Interest rates across the board have gone up and the profit investors make from a multifamily outweighs a smaller 1-4 unit building. With rates increasing, an investor is better off securing more units at a higher rate, rather than just a single-family investment at an interest rate currently above 6%. Just one multifamily investment property can turnaround a struggling, underperforming portfolio. Investors that have missed out on numerous properties throughout last year can also make up for that loss of opportunity with only one multifamily property. Interest rates are also tipping the scales towards multifamily investing because in a market where rates are scaring away everyone, an investor with a multifamily investment property with multiple units for rent just found themselves in a high leverage situation. In an article found on wealthmanagement.com, this sentiment is echoed, “As homes become more expensive to buy, and new product more expensive to build, the existing inventory of rental housing becomes more valuable and in-demand.”
Portfolio scalability achieved much faster
Multifamily investment properties are crucial for a number of reasons but mainly for investors the most attractive aspect is the scalability opportunity it creates for them. The money generated from a rental property, sometimes referred to as passive income, is amplified greatly by owning a multifamily property. With this money coming in due to volume of units, it is easier for investors to expand and make down payments on investments. Any investor will take you through their journey that usually starts with modest fix and flip projects, shifts to owing single family rentals and jumps to owning multifamily properties. Investors are always looking for the next challenge and a chance to earn the greatest ROI. With multifamily investment properties, the path to financial freedom has never been easier. With a partner or two and a few trusted property managers, investors can cross the 50–100-unit threshold with ease.
Liquidity equals flexibility
Liquidity is another attractive reason why investors want multifamily investment properties in their portfolio. Unlike stocks and bonds, a multifamily investment property holds its value at a much more reliable rate than an investment in the stock market. That value makes these investment properties much more appealing and offers flexibility to an investment portfolio. If a new property comes on the market and an investor needs to liquidate soon to free up some cash to make a down payment, a multifamily investment is just the asset they would need. Whether it’s selling off a certain number of units to make it worthwhile or unloading the multifamily property entirely, an investor can come up with that down payment money. Stock market conditions may cause an investor to miss out on an opportunity if the market is down, so having that multifamily property can prove to be much more reliable.