Right now, investors are getting especially bullish on multifamily real estate properties. But why the sudden interest?
Multifamily properties have always been lucrative and important when it comes to diversifying portfolios and building an optimal ROI. However, trends in the modern market make these property types especially desirable.
Here, we explore why multifamily investments are the future of real estate investment.
Housing will always be a necessity
First, let’s talk about the obvious. Housing is and will always be a necessity.
That said, we have to do something for our growing population. Some markets are growing more than others. Just take a look at the ways the Boise, Idaho housing market has shifted with an influx of new residents.
With rampant growth, communities need multifamily properties to help provide housing for all the diverse needs within the community. Apartment units are often some of the most affordable housing types, and investing in them can mean supporting real estate stability for many.
This longevity of need is one of the most attractive features of multifamily housing units at the moment because the pandemic highlighted the inessential nature of many other investment property types. For instance, malls and offices can be shut down or accessed virtually, while a living space cannot.
Real estate shouldn’t be a volatile industry. Yet we have seen volatility from many sectors of the market since the Great Recession and into the COVID-19 pandemic.
However, multifamily housing has been one of the least volatile investment types, having rebounded 33% already from pandemic slumps. An activity like this proves the need for multi-family units, especially when considering the growing housing shortage.
A housing shortage limits buyers
Right now, the U.S. is faced with a shortage of homes. Not only are there not enough units for those looking to buy a home, but the aging population is also more often choosing apartment living.
By 2030, the National Apartment Association estimates that we will need 4.6 million new apartments if we hope to accommodate demand in a balanced, thriving market. Demand for apartments has reached an all-time high at nearly 39 million people. Meanwhile, annual growth in renter households keeps growing.
This is a market outlook that spells big potential for real estate investors looking to capitalize on changing demographics while providing essentials for their communities. Apartment units by nature house more people and therefore can make a bigger impact.
Regardless of your goals as a real estate investor, multifamily units have more to offer.
Multifamily investments mean more options, partners, and income
With bigger buildings come more opportunities, more potential partners, and a greater pool of income from which to draw. That’s because the number of ways to invest in multifamily units is nearly as varied as the properties themselves.
Your investment options include crowdfunding, residential REITs, or buying the property outright. Each of these options comes with its positives and negatives that may determine the route you end up taking. However, the point to remember is that crowdfunding and REITs can lead to lucrative real estate partnerships. Meanwhile, multifamily ownership comes with a host of benefits.
Here are just a few of the reasons investors are increasingly turning to multifamily properties as they build their portfolios:
More units mean more cash flow each month
Tax deductions often come with multifamily property depreciation
Comprehensive insurance options abound for multifamily properties
The scalability and customizability of these units are more features that make them highly desirable to investors looking for room to experiment and grow. For the future of housing, these many benefits will be a draw for all kinds of investors.
Bottom Line
Multifamily properties offer more units for the millions of renters who will need them in the years to come. By investing in these essential resources, you can help expand your portfolio with lucrative opportunities. From here, perhaps a future as a real estate mogul awaits you.
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