Understanding This Investment
Multi-family residential building designs vary by location to location, and the size of the structure depends greatly on where you’re shopping. Home ownership and household formation rates in a given area can affect your tenancy numbers in multi-family buildings, as can local employment growth.
The bonus with this type of investment, though, is that leases are typically just one to two years in nature, and the rates tend to adjust to market conditions fairly quickly. A single vacancy often doesn’t matter in this setting, and while new construction may give you a bit of competitive pressure, the reality is that you can enjoy substantial success in this market.
Multifamily real estate makes up about 25% of U.S. commercial real estate stock, making it the second-largest share of investor real estate holdings. It’s easily one of the best choices available. As you look to invest in this asset class, you’ll not only want to consider the area, but also the type of building, its history, and the type of design involved in the building.