Adapted from the July 2025 PREP Newsletter: "So What Does That Mean in Plain English?"
If you have ever wondered why PREP invests specifically in certain markets and avoids others, the answer often comes down to location. But it is not just about finding a trendy neighborhood or famous city–choosing the right market and submarket is one of the most critical decisions for creating stable, long-term income from a multifamily investment.
Here are 5 important factors when assessing a submarket:
1) Population Growth: One of the first things we look for is population growth. Simply put, people need a place to live. Markets where the population is growing, whether because of new job opportunities, a better quality of life, or affordable living, tend to have steady demand for rental housing. If a city or region is attracting new residents each year, that means more potential renters for multifamily properties. This is why areas like Texas, Florida, and Virginia have become attractive to real estate investors, as they continue to see strong population growth.
2) Jobs: Not Steve Jobs, though he helped. Where jobs go, people follow. We focus on markets that have a diverse employment base, meaning they aren’t overly dependent on just one industry. A city that has opportunities in healthcare, education, technology, and manufacturing is more likely to remain stable during economic ups and downs than a city that relies solely on tourism or energy. A strong local economy means people have steady income to pay rent, and companies will attract workers from outside the area, keeping rental demand healthy.
3) Housing Affordability Gap: In many places across the U.S., home prices have risen faster than wages. This makes it difficult for middle-income families to buy a home, so they remain renters for longer periods of time. In these markets, quality rental housing fills an important need. Apartments in these areas tend to enjoy consistent demand because it is often cheaper to rent than to own.
4) Regulations: Just as important as finding the right demand drivers, is avoiding markets that are unfriendly to property owners. Some cities have implemented heavy-handed, pro-tenant regulations that make it extremely difficult for landlords to operate responsibly. Strict rent control laws, complicated eviction processes, and excessive regulatory red tape can limit a property’s ability to generate enough income to cover expenses and make necessary improvements. While tenant protections are important, markets with extreme restrictions can discourage responsible ownership and investment, leading to deteriorating housing stock over time. For this reason, we focus on landlord-friendly markets where regulations strike a healthy balance, protecting both the rights of residents and the viability of property ownership.
5) Supply and Demand: If too many new apartments are being built in a city, it can flood the market and drive rents down, hurting property performance. We look for markets where new housing construction is keeping pace with, rather than outpacing, population and job growth. This balance helps keep vacancy rates low and rental income steady.
When you invest in multifamily real estate with PREP, you are investing in carefully selected markets where these factors align. Our job is to research, analyze, underwrite, and execute thorough due diligence so your investment has the best possible chance to grow in value and generate steady income over time.
Written By:
Donny S. Steinberg
Director of Strategy & Innovation
