A 10-Part Series: Questions to Ask When Assessing a Multifamily Fund 

As discussed in our last post, you are critical in evaluating multifamily investment funds for your clients to ensure the opportunity aligns with their goals and objectives. In this blog, we look at the second question in this ten-part series that you’ll want to be attentive to when conducting your due diligence on a specific fund.

What Markets Are Being Targeted? And Why?

Why This Question Matters

Selecting the right markets is fundamental to the success of a multifamily real estate fund. Strong market fundamentals—such as population growth, employment opportunities, and demand for rental housing—can translate to steady cash flow and long-term appreciation. Advisors must evaluate whether a fund’s geographic focus aligns with their clients’ financial goals and risk tolerance. Asking targeted questions about the fund’s market selection process reveals its ability to adapt to economic shifts and capitalize on growth opportunities.

Key Subquestions to Ask

• What are the economic drivers of the targeted markets?
  Understand the industries, employers, and infrastructure fueling economic growth and demand for housing.
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• How do market fundamentals support rental demand?
  Assess factors like population growth, job creation, and housing affordability.
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  What criteria are used to select specific submarkets?
  Learn about the fund's approach to choosing suburban or secondary markets over urban cores.
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  How does the fund mitigate market-specific risks?
  Explore diversification strategies or contingency plans for potential market downturns.
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  What recent acquisitions reflect the fund’s market thesis?
  Review recent transactions to gauge the alignment between the stated strategy and execution.
  
  
  

Rincon’s Market Selection Focus

Rincon’s strategy zeroes in on key metropolitan statistical areas (MSAs) and suburban submarkets with strong growth potential. Targeted markets include:

• Southwest MSAs: Phoenix, Tucson, Las Vegas, Denver, and Colorado Springs.
• Southeast MSAs: Atlanta, Raleigh-Durham, Charlotte, Charleston, and Savannah.
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These markets were selected based on the following:

1. 1. Demographic Trends: Rising populations and millennial-driven demand for rentals.

1. 2. Economic Resilience: Strong employment growth, diverse industries, and infrastructure        investment.

1. 3. Value Opportunities: Properties acquired below replacement cost with room for value-add improvements.

For example, Rincon’s recent acquisition of the multifamily property Rancho Las Palmas (now renamed Ascent on Spence) in Tempe, Arizona, exemplifies its market strategy. Located near Arizona State University and major employers like State Farm Insurance, Amazon and Deloitte, this property benefits from proximity to employment corridors and easy transportation access.

What Sets a Fund’s Market Selection Strategy Apart

Rincon Multifamily Fund II LLC distinguishes itself with a disciplined focus on high-growth secondary and suburban markets in the Southwest and Southeast United States. These regions offer:

• Population and Job Growth: States like Arizona, Nevada, and North and South Carolina benefit from significant migration and economic expansion.

• Housing Shortages: Single-family home supply constraints and affordability in these markets lead to increased multi-family rental demand.

• Economic Diversity: Markets like Phoenix and Raleigh-Durham are hubs for tech, healthcare, and education, helping ensure resilience against sector-specific downturns.
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Conclusion

Evaluating a fund’s market selection focus helps ensure its strategy aligns with your clients’ investment goals. Rincon’s targeted approach to high-growth, supply-constrained regions positions its portfolio to capitalize on both stable income and long-term asset appreciation.

For more information on investing through FLX Networks, contact John Feeley at tel: 908.944.7917 or at John.Feeley@flxnetworks.com