Best Markets to Invest in Commercial & Multifamily Real Estate

Looking for the best markets to invest in commercial & multifamily real estate? Discover three essential rules every beginner must follow to find profitable commercial and multifamily real estate deals.

You’ll learn:

Why staying within a 3-hour drive is critical for managing risk
How B and C class properties offer the best value for new investors
The importance of boots-on-the-ground intel—and how to gather it effectively

The best markets to invest in might be closer than you think!

Why Market Selection Can Make or Break Your First Deal

What I’m about to share with you could be the difference between closing your first profitable deal this year—or spending the next three years chasing deals in unfamiliar markets that ultimately lead nowhere. Most beginning investors make the same costly mistake. They become convinced that the best deals are somewhere else. But the reality is this: your goldmine might be right in your own backyard. The best markets to invest in could be just a short drive away, hidden in plain sight.

The Common Pitfall: Chasing Distant “Hot” Markets

New investors often fall into the trap of believing that success lies in faraway cities with booming headlines. They scour the internet for the “best” markets, convinced that if they just follow the crowd, they’ll land a winning deal. But here’s the problem: investing in a market you don’t understand—especially one that’s 2,000 miles away—is extremely risky. You don’t know the neighborhoods, the tenant base, the local regulations, or the economic drivers. And without boots on the ground, you’re flying blind.

The Smarter Approach: Invest Where You Know

Instead of chasing distant deals, I want to share with you a proven framework that will help you find solid B and C class multifamily commercial properties within driving distance of your home. This approach is especially critical for beginners. It allows you to:

Leverage your local knowledge
Build relationships with nearby brokers and property managers
Visit properties in person
Respond quickly to issues or opportunities

This system is designed to help you avoid the costly mistake of chasing deals in unfamiliar markets and instead focus on areas where you can build real expertise and momentum.

Rule #1: Stay Close to Home

Why Proximity Matters

The first rule in identifying profitable commercial and multifamily real estate deals is simple: stay close to home. But how close is close enough? Aim for properties within a three-hour drive from where you live. This range allows you to physically visit the property, inspect it firsthand, and respond quickly when needed. It’s a safe and manageable distance, especially for new investors.

Common Objections—and Why They’re Misguided

At this point, you might be thinking:

“My market is way too expensive.”
There are no good deals where I live.”

These objections are common and they’re exactly what hold many investors back. Here’s what you need to understand:

Every market has opportunities. You just need to know where to look.
Comparing your market to a ‘hot’ market 2,000 miles away is a mistake. You’re cheating yourself out of deals that are right in front of you.

The Responsibility Factor

Investing in commercial real estate comes with significant responsibilities: The larger the opportunity, the greater the responsibility. Imagine owning a 20-unit property in a city 2,000 miles away. A major plumbing issue floods the street, and the local news is on the scene. Wouldn’t you want to be there to assess the damage yourself?

Or consider this: your property manager is underperforming and dishonest. If the property is across the country, how do you handle that situation effectively? You can’t. That’s why proximity is critical—it allows you to manage problems directly and maintain control.

The Exception to the Rule

There is one exception to this rule: experienced investors and working with a mentor. If you’ve completed multiple deals, have a proven track record, or are working closely with a mentor, you may be ready to invest out of state. But even then, success depends on having robust systems in place for:

Marketing
Management
Maintenance
Money (financial oversight)

These systems ensure accountability—because you’re not managing the property directly, you’re managing the property manager. And that requires structure and discipline.

Action Item: Define Your Investment Radius

To apply this rule, start by mapping your three-hour radius. For example, if you live in the San Francisco Bay Area—a notoriously expensive market—don’t let that discourage you. Draw a dot on the map where your home is located, then outline a three-hour drive in every direction: north, south, east, and west. That’s your target area.

Real-Life Example: Dave’s Success Story

Take Dave, one of our students. He’s a truck driver based in the Bay Area. Despite the high prices in his local market, he didn’t use that as an excuse. Instead, he followed this exact strategy and acquired five or six properties totaling over $7 million—all within a few years and within driving distance of his home. You hear in his own words how he did it in my video Multifamily Millionaires Part 4: Truck Driver. If Dave can do it, so can you.

Rule #2: Focus on B and C Class Properties

Why B and C Class Are Ideal for Beginners

Rule number two will save you an enormous amount of time when searching for the best markets and the most profitable deals. If you’re just starting out, forget about A class properties. They’re not for you—at least not yet. Instead, focus your efforts on B and C class properties. These are the sweet spot for beginner investors. Let’s break down what each class means so you can identify them in your market.

