Why Invest In Multifamily Housing
1. Demand for housing will always be there – People will always need a place to live. It's really that simple. People may cut back on travel, hotel stay, shopping, or downsize their office space, yet they will always need a place to live.
2. There's a shift towards rent vs own - Flexible work schedules and a cultural shift towards greater time working from home, has caused people to prefer renting vs owning. Many young professionals tend to relocated for their job, therefore greater preference to rent vs own.
3. Good operating margins / higher profits – Multifamily housing have good operating margins and typically require less hands-on management and more predictable costs. Compare this to other asset types like, hotels, where it generally requires 24-hour staffing and operations.
4. Investors can easily identify with multifamily housing – Investors can generally relate better to multifamily housing than other asset classes. This can be due to their personal experience from having lived in an apartment building, therefore it from an investment standpoint, it is has a wider range of investors that it attracts for both purchase and sale.
5. Rent growth – As more younger professional shift towards working from home, there is a greater preference placed on the quality of living. Renters are willing to pay higher rents so long as they are valuing their home, therefore more likely to accept paying higher rents if they see the value. Compare this to traditional office buildings, where the rent growth is typically flat or only slightly increasing during the lease term.