Doing some multifamily shopping
I never knew until recently that Cinco de Mayo, despite its Mexican heritage, is celebrated much more widely in the States, surprisingly.  The festival always makes me chuckle because I grew up in Dallas, TX where we studied Texas history and learned about the bad guys from Mexico who we fought against for independence.  REMEMBER THE ALAMO!  Now the conversation about Mexico revolves around vacation destinations and immigration.  Much has changed since 1836. I probably won’t be a tourist in Mexico anytime soon, but I have been out scouring for our next deal (and trying not to look too much like a tourist).  As I was on a recent trip to Atlanta, I thought of the critical importance of developing effective acquisition comps.  I thought you may be interested to hear some of the “behind the scenes” that goes into our process. 
DEVELOPING EFFECTIVE ACQUISITION MARKET COMPS
Developing an effective acquisition market comp involves searching the local area for all of the competitive properties – both at, below, and above the price point that our target property is currently at.  I find it extremely valuable to put myself in the role of a property manager or leasing director who is tasked with developing a market strategy to compete in that area.  I want to know where my competition is located, the ease of access, the amenities/retail around, the curb appeal, the general feel of the area (growing, declining, steady, clean, dirty, etc), and how well my competition presents themselves both via the internet (website, Facebook, Google) and in-person.
ON THE GROUND
While some of an acquisition market comp can be done virtually, there is much that requires time spent on the ground, driving the area.  On a recent trip I covered over a dozen properties in an area: drove multiple neighborhoods, talked with many people in the area about the improvements taking place, and generally got a feel for the market. I walked away with:
- a clear sense of why one part of town was charging below market rent (lack of marketing and stigma associated with low-income housing).
- identification of an off-market property to call on because it was massively under-managed
- observation of recent road improvements being completed that did not show up on my google satellite research. 
- observation of activity. I spent time parked IN the parking lot of both the target property and the competition – just watching.  I get the best information during commute times (morning and evening) but even during the day I can learn a lot about the property by just observing.  How often do I see the maintenance guy, how many people are in/out of the office, are there people loitering in the parking lot, etc.Â
OBSERVATIONS DRIVE VISION
My goal in all of this is to solidify how much we could potentially raise rents and increase operating efficiencies at our target property. I’m also looking to confirm/deny the sense of being in a path of progress (if any) and figure out where we would be pulling our ideal customer (resident) from.  To that end I also like to drive by/through a couple key businesses in the area (if it’s a more local job market) and get a sense of how busy the parking lot is, the type of people working there, and whether it could be a good resident referral target.   Granted, all of our markets have increasing income and population, but having a clear and “data” based marketing plan is critical for sustainable success.
That being said, we are putting offers on two (and maybe three deals) this week.  Despite the low cap rate going in, we’re still seeing a 20-25% upside in rents that would allow us to achieve the usual 10% COC and 15% IRR returns.  Hopefully I’ll have some good news soon.