Why Multifamily?

The Case for Multifamily

Why is multifamily real estate a favored investment?

First, unlike business products that have a useful shelf life but eventually get replaced, multifamily communities aren’t going anywhere. Additionally, one should consider who already invests in multifamily real estate, and how much due diligence and risk mitigation they have done to determine that investing in multifamily is right for them.

For example, AAA rated life insurance companies hold a significant portion of their portfolio in multifamily real estate, both on the debt and equity sides. These are some of the most conservative investors in the world. They want to grow their money, but they absolutely have to do so cautiously as they have guaranteed benefits that they have to pay out. Also, university endowments and pension funds use multifamily real estate on the equity side to safely preserve principal while generating steady returns.

Furthermore, commercial lenders are by far the biggest investors in apartments. They do so on the debt side, and it is typical to find them financing 70% - 80% of the money to purchase these properties through first lien mortgage financing. They research the quality of the market, submarket, and operator long before they ever put their money into the deal. Additionally, many of their profits are reinvested back into multifamily ownership in the form of equity investment or direct ownership on their own platform.