Are you looking to invest in commercial real estate? If so, multi-family properties are a smart choice. It's not just commercial real estate investors that are catching on to the trend; even homeowners who have been renting out their single family properties for years have started investing in multi-family properties themselves!
In this blog post we will talk about why investing in multi-family properties is a smart idea, and how it can help you earn more money with less risk.
What are some of the reasons that make multi-family properties a good investment?
#1 - with skyrocketing single family home prices across the country many families are being priced out of this market resulting in more demand for multi-family apartments.
#2 - as demand increases while the supply stays relatively low, rent prices will continue to increase resulting in more income for multi-family property owners.
#3 - thanks to low interest rates, sponsors have been able to secure or refinance their debt into lower cost loans that will reduce expenses and improve cash flow.
#4 - unlike retail centers, the loss of one tenant will not have an adverse affect on your income stream.
One question we often hear is if the value of multi-family properties have already risen so high, will they continue to rise?
We believe the answer is yes. The business model for most multi-family investments is to purchase a property, renovate the units and exterior thereby improving its rentability and then once higher income is generated, sell the property at an appreciated price. We don't believe there is any reason that this business model is at risk. As properties get older & go through multiple tenants, renovation is critical. Since existing owners don't want to invest in updating the properties, they sell the properties to new owners (with new investor equity) that can improve the property.
We hope this blog was helpful in understanding why the multi-family asset class is one of the most resilient and attractive asset classes. If you’re interested in learning more, reach out to us at invest@avestorinc.com.
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