💻 Surprising tech hubs emerging across the U.S.

👋 Hello, Best Ever Community! The Fed stood pat on interest rates this week, but Jerome Powell indicated we could see cuts as early as September. We’ll see.

In this week’s newsletter, surprising new tech hubs emerge, we go inside the fund-of-funds model, and one investor hits a 62% IRR and 9.2x equity multiple on his first-ever deal.

Today’s edition is brought to you by BAM Capital, a leader in innovative investment solutions aimed at maximizing returns and building wealth for accredited investors. Learn more about BAM Capital here.

🎧 ICYMI: AJ Klenk of Catalyst Capital Partners joined us on the Best Ever Show this week to share how he and his firm have built a $1.3 billion Sun Belt portfolio. Listen to the full episode on Apple or Spotify.

Off we go!

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CRE HEADLINES

👽 Signs of Life: Year-to-date multifamily absorption is up 75% compared to H1 2023 with 138,000 units absorbed. Vacancies declined by 10 bps in Q2. With the economy adding 500,000 new jobs and real wages increasing, an apartment market rebound could be on the horizon.

📈 Foreclosures Surge: Portfolios of foreclosed and seized commercial property reached $20.5 billion in Q2 — a 13% increase from Q1 and the highest quarterly figure since 2015. Some believe it signals the market nearing a bottom.

🌵 Drought Ahead?: A July report from Yardi Matrix found that new multifamily deliveries nationwide will drop from 560,000 units in 2024 to 350,000 in 2026, and fall even further to 328,000 in 2027, signaling a possible multifamily drought that will push rents to new heights.

💊 Bio Building Boom: JLL’s Charlie Hoff projects the pharmaceutical CDMO industry to double globally by 2033, fueling demand for bio-manufacturing real estate that’s expected to spur significant land deals and the development of large manufacturing operations nationwide.

🔎 Revisionist History: RealPage revisited its economists’ early picks for top apartment markets in 2024, showing Cleveland, Cincinnati, Columbus, and Chicago with rent growth well ahead of the national norm, Washington D.C. showing surprising upside, and top markets like Atlanta and Tampa sliding.

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SURPRISING TECH HUBS EMERGING ACROSS THE U.S.

As the cost of living in tech epicenters like Silicon Valley and New York City continue to skyrocket, small and medium markets across the U.S. are slowly emerging as mini tech hubs. With rare combinations of low living costs and desirable tech wages, these markets offer new opportunities to tech professionals — and as the markets grow, to commercial real estate as well.

The top three emerging tech markets are Flint, Michigan; Brownsville, Texas; and Racine, Wisconsin. Flint topped the list with 114% growth in high-tech wages from 2018 to 2023, an average weekly wage of $2,044, and 64% growth in high-tech employees. Brownsville ranked second despite a slight decrease in high-tech wages, posting a 125% increase in high-tech employees, and Racine came in third with 91.5% high-tech employee growth and nearly 20% wage growth.

• Top Dog: Flint was once known for its auto industry, but it's now the top emerging tech hub largely due to the city's MI Tech Hub Initiative, which has attracted investment and has created an innovation epicenter. It's also home to the University of Michigan's STEM Pathways program and the Great Lakes Tech Center.

• Key Factors: Brownsville, located on the Gulf of Mexico near the Mexican border, can thank its proximity to international trade routes and growing entrepreneurial spirit for its high ranking, while Racine’s focus on building a tech-savvy workforce is attracting startups, bolstering its growth.

• The Best of the Rest: Manhattan, Kansas, and Myrtle Beach, South Carolina, rounded out the top five, boasting 70.7% and 53.36% employee growth, respectively, with Myrtle Beach clocking 31.2 1% in wage growth. Greeley, Colorado; Bend, Oregon; Boise City, Idaho; Sioux City, Iowa; and Trenton, New Jersey round out the top 10.

WHAT IT ALL MEANS

As the prospect of interest rates coming down, even marginally, has inventors ready to leap back into the market, competition will intensify, especially in traditional Sun Belt powerhouse markets. These small emerging tech hubs offer alternatives across asset classes for investors to niche down and provide housing and office/industrial space where jobs are being created, wages are growing, and people are moving, allowing investors to cast a wider net when selecting their markets of choice.

