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There was a time when renters would flock to cities to be close to work, nightlife, and other amenities. The coronavirus pandemic, however, has changed all that.
Over the past 12 months, there's been a notable exit from cities as renters have traded expensive rents and cramped quarters for larger spaces and better deals. And while that exodus has been more notable in major metro areas, like New York City, the reality is that the lure of city life may be waning on a national level, especially with so many companies making plans to let workers do their jobs remotely on a long-term basis, even beyond the pandemic.
As a real estate investor, you may have a prime opportunity to capitalize on this trend by scooping up income properties in suburban markets rather than focusing on cities. But which suburbs should you target?
While New York City's suburbs might seem like a natural choice, high prices and low inventory make that particular market tough to enter. A better bet may be to focus on more moderately priced suburbs where rental units are abundant.
To this end, RentCafe has compiled some data on the suburbs that have added the greatest number of new apartments over the past five years. Here's what it found.
Suburbs where apartments are plentiful
According to RentCafe, these 10 markets saw a huge uptick in apartments over the past half-decade.
|Metro Area||Suburb||New Apartments Added|
|Las Vegas||Spring Valley||4,559|
|Philadelphia||King of Prussia||3,030|
Clearly, there's been a boom in apartments in Dallas and its suburbs in recent years, and given the number of companies that are making plans to move to Texas, it's a market worth considering as an investor.
RentCafe reports that rents have held steady in Dallas. The average apartment currently goes for $1,254, which is unchanged from the previous year. By contrast, Houston saw a -1% change in apartment rents year over year, while Austin saw a -3% change year over year. Of course, rents in actual cities aren't necessarily reflective of how they're trending precisely in neighboring suburbs -- but they're a reasonably strong indicator to look at.
Is it worth investing in suburban apartments?
Given the number of people seeking out suburban homes, as an investor, you may be wondering whether it pays to focus on apartments/multifamily units versus stand-alone houses. But while single-family homes may be a less cumbersome investment, housing inventory is also extremely limited on a national level right now.
On the other hand, demand for multifamily units is likely to soar in the near term as more people recover from the pandemic and look to lock in leases, so now may be a good time to buy up some apartments -- particularly in those suburbs where the demand is clearly high and the inventory is already there.
Unfair Advantages: How Real Estate Became a Billionaire Factory
You probably know that real estate has long been the playground for the rich and well connected, and that according to recently published data it’s also been the best performing investment in modern history. And with a set of unfair advantages that are completely unheard of with other investments, it’s no surprise why.
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