As the ongoing COVID-19 pandemic, inflation concerns, and the war in Ukraine illustrate, it can be difficult to decide where and how to invest money in volatile environments. As we like to say, we don’t have a crystal ball to predict the future; instead, we focus on the bigger picture to help us identify opportunities. We believe that the multi-family sector – long a bedrock of our real estate investment strategies – deserves investors’ attention in 2022.

Last year, we wrote about the impact of COVID on housing supply and demand. We also analyzed rising rents as a trend in multi-family assets. These COVID-era rental trends appear to be continuing this year.

As we evaluate investment opportunities, here are a few reasons we continue to consider multi-family real estate for our clients in 2022:

High Occupancy Rates

The demand for single-family housing remains high while supply remains low. This trend has continued to push prices higher, and in turn, many would-be home buyers are instead continuing to rent. According to Costar, the national occupancy rate for rentals at the end of 2021 was 95%—an all-time high.

Increasing Rents

The outpacing of demand versus supply, coupled with high occupancy rates, allows the market to adjust rental prices upward. According to Realtor.com, rent prices were up almost 20% for the 12-month period that ended in November.

Inflationary Pressures

Real estate cap rates are near all-time lows. Additionally, we’re in a period of elevated inflation that doesn’t appear to be going away anytime soon. Real estate is often considered a good asset class in times such as these, but it’s important to remember that “not all real estate is an inflation hedge.” Should inflation persist, the opportunity is certainly there for owners of certain types of real estate—including multi-family—to increase rents, which can combat those inflationary forces. 

A Strategic Investment Approach

Whether we’re building an alternative investment strategy or assisting with a 1031 exchange, Chicagoland 1031 Exchange has consistently utilized and focused on multi-family real estate.  In addition, we consider micro and macro forces at play and employ a thorough sponsor- and property-level due-diligence process when evaluating potential investment opportunities for our clients.

We’re happy to answer any questions you may have about multi-family real estate investing, whether as part of a 1031 exchange or a traditional cash investment. Please call or email us anytime to learn more or discuss your options further.

Source: Costar, Realtor.com