Is Multifamily Still The Best Play?

Is Multifamily Still the Best Play for RE Investors, RE Firms, RE brokers and agents… for investors, rents in many markets are rising and vacancies decreasing, and financing is more available for those who wish to invest in them,and  for brokerages one can look to the recent Cushman & Wakefield and Walker & Dunlop strategic alliance to focus on multifamily Agency financing and investment sales. It appears that Multifamily will continue its market dominance as the property type for real estate investors and brokerage firms.

The problem, if you can call it that, is finding a MF property or properties that realize the desired return on investments. Investors rightfully want returns but some might just have unrealistic return expectations. Plus, Sellers, too, might believe their properties are higher in value than their market (and the competition) says they are. Plus, in this space, many investors are seeking “bargains,” “fire sales” believing that this distressed space will offer them a whole host of foreclosures, short sales and Bank-owned assets — both physical, the buildings themselves — and paper, such as the mortgage note.

Couple all of this with the fact that the Obama administration believes strongly in MF and apartments, and preserving affordable housing. Department of Housing and Urban Development Secretary Shaun Donovan is continuing the administration’s work to develop a new “financing mechanism” to support rental and affordable housing as talks continue on about sunsetting government's role in the mortgage markets – the GSEs – Fannie Mae and Freddie Mac – something this blogger is on record as saying is a big mistake, a big mistake for real estate owners, investors and transaction businesses who rely on real estate as a means for wealth generation, safety and security.

So, there is all sunshine – all bright lights – all good news on Multi-family right now, right? It’s hot – it’s getting the attention of owners, investors and the government. But wait, when things look bright there are always dangers, the dark side – the scum – lurking behind and around us – seeking to gain advantage of any given situation. MF is no different. A quick look at the news and we learn of a Ponzi scheme where two “real estate investment specialists” took more than $16 million dollars of investment money from investors for passive MF investments but the two were charged with multiple fraud counts. What will happen to the investor’s money? What about the renters themselves? And, the property manager who relies on that monthly income?

Is MF is hot? Yes. Is the IDEAL Model done well – Income, Depreciation, Equity, Appreciation and Leverage – a successful model? Yes. Do we need renters and affordable housing for our nation to thrive? Yes.

Here’s what YOU will also need… a TEAM, a TEAM of professionals working on your behalf whether you are an owner, investor or renter. Last week, I argued that if real estate is going to continue to be the locomotive that pulls the economic train in the U.S. and the wealth generator for investors, owners, property managers, lenders, builders and all the other players involved in a real estate transaction, then we need a VOICE to represent Main Street AND change the media discourse in this country about real estate and its importance to our collective futures.  As the collective force influencing and shaping the real estate industry, the National Association of REALTORS® is that VOICE, they are the leading advocate for preserving the free enterprise system, and the right to own, use, and transfer real property.

IREM is an affiliate of the NAR and its 18,000 members our property management experts with varying degrees and certifications and designations specifically aimed at property management and corporate real estate managers. For over 75 years, IREM has been the source for real estate management professionals to build, connect, and grow, and they are dedicated to providing education, resources, information, and opportunities to real estate management professionals… Real estate management professionals who YOU want on YOUR TEAM, especially if you are thinking MF and thinking MF should be a part of your investment portfolio.

Your thoughts?