4 Important Reasons to Consider Investing in Multifamily Property
Author : Move Me Realty | Published On : 15 Sep 2021
While investing in real estate comes with potential pitfalls, multifamily housing is a relatively safe investment. There are several advantages to owning multifamily real estate, accounting for its rising popularity.
Multifamily investment property is hard to amiss with better access to financing opportunities and an impeccable chance to grow one’s rental portfolio.
If you are looking forward to making the investment in a multifamily property, here are few important reasons to bring you 100% surety:
Millennials Are Favoring the Rising Demand on Rental Properties
According to a recent survey, renting represents one of the most common forms of housing for the millennial generation. The national rate of homeownership was approx. 64% in 2016, for millennials aged 25 to 29 it was 31%, and for aged 30 to 34 it was only 45%.
There are many reasons why this trend growing toward renting for the millennial generation, including the fact that steadily rising median home prices put hassle in homeownership for this generation. Millennials also prefer to enjoy mobility and flexibility rather than owning property, and for this reason alone, they are more likely to prefer renting.
Baby Boomers are Increasingly Opting to Rent
At the other end of the age funnel, the baby boomer generation favors rent property over homeownership. According to a report submitted, between 2009 and 2015, the major shift from homeownership to renting was seen among those aged 55 and older (in other words, boomers).
As per the report notes, older tenants prefer renting not because they encountering inconvenience in buying a home like millennials (they do not), but rather because an ideal multifamily property can offer hassle-free, amenity-rich luxury living that attracts this bunch.
Shorter-Term Lease Agreements Allow Spurt in Rent
Another reason multifamily investment property has the potential to be a lucrative investment lies in its tremendous ability to adjust according to changing market conditions, specifically spike in rent due to market demands or inflation.
Preferential Investment for Financing
Finally, the data also came up with good news highlighting that multifamily investments enjoy a preferential mortgage market and better funding terms parallel to other types of commercial real estate.
According to 2017 research, multifamily investors benefit from better terms for funding than investors in the broader commercial real estate spectrum. For instance, Multifamily investors received higher loan-to-value ratios (67% on average) in parallel to a range of commercial real estate investors (who averaged 59%), and lower debt-service-coverage ratios (1.25, versus 1.74).
There are a myriad of advantages that investing in a multifamily property. These are well inclusive of building a better financial status and making the best out of one’s rental property. PS: You are not going to enjoy the above-said benefits if you go for new homes for sale near me, rather than investing in multifamily.