To view the full list of emerging tech hubs, check out Secure Data Recovery’s full report here.

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FROM VIKING CAPITAL

As an investor, understanding different investment strategies is crucial. In their guide to Fund of Fund (FOF) investing, Viking Capital explains that FOF pools investments to employ in other funds to achieve broader diversification. Fund managers spread risk across asset classes and tap into specialized expertise.

👫 Benefits of Co-Investing: Co-investing allows investors to pool resources to access high-value opportunities like real estate and private equity. With this strategy, investors gain access to larger deals that might otherwise be out of reach while also reducing risk through diversification. Co-investing often lowers the barriers to entry for significant investments, making it possible for more individuals to participate in lucrative opportunities.

🏘️ The Multifamily Option: Multifamily real estate presents a solid entry point for individual investors, offering both cash flow and appreciation potential and serving as a hedge against inflation while also offering tax benefits. It also allows for diversification of investment portfolios, spreading risk across multiple units. Managing multiple units in one property can also result in economies of scale, enhancing overall efficiency and potentially increasing returns.

💸 Strategies for FOF Success: To succeed in FOF investments, it's crucial to document everything clearly to avoid misunderstandings among partners. Staying informed about market trends and remaining adaptable to changing conditions is essential. Networking within the industry can open doors to new opportunities and insights, and conducting comprehensive risk assessments before committing to investments is vital.

Investing in a syndication with FOF Investments offers a powerful way to pool resources, access larger opportunities, and diversify your portfolio efficiently. To explore these opportunities further and learn about Viking Capital's open investment opportunities, click the button below.

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U.S. NATIONAL DEBT TOPS $35 TRILLION

The U.S. national debt surpassed $35 trillion last Friday, rising $1 trillion since January and growing by nearly $5 billion daily in 2025. 

The deficit has increased by more than 75% during the Trump and Biden administrations. Despite this, deficit reduction remains a low priority in the 2024 campaign, with some proposals potentially increasing debt further, leading critics to sound off on both parties. Others, like Elon Musk, had simpler responses.

“This is crazy,” Musk said on X.

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A 62% IRR AND 9.2X EQUITY MULTIPLE ON FIRST DEAL

Cory Harelson of Freedom Investing Group hit a 62% IRR and 9.2x equity multiple on his first-ever investment deal. Here's how he did it 👇

🏢 Property Details: The 12-unit mobile home park property was purchased in June of 2016 in Garden City, ID. It was fully occupied at the time of purchase with 11 good tenants and one “trouble” tenant.

💸 Finances: The property was purchased for $340,000. Cory secured a $230,000 commercial loan with a 5.25% interest rate. He also used a HELOC on his house to fund the majority of the down payment. Then he combined savings plus cash flow from the property to quickly pay down the HELOC and buy another MHP.

💼 Business Plan: The one trouble tenant was removed with a cash-for-keys offer. Cory demolished the home, replaced it with a newer one, and sold it to a new and reliable tenant, bringing occupancy to 100%. He also installed submeters and billed back water and sewer charges based on usage, removing the largest expense item from the P&L. This was all accompanied by modest annual rent increases.

🍾 Projected Results: The property sold in 2021 for $975,000. The year one cash-on-cash rate was 6.1%, and the year five rate was 23%. Cory refinanced the property in 2020 and pulled out $400,000 in cash that was used to purchase another 51-unit mobile home park property in Michigan.

Upon sale, Cory did a 1031 exchange to buy a 27-unit property in Minnesota. He realized a 62% IRR and 9.2x equity multiple at sale.

If you have a deal you'd like us to feature, share it with us!

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FREE DOCUMENT DOWNLOAD

Questions to Ask the Listing Broker When Underwriting a Deal

To fully underwrite a deal, you need all the nitty gritty details about a property. Here is a full list of questions you’ll need to ask the listing broker broken out into five categories: property information, financial information, market information, value-add information, and offer process.