Multi family homes proved to be quite the investment in 2018, and this trend is continuing into the new year. If you’ve been hearing a lot of buzz around investing in multi family homes, it’s all for good reason. Any investor looking for some serious cash flow and a more diversified portfolio in 2019 will definitely find these as a multi family real estate investor.
Why Investing in Multi Family Real Estate Has Always Been a Must
Over the years, experts have promoted multi family investing as the best way to invest money. Now it might not be the right strategy for just anyone, but the fact still remains- investing in multi family homes definitely has its benefits. Here are a couple.
Growing Your Investment Portfolio
The best investment property for your portfolio is one that generates bigger returns faster. Multi family homes are the best type of income properties for building wealth. For instance, investing in a duplex or triplex is much quicker than going with a single family rental in which you would have to allocate your time and energy for each separate unit.
Financing
Investing in multi family homes may require a larger start-up capital, but getting approved for mortgage loans is actually much easier for commercial multi family properties. Lenders are more comfortable approving loans for a multi-unit property, in which there will be multiple tenants. This is because multi family housing lessens the dependency of cash flow on just one tenant. There’s just less risk involved from a lender’s point of view.
Related: How to Buy a Multi Family Property with No Money
Management
Buying multi family homes for investment allows justification for professional property management. You have a larger rental income to offset the extra expense of your property manager. And if you choose to personally manage the property, it’s still easier for you to manage multiple units when they are in the same building.
Investing in Multi Family Homes in 2019
So how are things looking for multi family investing in the US housing market 2019? Let’s check out this forecast for what to expect.
Rising Interest Rates
Possibly one of the biggest factors moving the multi family market in 2019 is the debt pricing. We can expect an increase in interest rates throughout 2019 based on private market behavior and federal monetary policy. Now it’s very important for investors to keep tabs on debt pricing because multi family asset pricing is most closely tied to it (as opposed to other types of investment).
The multi family investing market has experienced increasing property values in recent years. However, an increasing cost of borrowing in 2019 translates to higher cap rates as a means of financial sense. What does this mean for those of you considering investing in multi family homes?
Related: What Is a Good Cap Rate When Investing in Multi Family Homes for Sale?
The multi family market looks like it’s shifting from a seller’s market to a buyer’s market for 2019. Buyers searching for multi family homes for sale can secure these assets at a more balanced price to account for rising interest rates.
To better understand the metrics and financials involved in investing in multi family homes, use Mashvisor’s multi family investment calculator. Sign up now! To learn about your options for signing up for our services, click here.
Related: Multi Family Real Estate Investment Analysis: The ONLY Guide You’ll Need
The Millennial Effect
The largest generation in US history, millennials, are now hitting their late 20s and early 30s. What does this fact have to do with investing in multi family homes? Well, this age group is the exact one filling up the renter pool. With rental demand on the rise, millennials are the key demographic for multi family housing in bigger cities.
Millennials were affected most by the 2008 recession. As the consequential debts and other financial complications continue to be an issue to this day, buying a home is simply out of the question for most. Major cities like Boston and Seattle have experienced hot rental growth over the past five years. Yet renting is still the more affordable option for many people.
Multi Family Housing Inventory
Rising rents coupled with high occupancy rates is what drove previous rent growth. However, it’s expected to slow down in 2019; somewhere between 0% and 1.5% on a year-over-year Q3-2018 basis. And with that, investing in multi family homes is still encouraged.
The main reason for this slowdown is an increasing supply of multi family properties. There is a number of new apartment lease-ups scheduled for delivery in the near term. So supply is only now catching up to add a bit of balance in the 2019 multi family market. Although rent growth is cooling its fire-hot spike all round, housing demand still fuels impressive rent growth in some metros. Despite the increased supply, vacancy rates are still low (4.5% nationally).
Figuring out how to find multi family homes in the market at reasonable prices has now become a bit easier. With increased supply (expected 1.8% added apartment buildings in 2019), buyers have more leeway in getting good deals.
Related: How to Buy the Best Multi-Family Real Estate Properties for Investing
Wrapping It Up: Investing in Multi Family Homes for 2019
The overall consensus for 2019 is that multi family properties are going to continue to be a great investment. The security and tax advantages that come with investing in multi family homes is what has always captured the attention of investors.
But in 2019, real estate investors need to act now. Get assurance so you’re able to manage evolving dynamics. The best move investors can make in the 2019 multi family market is apartments. If you’re looking for wealth-building, attractive risk-adjusted returns, this is the asset class you want.
If 2019 is the year you buy your first rental property, Mashvisor is here to help you set aside any concerns. Our rental property calculator, along with our many other tools, can guide you every step of the way when it comes to real estate investing.
To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.
