Investing in multifamily real estate assets has long been a popular choice for both seasoned and novice investors. The ongoing housing shortage continues to crush many American cities, and demand for rental properties continues to grow – making multifamily investments a promising option. However, like any investment, choosing the right type of multifamily asset is crucial for success, especially in a dynamic real estate market. In this blog post, Vision & Beyond explores three types of multifamily assets to consider right now.
Apartment Complexes
Larger multifamily assets are perhaps the most common investment type – and for a good reason. Complexes with 50 to 80 units or more offer a stable income stream due to a relatively consistent demand for rental apartments. Here's why they might be a smart choice right now:
a. Urban Locations: Investing in apartment complexes in urban areas can provide a steady stream of tenants, especially in cities with strong job markets. Urban living is appealing to millennials and young professionals, ensuring a consistent tenant pool.
b. Value-Add Opportunities: Look for apartment complexes in need of renovation or upgrades, like Vision & Beyond’s Bexley Commons property in Columbus, Ohio. When our team acquired the property, we invested $3 million to make sweeping improvements including new roofing, windows, and HVAC units, and we overhauled the flooring and bathroom and kitchen amenities in every unit. By improving the property's condition, you can increase rent rates and overall property value.
c. High Occupancy Rates: Well-managed apartment complexes often maintain high occupancy rates, providing a reliable source of rental income.
Mixed-Use Properties
Mixed-use properties combine residential and commercial spaces within the same building. These can include apartments above retail shops or offices. Here's why mixed-use properties are a compelling investment option:
a. Multiple Income Streams: Owning both residential and commercial spaces diversifies your income streams, reducing risk.
b. Thriving Urban Centers: In cities experiencing urban revitalization, mixed-use properties can offer significant potential for growth and rental income.
c. Adaptability: In uncertain economic times, mixed-use properties can adapt to changing market demands. For example, if retail demand decreases, the residential component can provide stability and support your bottom line.
Student Housing
Investing in student housing near colleges and universities is another niche but profitable multifamily asset class. Here are some reasons why it may be a smart choice right now:
a. Consistent Demand: Universities typically maintain consistent enrollment, ensuring a steady tenant pool.
b. Less Seasonal Vacancy: Unlike traditional apartment complexes, student housing vacancies often remain lower during summer breaks due to international or year-round students.
c. Room for Innovation: Investing in modern, amenity-rich student housing can attract higher-paying tenants and potentially generate premium rental income.
Multifamily real estate assets remain a solid choice in the ever-changing world of investing. When deciding which type of multifamily asset to invest in right now, it's essential to consider current market conditions, location, and your investment goals. As with any investment, it's advisable to consult with real estate professionals and financial advisors to make informed decisions aligned with your financial goals.