Are you looking to branch your multifamily efforts out and into a new region or area? If so, then you probably realize that there are a lot of factors to consider when making this move.

But, which factors are the most important?

It is said that all real estate markets are local.

Aside from the basic need to research things such as the current and future supply of multifamily units in any area of interest and looking at what's been happening to the rents and prices in those areas, we also need to take a good look at the types of industries within a metropolitan area and how they provide insights into the demographics of the markets being served.

A great example of this can be seen in areas where technology is flourishing. For the most part, investors find that these areas are best for catering to the younger demographic--the twenty-somethings. In contrast, in areas where the finance market is thriving, residents tend to be more in their thirties or forties.

Regardless, in both of these examples, the would-be renters are more likely to be employed, earn a higher wage, and--especially for the older crowd--have assets that make them more stable tenants than other would-be lessees.

The most popular and successful areas for multifamily dwelling will continue to be locations that not only offer a close proximity to employment opportunities, but also offer up plenty of easily accessible activities like dining, shopping, entertainment, and other needed services like public transportation, medical offices, and cultural needs.

Analyzing a potential investment opportunity

Being able to quickly assess a property's potential is one of the most essential skills to have when selecting the next multifamily project. While this isn't a complete, in-depth analysis, according to investment experts, this type of quick rundown can be considered an effective initial filter.

Here's a look at what should be considered:

• Location: Select a property that is located in an area that could be classified as undervalued or in an up-and-coming area.
• Price: Look for a property that has room to grow. Maybe recently reduced.
• Units: Consider the total number of units, both for potential income and possible upkeep.
• Rents: Identify the current rents being collected, compare those rates in the area, and adjust to find the property's total monthly income potential.
• Expenses: Using a 50/50 rule, 50% of the potential rental income can be used to pay the property’s mortgage.
• Cash-flow: Based on the same 50/50 rule, 50% of the total rents is need to cover the total mortgage.
• Seller motivation: Upon completing the basic analysis, discover what it is that is motivating the sale. (Most properties are overpriced. Finding the ones that are in our ideal price range is key. If a seller is motivated, they tend to negotiate with us better.)

Do you have any tips, tricks, or processes you'd like to share with the community regarding selecting an area for a new multifamily project? If so, please feel free to leave your valuable comments and suggestions in the section below.