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Where We Are Investing

Top Down Approach

Rameses Capital believes that by understanding long-term secular trends, we can reduce investment risk and increase potential returns for our investors.

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Key Drivers We Look For:

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  1. Population Growth

  2. Job Growth

  3. Economic Diversity

  4. Affordability

  5. Supply

  6. Landlord/Tenant Laws

  7. Crime Rate

  8. School Districts

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Two of the states well supported by our key drivers are:  Florida and North Carolina

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Population Growth

 

Areas with above average population and job growth are supportive of real estate demand.  New jobs will attract new residents who will need housing.

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The Census Bureau report to the right shows the fastest growing areas in the country since 2010.

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As the Census Bureau map shows, the "smile states" (the southeast through Texas to the southwest) have been the strongest areas for population growth over the last decade.

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Job Growth

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A McKinsey study takes a foward-looking approach potential net job growth across the country.  The map below shows that many of the areas which has experienced above average population growth over the last decade are expected to outperform in net job growth.

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Economic Diversity

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Areas in which the economy is supported by multiple industries provide diversification for any industry specific issues.  Examples include the financial sector in 2008 or more recently the travel and leisure sector during Covid.

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The top 5 industries in Florida account for 49% of the state's GDP, with no single industry attributing more than 18%.

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  1. Real Estate - 17.5%

  2. Health Care - 8.5%

  3. State & Local Govt - 7.9%

  4. Retail Trade - 7.7%

  5. Professional Services - 7.4%

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Similarly, the top 5 industries in North Carolina contribute to 54% of the state's GDP with the manufacturing industry leading the way at 17%.

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  1. Manufacturing - 17.0%

  2. Real Estate - 11.7%

  3. Finance and Insurance - 9.5%

  4. State & Local Govt - 9.2%

  5. Health Care - 6.7%

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NC GDP by Industry v2.png
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Affordability

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Affordability can encompass a variety of different metrics.  At a minimum, the median income should be able to support the median cost of living.  Elevated median home prices in an area can also push residents to rent instead of buy.  Florida and North Carolina both have lower than average median household incomes but the cost of housing in those states is also proportionally below the national average.

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Supply

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While positive drivers for demand are important, if the number of new units coming to market outpaces the number of new renters, rent growth will likely be subdued.  Investors should ensure the market boasts demand rising faster than new supply.

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The Florida Apartment Association estimates that it will need 48,000 new units per year to keep pace with demand and roughly only 34,000 apartments were added in 2020.

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Landlord/Tenant Laws

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Different states operate with different laws.  Some states are more friendly toward landlords while others favor the tenants.  Rules that can vary state to state include: ease of evictions, security deposit rules, maintenance and repair issues, access to a tenant's apartment and rent control.  

Crime Rate

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A low and declining crime rate will be supportive of more people moving to the area and rising rents.

School Districts

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Good school districts attract families who are more likely to become long-term tenants.

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