We love multifamily investments. We have designed, develop, built and managed over 2,000 units. Our experience with multifamily has been very positive.
Multifamily vs. Other Commercial Real Estate
Multifamily has proven to be the most stable of all commercial asset types. While all commercial asset types do well when the economy is strong, retail, warehouse, office, and industrial assets often lose major tenants and can end completely vacant during bad times. However, with multifamily, owners can respond better to changing market conditions by offering concessions and incentives to prospective tenants to keep their spaces occupied.
Even in stagnant markets, multifamily real estate investing still outperforms other commercial sectors because people never stop needing a place to live. With the steady influx of housing foreclosures, people are renting in apartments, which is an affordable, and sometimes only option. Renting an apartment can provide the opportunity to begin a rental history, rebuild credit, build savings for possible future homeownership, provide flexibility in this uncertain job market, and offer a home for everyone from students to seniors.
Active vs. Passive Multifamily Investors
It’s not easy to get started. In order to get involved as an active investor in multifamily you need money, time, and experience. If you have all three, you could contemplate going alone. If you only have one or two and still consider to be an active investor, it’s time to consider partnering with others who have the aspects you do not.
Passive investing is another option to be involved in multifamily. This could be done through private equity firms whom specialize in this particular asset and who have vast experience in design, development, construction and management. The other passive investment option is with a private mortgage funds. Fund managers invest in multifamily across different geographic areas and different asset class. This will allow the managers to diversify risk, and to deliver the expected returns for their investors.
Multifamily vs. the Stock Market
Multifamily outperforms the stock market for a variety of reasons. Investors are more directly in control of their investments than they are with publicly traded stocks. Investors are not subject to the large institutional firms that determine that market and can more quickly adjust to changes in the market. Additionally, the element of leverage in real estate offers more buying power than in stocks, and (not including the very rare circumstance) it is not typical to experience a total loss in multifamily real estate.