Multifamily syndication advantage, let’s talk about market appreciation. There are many reasons we love multifamily syndication, which is where a group of investors pool capital to go out and buy a project, in this case, let’s say a hundred-unit apartment building. Happens all the time and it’s a great investment for many reasons … specifically want to talk about market appreciation.
The assets that we’re targeting and many syndicators targeting, doing this type of projects, need to meet a number of criteria, but let’s talk specifically about the market. These have essentially three things, and that is landlord-friendly laws, needs to have a relatively low cost of living, and it needs to have job growth that’s acceptable. Doesn’t have to be insane job growth but needs to be an upward trajectory.
That means we’re avoiding places like maybe New York City or Los Angeles because you might not have landlord-friendly laws. You’re not having low cost of living. While you may be having job growth, you don’t have those other two. You’re looking for that trifecta in terms of a market.
What we do when we identify a project like this is we can go in and purchase the asset, make some improvements, etc., but in terms of appreciation, we’re also going to ride that wave up with the rents that are going to increase over time as demand and population grows in that area. Job, growth and the economic drivers there, and the diversity of employers is extremely important when we’re selecting a market criteria, but we can benefit from this market appreciation because we’ve got an important product that we’re selling — a place to live, arguably the most compelling bill anybody has on any given month, and in fact, folks are paying the majority of their … not majority, but they’re paying the most of their … if you look at the pie of most people’s paycheck, they’re paying the largest piece to the roof over their head. Whether it’s a mortgage or maybe they’re renting an apartment complex, but somebody obviously is very motivated to pay that bill every month and it’s a large part of their bill. The service we’re providing captures the majority of someone’s … or can be the largest bill that someone’s paying in a month.
By selecting the right markets and using those simple three criteria of jobs, cost of living, and landlord-friendly laws, we’re able to take advantage as these markets appreciate and it’s one of many reasons we love to do multifamily syndication as an investment vehicle.