Why Multi-Family Real Estate Is The Best Investment

Why Multi-Family Real Estate Is The Best Investment

In general, investing in real estate is one of the more reliable ways to make a regular income. Although, even within the real estate sector itself, some investments are better than others, depending on what your financial goals are. “Flipping” has become a popular trend in real estate, as investors buy a home, renovate it, then attempt to quickly put it back on the market at a markup to make their profit.

But apartments, or multi-family properties of any type, are a much more substantial leap in both profit and the time it takes to make that profit, and here are a few reasons why.

Retirement Downsizing

Traditionally, families make the move to a house in order to spend the child rearing years in a larger space. However, once children have grown up and moved on, there’s no longer a need for all those extra bedrooms, as well as the maintenance required for backyards and other amenities that are no longer seeing regular use. Retirement couples often “downsize” to an apartment to enjoy retirement with fewer housekeeping responsibilities, and more income from the sale of a home.

While this is a well understood and documented real estate phenomenon, it’s the scale at which it is now happening that is remarkable. The population of retirees continues to grow, and, in other developed countries like Japan, is beginning to outnumber the younger population. Keeping up with the supply to satisfy this growing demand will be extremely lucrative for apartment investors.

Millennial Rentals

With the shift in the economy, and the changes in both employment and salary opportunities, more and more people of the current working generation, better known as millennials, are choosing to rent a home rather than owning one. Economic uncertainty makes the commitment to a traditional homeownership plan far less appealing and feasible than it once was.

This has resulted in a move towards the more economical and less committed apartment space. It’s counter to the traditional trend of people of working age owning their own homes, but, especially in urban areas, is a preferable alternative to rising costs of homeownership, especially if real estate bubble conditions exist.

Faster Income

Last, but certainly not least, there’s the indisputable fact that rental properties are income generators immediately. Traditional home investment where people live in their homes before selling them is more like parking money, similar to a bank account. Flipping nets more profit in a shorter period, but a lot of money is used in the renovation, making for thinner profit margins upon sale, whereas rentals immediately create revenue once tenants move in.

This means that for a stable apartment building or other multi-family dwelling, pure profit can be recouped in a much faster period of time, but, more importantly, over a much a longer period of time as well.

If you have any interest in getting involved in multi-family property investment, you should start looking at resources such as the California Apartment Association, or the rights of tenants and landlords. You should also start thinking about the kind of insurance coverage and protection you’ll need. We can help in that regard, so just contact us with any questions or concerns you may have, and we can get the conversation started. Contact us today for more details at 800.644.6443.