A gateway city is defined as a primary arrival and departure point into a country such as an airport or a seaport. In terms of commercial real estate, it usually defines the big and the bold—and is represented by cities such as San Francisco and New York. But these larger than life cities are currently facing some challenges due to over-supply and low yields. When the subprime mortgage crisis changed the face of the nation, real estate investors first returned to those markets that yielded the best ROI and had strong demand. Because of this, these types of markets are becoming oversaturated and investors are turning their attention to non-gateway cities.
Non-gateway cities that seem to be the hot spots for commercial real estate investing include Phoenix, Denver, Portland—Oregon, that is—Charlotte, Raleigh, Nashville and Atlanta. According to the global law firm DLA Piper’s State of the Market Survey, Austin recently came out as the top non-gateway city in America for Texas commercial real estate investing—quite an achievement for a town whose population falls under 1 million. It does have all the attributes that investors look for including a strong job market, growing population, educated demographics and/or a strong industrial sector. Now could very well be the time to get into this burgeoning non-gateway market while it is till attractively priced and supply has not overshot demand.
According to the Austin Board of Realtors, “Central Texas housing market sees record-breaking 2017 summer selling season.” The sales of single-family homes in the city of Austin jumped over 6 percent year-over-year. And in the five-county area, home sales topped $1 billion in a single month. The median price continues to rise as well and came in at approximately $361,000 in the city of Austin in August and $300,000 in all five counties. Currently, there does not appear to be an increase in supply to the extent that it has started affecting prices, leaving investors confident in a high yield that is difficult to obtain in some of the gateway cities.
So just which markets are investors turning to? As evidenced by the numbers, single family homes seem to be a lucrative venture. Multifamily units also seem to be a hot market and as more and more businesses continue to make Austin their home, the need for these types of properties should continue to ensure optimum occupancy and good rental rates. After all, people always need a place to live which makes these types of investments fairly stable if purchased in the right areas. And, while investments in retail have been a little bit rocky lately, secondary markets still seem to offer relative value due to job growth and a lower cost of living than the gateway cities.
If you’re looking to purchase a property for a quick fix-and-flip or for a rehab and hold, seeking funding from a private hard money lender is often a good choice for real estate investors. This is primarily because the time to funding is much shorter than a traditional bank, getting you the capital you need to start your renovation or purchase that ideal property that just came on the market. At Level 4 Funding we can often provide you with the capital you need in less than a week.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.