.S News & World Report
  2. Strong population growth for 6 straight years
  3. Employment is at an all time high
  4. Increased rents
  5. San Pedro Creek Improvements project will drive development in the next few years.

San Jose – Population 1.025 Million (2016)

  1. Tech companies continue to drive San Jose’s Economy
  2. Low vacant
  3. High rents
  4. Ranked top 3 best places to live by U.S News & World Report

Raleigh/Durham – Population 458,880 (2016) / 263,016 (2016)

  1. Young tech workers and university students abundant
  2. Home to 3 major universities (Duke, UNC-Chapel Hill, NC State)
  3. Low cost living
  4. 7% Population growth reported by Forbes
  5. Job and rent growth
  6. Ranked 7th top places to live by U.S News & World Report

Whether you’re investing in a primary or secondary market, we are the lender to help grow your portfolio. Our creative financing options have helped thousands of different investors fix and flip or buy and hold 25,000 investment properties collectively. Are you looking to explore your financing options?

CoreVest is the leading lender to residential real estate investors. We provide attractive long-term debt products for stabilized rental portfolios as well as credit lines for new acquisitions. For more information about how CoreVest can help you grow your rental and rehab business, please call Mario Navarrete at 949.936.0007 or email mario@cvest.com.

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