Why Secondary/Tertiary Markets Are The Future

As the multifamily housing market evolves, seasoned investors and industry newcomers alike are increasingly turning their attention away from primary markets and toward secondary and tertiary markets. These smaller, sometimes-overlooked regions are proving to be the hidden gems of real estate investing. Here’s why secondary and tertiary markets represent the future of multifamily investing:

1. Affordability and Higher Returns

Primary markets like Dallas, Austin, and others are notorious for their sky-high property values and stiff competition. While these markets can deliver stable returns, the entry costs often make them prohibitive for many investors. Secondary and tertiary markets, such as those a 30 minute to 1 hour drive outside of these major cities, select markets in the midwest, and smaller metropolitan areas, offer significantly lower acquisition costs, which translate to better cap rates and higher potential returns on investment.

2. Robust Population Growth

Many secondary and tertiary markets are experiencing robust population growth, driven by migration trends. People are leaving high-cost, high-density urban areas in favor of more affordable, livable cities and towns.

Case Study: Cleburne, TX

Cleburne, located just 30 minutes south of downtown Fort Worth, is a prime example of a thriving tertiary market. Known for its small-town charm and proximity to the Dallas-Fort Worth metroplex, Cleburne has experienced steady population growth, with a remarkable 20% increase since 2020. Economic development has played a key role in this growth, with one notable project being the Chisholm Trail Parkway. This toll road connects Fort Worth’s central business district to U.S. 67 in Cleburne, enhancing accessibility and making the area a convenient option for commuters.

The housing market in Cleburne offers compelling opportunities for investors. Median home prices are significantly lower than those in Dallas or Fort Worth, making property acquisition more attainable. The rental market is also robust, fueled by demand from local workers and commuters. Multifamily properties in particular stand out, offering better returns compared to many primary markets due to lower acquisition costs and rising rental demand.

Conclusion

As investors search for new opportunities in the evolving real estate landscape, secondary and tertiary markets like Cleburne, TX, are emerging as attractive options. With affordability, strong population growth, and promising returns, these markets represent the future of multifamily investing. By exploring these hidden gems, investors can position themselves for success in the years to come.