Top 5 Markets for Accredited Investors in Real Estate

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“Find the right market and the right partner, execute quickly, don’t miss an opportunity — and invest one deal at a time.”
– Emerging Trends in Real Estate 2014 by PWC and Urban Land Institute.

When investing in real estate through crowdfunding, it is not just important for accredited investors to do their due diligence concerning the right platform to invest in. Identifying the top markets with the highest yields and deal flows is also important.

If you are a developer, knowledge of the top real estate markets will help you in making wise decisions with regards to the location of your projects. If, on the other hand, you are an average real estate investor, you can receive greater returns on your investment if you know the top markets.

The Emerging Trends in Real Estate 2014 report by PWC and Urban Land Institute gave rankings on the top real estate markets for investors. The 3 variables used for the rankings were homebuilding prospects, development prospect and investment prospect. Below are the top 5 markets for accredited investors according to the survey:

  1. San Francisco: Topmost on the market rankings is San Francisco. It was ranked as the first for homebuilding prospects, third for development prospect and first for investment prospect. According to the survey respondents, the abundance of capital to fund projects makes it attractive for investment in all types of properties especially for commercial real estate like hotels. Its booming economy counteracts the effects of the high cost of living and conducting business in the metropolitan city. The large number of immigrants (with the rate of migration currently placed at 36 percent) and the high productivity level that could reach 4.2 percent in 2015 have all contributed to the strong growth posted by its economy.
  2. Houston: Houston was ranked first for investment prospect and second for homebuilding prospect. The growth of its market is tied to the strong growth in both residential and non-residential properties and revitalization in natural resource exploitation. It is projected that in the future, a relatively high population growth and strong performance in industries such as energy and health will spur economic activities.
  3. San Jose: San Jose is ranked third among the top markets. It is ranked fifth in investment and development prospects and third for homebuilding prospects. According to the respondents, the flourishing technology industry caught their attention. They also believe that the real estate market is expected to boom as economic activities especially in the technology industry flourishes in the metropolitan city.
  4. New York City: New York occupies the fourth position in the market rankings. It ranked second for investment prospects and third for development prospect. Although the interviewees pointed out to the high cost of doing business in the city, they were particularly attracted to the high employment for professionals and in the tech industries. It has also been projected that high gross metro product as a result of high productivity of commodities, and high employment levels in will be responsible for its future growth.
  5. Dallas/Fort Worth:Among the three variables used in ranking, Dallas faired the most in the homebuilding prospects. According to the survey findings, although the Dallas market is open to market volatilities, investors were still attracted to it. The reason is that they were aware of the high prospect for developments in housing and manufacturing sectors. Against this backdrop, industrial properties were rated above retail and office properties by the respondents.

Now that you are aware of the top 5 markets for real estate investing in 2014, the next step is to decide which platform to invest through. There are currently more than 100 real estate crowdfunding platforms in the U.S. that can connect you with high yielding deals in the states listed above. While a platform like The Carlton Group only allows participation from accredited investors with a minimum of $1 million, a platform like Fundrise, on the other hand, accepts investment for as low as $100.

Whichever platform you eventually decide to invest through, knowledge of the top markets will guide you as you sort through the offerings listed on their websites.

Note: This article appeared on The Soho Loft