Investor Resources

Today we're talking about the multifamily asset class. Multifamily can be apartments, single-family rentals, mobile home parks, tiny homes, senior living, student housing, and I'm sure I'm missing a couple more, but generally speaking, it's the most popular investment class over the last decade or so.

Today we're going to go over the cons of the multifamily asset class. It's important to have a basic knowledge of what you're investing in, whether it's single investment syndication or a REIT or private equity fund that's a little more diversified. You should still know the basics of what you're getting into.

One con or negative of multifamily investing would be the affordability factor. Recently, a lot of people who invested in multifamily projected large rental increases  which justified higher acquisition costs. However, rental increases have slowed down significantly, so many investors who bought off of a spreadsheet versus looking at the asset and where it is, are going to face some headwinds in the not too distant future. 

In addition to the extremely competitive nature of the asset class, there were a lot of units built in the last several years that are coming online now. A lot of investors and owners have a low basis and can adjust their rents to fill their units up. But some others bought at the very top of the market and estimated higher projected rental rates, they might not be able to lower rates and still be able to meet their projected returns or mortgage payments. If rents are as low as the competition and costs are higher, that is an unfavorable situation to be in. 

Finally, owning multifamily inevitably entails dealing with toilets, tenants, unpredictable expenses, and costly repairs that may not be accounted for in a spreadsheet. So multifamily is a little more volatile on the expense side than other asset classes or a little less predictable than other asset classes. 

All right, so there are your cons and a quick recap of multifamily. If you want to learn more, follow the link below to our website for additional videos and blogs.