Why Smart Investors Are Flocking to the Midwest Multifamily Market
For years, investors focused on the Sun Belt—Phoenix, Dallas, Orlando. But now, a quieter, more stable region is making waves: the Midwest.
In a recent conversation between Ken McElroy and long-time investor Robbie Hendricks, the two dissected the growing interest in Midwest multifamily investing—and why some investors are thriving while others are crashing hard.
The “Boring” Markets Are Now the Smart Ones
Robbie, who has been investing in Midwest cities like Columbus, Indianapolis, and Akron for over a decade, explained that the region’s slow, steady growth is now seen as a virtue.
While Phoenix and other Sun Belt cities boomed during the pandemic—with out-of-state investors pouring in and overpaying—Midwest markets stayed consistent. “It’s not flashy,” Robbie said, “but it’s stable.”
Unlike high-growth metros where cap rates were driven down by competition, Midwest markets still offer attractive returns—if you know what you’re doing.
Local Knowledge = Competitive Advantage
One of the central themes: real estate is a local business. Period.
Robbie emphasized that their edge comes from being embedded in the markets they invest in. “We know the rents, the streets, the contractors—and the buyers.” In fact, their firm has a saying: Buy from locals, sell to out-of-towners.
Ken echoed this, sharing how out-of-state developers flooded Phoenix, offering up to four months free on new leases—many of them now underwater on deals they didn’t fully understand.
The Dangers of “Spreadsheet Warriors”
Inexperienced syndicators often make big assumptions based on projections, not realities. Ken and Robbie discussed how many of these operators raised money online, handed it to a third-party manager, and hoped for the best.
The result? Poorly managed buildings, high vacancies, and distressed properties.
“There’s a difference between buying a deal and operating it,” Ken said. “You’re not investing in a market—you’re investing in the operator.”
Why Some Deals Succeed—and Others Fail—In the Same City
Robbie shared that his firm passed on dozens of overpriced deals in 2021–2022. Many of those deals are now returning to market—at discounts. What’s the difference? Discipline.
“We kept dry powder. Now we’re circling back on deals we passed on. Same properties. Same rent rolls. Same location. The difference? The buyer.”
Both Ken and Robbie agree: in today’s climate, successful investing comes down to operator experience and local execution—not speculation.
What to Look for in a Strong Midwest Deal
Robbie outlined his current buy box:
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Value-add opportunities with poor management or deferred maintenance
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Stable employment and positive migration in submarkets
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A significant rent vs mortgage gap
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Strong school districts for long-term holds
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Limited new supply or barriers to entry in submarkets
Ken added that understanding the local debt markets and having strong relationships with community banks can also give investors an edge.
It’s Not Just the Midwest—Markets Like Lancaster, PA and York County, Pennsylvania Are Catching Attention
While much of the attention has turned toward cities like Indianapolis and Columbus, Robbie notes that other mature markets outside the Midwest are seeing similar interest. One example? Lancaster, Pennsylvania, and nearby York County, PA
“These areas share a lot of the same fundamentals we love about the Midwest,” Robbie explains. “Stable employment, limited new supply, and long-standing communities with deep roots. Investors are starting to notice.”
In fact, several investors have recently identified Lancaster and surrounding towns as overlooked gems—places where cap rates still make sense and local knowledge can give operators a clear edge.
What’s Next for Multifamily Investors?
Both Ken and Robbie believe the shakeout is just beginning. Rising interest rates, flat rent growth, and debt maturities are exposing weak operators.
But for disciplined investors who know their markets and operate with care, a major buying window is opening.
“If you’re on the sidelines with capital and experience, now’s the time to get ready,” Ken said. “The next 12 to 18 months could be the best opportunity we’ve seen since 2009.”
