El Paso vs other markets


#1

Hello Y’all!

Has anyone invested in El Paso apartments? If you had to choose among DFW, San Antonio, Atlanta, and El Paso what city would you choose?

Thanks
Nikolay


#2

Hi @Nikolay_Borodachev In my opinion, it’s not which city. It’s more about, in which submarket in the city that you can still find deals that have ample upside. For example, Dallas is hot, but the most jobs/growth are happening in North Dallas. Same for Atlanta, it’s not the whole Atlanta, Its north Atlanta and some pockets of the south Atlanta. At a high level, you can choose any of these cities because they are getting a lot of jobs incoming and landlord friendliness. Even in El Paso, if you can find a submarket that has a lot of jobs going in, then you have a submarket that is a winner. Avoid at all cost buying in higher crime rate area. In general, these are areas which does not attract higher-paying tenants to realise your business plans upsides.


#3

Hi James,

I am considering investing in someone’s deals in the markets I mentioned, so I cannot really choose an area of Atlanta or El Paso. I need to choose among similarly underwritten properties and I’d like to verify sponsor’s projections. E.g., El Paso deal assumes 2% annual rent growth but the historical number for the last 7-8 years is close to 0%. The rents are flat for El Paso as a whole but 2% growth may be valid for a particular sub-market. How do I verify that assumption?

Thanks
Nikolay


#4

@Nikolay_Borodachev If you look at the ALN market review for El-Paso. In May 2018, the annual change in rents is 2.7% for effective rents. That is at a high level for the whole market.

if you want specific submarket info, then you need to subscribe to data services such as Co-star, Yardi or ALNdata. That service has more detail info on each submarket. My personal recommendation is to look at the syndicator rather than the numbers that are presented. Hope that helps.


#5

The syndicator is good but he is based in DFW and this is his first deal in El Paso.


#6

In my opinion, a good syndicator would know how to analyze markets, submarkets and look for that opportunities. I have seen many many times, a deal lose money in a very strong market because the syndicator messed up in buying it right. Market is secondary.