Simply put, people have always needed a place to live, and always will. As grown children move out to form households of their own, and the lifespan of aging baby boomers have become longer, multifamily real estate investing has a very lucrative, high yield opportunity that will provide owners and investors a strong and continuous return.
Why multifamily real estate investing has become the perfect business investment opportunity can be well explained by the principle of supply and demand: The credit crunch, overheated housing market, and economic downturn have all contributed to a virtual freeze in new construction. This has led to an increasing rent growth and occupancy rates, which has led to the appreciation of value of apartment buildings, and in turn, the return growth of those who invest in multifamily real estate.
As we speak, the demand for multifamily real estate continues to rise. Echo Boomers and Milleniums (which are collectively called Generation Y), the biggest generation of youth since the Baby Boomers, representing one-third of the U.S. population, are starting to come of rental age, that being 18 to 34 years old.
The number of people who turn 18 year after year is good news for multifamily owners and real estate investors as the number is significantly great. Not only do most of these young people go to college and get their first jobs, they will also be looking for housing, most often in apartments, driving demand for student housing, and B and C class properties. According to the US Census Bureau, between the years of 2008-2020, approximately 57 million people will reach the age of 22.
There are also people in older demographics that rent during transitions in their life; whereas others are simply perpetual renters, without any desire or means to buy a home – a portion that is on the rise due to the foreclosure crisis and recent economic downturn. Additionally, the aging Baby Boomers who downsize to rental units are estimated to reach 10 million over the next ten years. All of these different populations create a very strong and steady market for multifamily housing.
Multifamily Investing Compared to Other Investment Vehicles