How Multifamily Investing Can Resist a Recession
03-02-2023
There are several ways that multifamily investing can resist a recession. This includes choosing the right market, avoiding short-term investments, maintaining strong tenant relationships, and investing in long-term financing options. One of the best things about multifamily investing is that you can raise rents during a recession. This is because the demand for rental units increases during a downturn. This will cause a decrease in supply and allow sellers to charge higher prices to control the influx of tenants.
This will lead to increased income for investors and can help them weather any recession that may be coming their way. Moreover, there are many competitive loan options available to investors, so it is not hard to find the perfect mortgage for your investment property.
Scalability: Investors are also able to scale their portfolio with multifamily investments, which can give them an edge over other investors who only invest in single-family properties. Lower Interest Rates: Historically, interest rates have been lower for multifamily assets than most other commercial real estate investments. This makes them a great option for investors looking to diversify their portfolios and reduce their risk.
High Housing Demand: The demand for housing is constantly increasing, especially in areas with a high job market and population growth. This means that there is always a need for affordable housing, which will help keep multifamily investment properties in high demand during a recession.
Low Vacancy Rates: Occupancy rates in the multifamily industry tend to be more stable during recessions than other parts of the commercial real estate sector. This is because people need a place to live and will stay in their homes if they can afford it. As the economy improves, the demand for rental apartments can continue to grow. Frank Roessler believes that this will create a healthy income flow for investors and will also allow them to grow their portfolios over time.
The demand for multifamily rentals is expected to grow even more in the future as Americans move to urban areas, which are typically considered more attractive than rural communities. As a result, it is a smart strategy to invest in properties that are located in thriving areas where housing is still needed. In addition to the demand for multifamily apartments, the market for self-storage has also been resistant to recessions. The four constant drivers of demand—death, divorce, downsizing, and dislocation—make self-storage a resilient asset class to invest in during recessions.
