Real Estate

  Important Factors to Consider When Investing in Multifamily Real Estate

Despite the covid pandemic’s impact on other markets, investors continue to favour multifamily properties above other asset classes. This is especially true in mature and well-established multifamily markets such as the United States and Japan, where demand for multifamily housing has increased and is expected to continue to rise.

Many people are familiar with this asset class, especially those who have rented an apartment or purchased a home in the past. As is the case with any other residential property, a multifamily apartment has a functional kitchen, bathrooms, and a mix of living and sleeping spaces.

Numerous seasoned investors consider multifamily real estate to be the simplest kind of commercial real estate. It is much easier and faster than investing in other kinds of commercial property, such as office buildings or hotels. Multifamily property investment is a great way for first-time real estate investors to get their feet wet. However, what exactly is a multifamily property and how do I invest in one?

What is a multifamily property?

Multiple-dwelling units, or MDUs, are often used to refer to multifamily buildings. It is a kind of residential construction that comprises of several self-contained housing units or various structures inside a single complex. Multiple tenants, each with their own housing unit, are accommodated in multifamily real estate. Rental leases are often month-to-month or year-to-year for this kind of property.

Condominiums and Apartments’ Historical Performance

According to CBRE, a major real estate services firm, multifamily real estate was the first sector to recover from the 2008 financial crisis and has continued to outperform many other types of real estate in the years afterwards. According to their study, demand for multifamily housing in the United States has increased significantly over the last decade, from about $15 billion in 2009 to an astonishing $170 billion in 2018.

Investment in Multifamily Housing in the United States of America: Historical Trends

Clearly, multifamily investment has a track record of generating regular and significant returns for investors. According to CBRE, multifamily investment has produced the highest average returns of any commercial real estate asset class over the past 25 years. Additionally, it has the lowest standard deviation (volatility) of return performance of all asset classes, implying the least risk.

Return on Investment Annualized and Standard Deviation by Property Type

Additionally, there is a constant need for family-friendly residential property, and multifamily real estate is a great choice for tenants. Multifamily real estate investment is often utilised by real estate investors looking to diversify and strengthen their portfolios.

Multifamily property is more resistant to economic cycles than other types of commercial property, since everyone need housing, even during periods of economic contraction. As shown above, multifamily real estate generates a higher average total return on investment of 9.75 percent and a lower standard deviation of 7.75 percent, making it a more attractive risk-adjusted return investment.

Rental homes are in great demand among millennials

Due to prohibitively high housing prices, millennials are increasingly opting to rent rather than own property. Additionally, millennials place a higher premium on the freedom to migrate at any time and the opportunity to live anywhere in the globe than earlier generations did. Marketing your property under a MDU as a rental property can yield many hits if its location is good.

For more information about investing in multifamily assets, visit Real Vantage at



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