B Class Properties: Solid and Stable

B class properties are typically well-maintained buildings located in middle-class neighborhoods. You’ll notice:

Reliable tenants with steady jobs
Clean parking lots with nice cars
Minimal repairs needed upon purchase
Immediate cash flow from day one
Potential for small upgrades to gradually increase rents

These properties offer a balanced investment—stable income with room for modest improvements. They’re ideal for building confidence and experience.

C Class Properties: Value-Add Opportunities

C class properties are older buildings with lower rents and, often, lower purchase prices. They represent value-add opportunities, meaning you can:

Renovate kitchens, bathrooms, and exteriors
Increase rents through improvements
Force appreciation
Refinance and use the equity to buy additional properties

C class properties may include Section 8 tenants and typically have a lower barrier to entry, making them accessible for new investors. The ultimate goal is to find a C class property located in a B class neighborhood. This allows you to upgrade the property and elevate its status, maximizing both rental income and long-term value.

A Class Properties: Not for Beginners

A class properties are high-end, expensive buildings in premium locations. These are best suited for experienced investors focused on capital preservation and long-term appreciation. Characteristics include:

High purchase prices and large down payments
Minimal cash flow
Little to no upside for value-add strategies
Long-term holding strategies, often for estate planning

These are appreciation plays—not value-add investments. They’re great for wealth preservation, but not for building wealth from scratch.

Your Investment Sweet Spot

Whether you’re in a hot or cold market, your focus should be on B and C class properties. They offer the best combination of affordability, cash flow, and growth potential for new investors.

Rule #3: Boots-on-the-Ground Intelligence

Why Local Intel Beats Online Data

This is my favorite rule and one that separates successful investors from those who spin their wheels. Rule number three is all about boots-on-the-ground intelligence. “Intel” is short for intelligence, and in real estate, it means firsthand, local knowledge from real people.

Many investors rely solely on online data, neighborhood demographics, job growth, economic indicators, and construction trends. But that’s not enough. Real estate is a local business, and local knowledge is everything. After 25 years in this industry, I can tell you with certainty: you cannot sit behind a computer and accurately judge whether an area is good or bad. There’s simply not enough context online.

A Personal Story: The Power of Being There

I once considered a property in a rural-looking area. The numbers were intriguing, so I flew out to see it. I arrived at night, stepped out of the van, and immediately noticed something I couldn’t see online—banks on every corner. That was a sign of economic activity and stability. I ended up buying the property, which turned out to be a great deal.

That same property also had the highest revenue-generating Super Walmart in the region. The population was small, but the economic output was strong and none of that was visible online. If I had relied solely on digital data, I would’ve passed on the opportunity.

Three-Part Intel System

To make informed decisions, you need a system for gathering local intelligence. Here’s my three-part approach:

Visit the Property and Surrounding Area

Walk the neighborhood and observe competing properties
Talk to tenants in nearby buildings—ask how they like living there
Visit local cafes and chat with waitstaff (many are renters and can offer insights)
Trust your gut—if something feels off, honor that instinct

This step gives you a real sense of the area’s livability, safety, and tenant satisfaction.

Speak with Local Property Managers

Connect with at least two property managers in the area. They can provide:

Rent trends—whether rates are rising or falling
Demographic insights—who your tenants are likely to be
Occupancy rates—whether demand is strong or weakening
Employer data—where tenants work, based on rental applications

Whenever possible, meet them at the property. Walking the site together yields far more insight than a phone call ever could.

Interview Commercial and Residential Agents

This is a pro tip that many overlook. You need both perspectives:

Commercial agents can tell you about market cap rates, pricing trends, and investment activity
Residential agents offer insights into tenant behavior—home sales, foreclosures, school quality, and neighborhood desirability

Residential agents are especially valuable because they understand the mindset of your future tenants. So their perspective is just as important as that of commercial brokers for finding the best markets to invest in.

Final Thoughts: No More Excuses

You now have a clear, actionable framework:

Stay close to home—within a three-hour drive
Focus on B and C class properties—your ideal entry point
Gather boots-on-the-ground intelligence—real knowledge from real people

The best markets to invest in may not be thousands of miles away. They could be right in your own backyard, waiting to be discovered. So map your radius, study your neighborhoods, and talk to the people who live and work there. No more guesswork. No more excuses. With this framework, you now have the tools to find the right deals in the right markets.

Every Successful Commercial Real Estate Investor Has a Mentor

Get your mentor here: Commercial Property Advisors Protege Program

If you have any comments or questions, text PETER to 833-942-4516.