Investing in multi-family properties in the US

Within investment portfolios, commercial real estate has been an alternative used by wealthier investors since, apart from maintaining excellent returns, it also preserves capital during times of crisis. Office buildings, co-working spaces, long-stay apartments, hotels and multi-family homes are the main protagonists of this category. Among all these options, multi-family homes have a very positive outlook for this year.

These real estate assets are characterized by having shared amenities and services such as parking areas, green areas, social lounges, swimming pool, sports, space, among others. Its attractiveness continues to increase, especially in cities whose population is in full expansion, which has a solid commercial activity and a high demand for jobs given by new companies that choose the city to install their headquarters.

The indicators for this type of property in the US are positive, with demand that exceeds supply, generating an excellent absorption of new products of this type. In fact, CBRE reports that absorption of these new products in 2018 reached the highest level since 2000¹. The average available property rate was down 20 points from the previous year. Last year, rental growth increased at an annual rate of + 2.8%, up from 2.3% in 2017. Acquisitions of multi-family properties totaled $ 173 billion, the highest level in 19 years, representing 12.1% more than in 2017. The positive trend should continue in 2019, although total investment may decrease slightly from last year and it is expected that the capitalization rates increase slightly.

“The reality is that multi-family properties represent a flight to safety for most real estate investors. While volatility affected most asset classes throughout 2018, multi-family acquisitions actually increased,” explained Russ Krivor of Sovereign Properties in Forbes magazine.

Before the implementation of the JOBS Act in 2013, the multifamily sector of commercial real estate was a common destination for capital from investment groups and institutional funds. With this new law and technological advances in fund management, small investors can now participate in large-scale institutional quality projects, such as large apartment buildings in the core of major US cities such as New York and Chicago.

For those who are new to commercial real estate investments, multi-family properties can be a good gateway to the world of institutional-quality capital preservation investments. Many may already be looking to acquire properties in the security and stability provided by the US A step forward in line with this strategy is the idea of investing in a multi-family project through a collective capitalization scheme. The investor joins a collective trust that is the owner of an entire building, giving them access to better prices, higher cash flows, and greater stability.

What are the benefits of investing in this type of commercial real estate instead of buying an apartment or condo individually? Investing in multi-family properties not only offers asset-backed capital protection, but also has the potential for cash flow generated by the rental of all apartments in the building and recessionary security from multiple tenants. The returns on investments in multifamily properties can vary, but they are somewhat separated from the uncertainty and changes in public markets, offering more stability and a faster recovery than stocks.