MFR Investment Analysis: New Orleans

MFR Investment Analysis: New Orleans

A location-driven investment analysis of 618 N Rampart St, New Orleans


Today I wear the hat of a multi family residential (MFR) real estate fund investor looking to acquire a MFR income investment property with strong cash flow, in New Orleans, that is in the $5 million to $10 million range. 

I want to use location data to augment insights I get from other places and inform my MFR investment decision-making.

To do the analysis, I’ll use Unacast’s data portal, which is free for MFR investors to try for 7 days. The three specific tabs on that portal that I’ll reference are: 

County Migration Flow Month - The projected change in population for a given county on a monthly resolution;

Tract Origin-Destination Migration - The estimated number of people migrating between two census tracts; and

CBG Foot Traffic Month - The estimated number of people `staying or having visited an area by the course of a month. 

To focus our location-based multi family residential investment analysis, we will zero-in on a nice looking rental property in the city’s French Quarter, at 618 N Rampart St.

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618 N Rampart St, New Orleans, LA 70112

Good old Zillow turned up this MFR investment opportunity based on search criteria for real estate in New Orleans and the $5 million to $10 million range. Listed at USD$5,750,000, this is a newly developed, mixed-use MFR luxury building in the historic French Quarter, with great cash flow opportunities for our investment fund.

The property, dubbed Six18 House, features 4x three-story residential units and one ground floor commercial real estate suite. As of the time of this writing, the residential units rented for about $7,000 per month, and the commercial property for about $3,500 per month. That creates a total cash flow of $31,500 per month income off a 5.65% cap rate -- that can sit well as as part of my fund portfolio.

The commercial property is not in located in an official opportunity zone, but commercial opportunity from tourism here is strong, with some 18.51 million visitors to Downtown New Orleans in 2019, and cash flow from MFR rental income also is good for this property and location.

Foot traffic analysis

To get some additional context, we’ll study not just the MFR listing and census block this property sits in, but two adjoining areas in the French Quarter, as well. This will prevent us from making any erroneous assumptions about cash flow related to any individual property or neighborhood.

The area as a whole is not showing particular resilience. Average foot traffic is still down 70% or more versus 2019. That’s a concerning indicator for a cash flow based real estate investor -- until you look a little deeper.

Foot traffic among Residents in the area - and in our location’s block in particular - is or has been much improved over 2020 and even 2019. Even the latest round of restrictions has only driven foot traffic in our neighborhood down 8% vs. 2019, and based on the chart, it looks set to rebound again before long. 

Visits from Non-Locals are also slowly rising. Those data points, along with those tourism numbers from 2019 are good indicators of resilience around our property, and positive for cash flow off rental income for both the MFR and ground floor commercial property.

Foot Traffic is Down -8%, Compared to the same time in 2019

Population and income flow analysis

Population is down 121 people since January 2019, but 82 of those left in 2019, meaning the rate of population decline has actually decreased since the pandemic began. Texas, South Carolina, and other parts of Louisiana were the top points of destination for those who left. 

Average income in the census blocks adjoining our MFR property ranges from $15,500 to $34,300, while newcomers to the area average about $55,200, or about 1.5 to 3.5x higher. This indicates upward mobility and higher price tolerance for both owners and renters, which is great news for our cash flow and rent forecast on MFR investment income.

It also indicates increasing opportunity for retailers, restaurateurs and others seeking cash flow from a more affluent market than traditional for this neighborhood -- and here we are with a nice, new commercial property on the ground floor we can lease out. Good stuff.

Summary

Will cash flow from rent continue to grow? Is COVID going to come raging back to Louisiana? Could 18 million people each year decide the French Quarter is no longer a fun place to be? 

Maybe, maybe not. But cash flow opportunity seems to exist at 681 N Rampart St in New Orleans for the right MFR fund investor. 

The neighborhood Residents are resilient, the cash flow from rent income is strong relative to the area, local wealth is growing thereby indicating a rise in real estate and other markets, and there are signs of a return to life in New Orleans and US cities everywhere.

Would you like to know how location data can help inform your MFR real estate investment decision-making? talktous@unacast.com

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