Multifamily Investing Along with Golden Ages

Joe Fairless

June 9, 2022



Multifamily Investing is consist of some sub forces. Let’s look at the facts and figures. According to Joe Fairless, multifamily was one of the best performing asset classes last year. And if you’ve been waiting for a great opportunity to invest in multifamily, now is the time. Let’s start by looking at the historical performance of the multifamily market.

Multifamily Investing |Core Development Stretegy

The Golden Age of Multifamily Investing

With cap rates hovering around the mid-fours, multifamily investments have positive leverage from day one. Also, the U.S. government’s debt is now at $27 trillion, and only hawkish economists predict that meaningful inflation is on the horizon.

The shortage of quality multifamily housing has led to the formation of a national investment fund called Capital Square. The fund will develop ground-up multifamily communities in markets like the Southeast and Mid-Atlantic. Investments will be made in cities like Raleigh, Charleston, Knoxville, and Charlotte, North Carolina. The fund will also target secondary markets in the Southeastern U.S. and other regions where the market is underpriced and underdeveloped.

With the demand for multifamily housing soaring, the multifamily sector offers the right investor the chance to profit from a growing market. This asset class continues to outperform other major commercial real estate sectors, with an internal rate of return of 9.5%. The lack of quality multifamily units in urban areas creates an exceptional shortage, and there is no better time than now to enter the multifamily space.

If you’re looking for an asset class that yields high returns while offering low risk, look no further than multifamily real estate. Historically, multifamily investing has shown high rates of return. Considering the inflated price of many assets in the U.S. today, the risk to return ratio is quite attractive. And with a strong demand for rental properties, this asset class has shown resilience during economic downturns.

It’s a good asset class

Joe Fairless thinks that multifamily properties can be classified by location, type, and demographics. Multifamily investment in Class B properties offers the highest rate of return, but it’s important to remember that these buildings are usually older and in need of maintenance. Because of their age, they often have significant potential for improvement and value-add. While the risk is lower, they’re still located in hot markets, which helps them generate high returns.

Another reason to consider multifamily investment is its high tax benefits. This asset class provides investors with a substantial tax deduction for expenses such as property management fees, marketing costs, and maintenance and repair costs. Investors also enjoy tax benefits related to depreciation and cost-segregation. A typical $2.5 million apartment building requires a down payment of approximately half a million dollars, which doesn’t include the down payment.

It’s a good time to buy

If you are looking to invest in real estate, a good time to buy multifamily properties is now. These properties generally have higher monthly cash flows, assuming that all other factors are equal. However, the cash flow will not be the sole determining factor. In fact, some investors argue that 20% or more of apartment complexes are vacant. This is not necessarily true. There are many factors to consider, and some investors prefer to purchase multifamily properties closer to home.

While there are plenty of reasons to invest in multifamily properties today, one of the main reasons to consider this type of real estate is the fact that the market is still booming. Demand for these properties is high and prices are steadily increasing. This is true for both multifamily properties and single-family homes. Despite the high demand, multifamily properties are still doing well, and you can even find some bargains if you take advantage of the low prices right now.

Joe Fairless feels that millennials are the largest buying force in the country, and the rent they pay will eventually be a significant portion of the total rents. Multifamily investing will most likely stay in demand until prices decline. This imbalance between supply and demand will lead to a more intense competition for inventory. In turn, multifamily investing will rise as a result. Therefore, multifamily properties are a good investment for any real estate investor.