Multi-Family vs. Single Family Real Estate Investing

Multi-family real estate investing achieves a larger economy over the single-family real estate. The feature of having more units under a single roof increases management efficiencies and lowers per-door expenses. Should a single unit turn vacant, this loss will only represent a tiny fraction of the total income.

Moreover, multifamily real estate investment figures are based on the “income approach", which means that the value of the asset lies in the amount of income the business operation is able to maximize, and the expenses it is able to control.  Values of single family homes are primarily based on sales comparables. Seen as such, values of multifamily real estate can appreciate relatively quickly with strong operations.

Multi-family Real Estate Investing vs. the Stock Market

Real estate investing outperforms the stock market for a variety of reasons. Investors are more directly in control of their real estate investments than they are with publicly traded stocks, are not subject to the whims of large conglomerates that determine that market, and can more quickly adjust to changes in the market.  Additionally, the element of leverage in real estate offers more buying power than in stocks, and (not including the very rare circumstance) it is not typical to experience a total loss in multifamily real estate.

Multifamily Real Estate Investing vs. Other Commercial Real Estate

Multifamily real estate has also proven to be the most stable of all commercial asset types. While all commercial asset types do well when the economy is strong, retail, warehouse, office, and industrial assets often lose major tenants and can lie completely vacant during bad times. But with multifamily, owners can  respond better to changing market conditions by offering concessions and incentives to prospective tenants to keep their spaces occupied.

Even in stagnant markets, multifamily real estate investing still outperforms other commercial sectors because people never stop needing a place to live. With the steady influx of housing foreclosures, people are renting in apartments, which is an affordable, and sometime only, option.  Renting an apartment can provide the opportunity to begin a rental history, rebuild credit, build savings for possible future homeownership, provide flexibility in this uncertain job market, and offer a home for everyone from students to seniors.

In nearly all markets, multifamily real estate investing proves its resilience during this time of recession. Throughout the downturn, multifamily fundamentals have shown themselves to be the most stable asset sector.  All indications show, according to experts in the multifamily arena-- from brokerages to REITs to media and analysts-- multifamily real estate investing will remain strong in both the near and long term.

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