Why Invest in
Multifamily?

Investing in multifamily properties, such as apartment buildings or duplexes, is considered to be an attractive allocation option for a variety of reasons. Multifamily investing offers diversification, stable income, and growth potential, making it a popular choice among both new and experienced real estate investors.

Investors frequently concern themselves with questions about market timing, often feeling that it's not the right time to invest.

However, at this point in time, when it comes to the multifamily sector, we have hit the inlection point of market rents now that prior years’ oversupply has been absorbed, with anticipated strong rental growth during 2025 and 2026 which are favorable to the development of new, Class A multifamily projects.

As such, the current multifamily market presents ideal timing and an opportunity to invest in multifamily real estate. As interest rates stabilize and decrease, capitalization rates will compress, and when combined with increased market rents will provide favorable factors for property values to rise.

The Fund believes that the combination of these broader economic and sector-specific market conditions bode well for the achievement of attractive returns on investment.

1. Housing as a Basic Need

Shelter is a fundamental human necessity, and therefore the multifamily sector remains resilient even during economic downturns. While other real estate sectors may suffer, multifamily properties consistently perform well, providing much more stable returns.

The Urban Land Institute’s Emerging Trends in Real Estate report has cited multifamily housing as a favored investment sector overall, particularly during uncertain economic times. Compared to office, retail and hospitality, the demand for shelter will always remain, ensuring a steady stream of tenants and income, regardless of broader economic conditions.

2. Chronic Housing Shortage

The U.S. has experienced a significant housing shortage for years. According to the non-profit Up For Growth, since 2012, the deficit has grown from 1.65 million to about 4 million housing units by 2021. This persistent shortage drives demand for rental properties, particularly multifamily units, making them an attractive investment. As the gap between housing supply and demand widens, the value of multifamily real estate continues to rise.

3. Affordability Gap

Current economic conditions have created a substantial affordability gap between renting and owning a home. Rising interest rates and home prices have made homeownership increasingly expensive, pushing more people towards renting.

According to Freddie Mac and the National Association of Realtors, the costs of owning a home are now 73% higher than the cost of renting. As owning a home becomes less affordable, the demand for rental properties, especially multifamily units increases, enhancing their investment appeal.

4. Lower Risk of Vacancy

In a multifamily property, the risk of vacancy is spread across hundreds of tenants. Due to the staggered lease expiry and diversification of tenants, when one or two units become vacant they tenants in the remaining units ensure a stable level of income. This reduces the financial impact compared to a single-family home, where a single vacancy results in a 100% reduction in income.

Conclusion

The combination of the ongoing fundamental need for shelter, growing undersupply of housing, unaffordability of home ownership, and high confidence revenue streams make the multifamily sector an attractive investment opportunity.

*Forbes - Why you should invest in Real Estate in 2024