The current pandemic has created unstable conditions across the globe. As a result, many sectors such as stocks and shares find themselves in extremely volatile situations. However, certain assets stand solid even in uncertain times. One of them is multi-family properties and Forbes makes the compelling case for investment in this type of property now.
Historically solid investment
The first reason why multi-family properties present such good investment at the moment lies in their solid record. While other property classes such as office, retail and industrial tend to suffer from volatility in a recession, apartments generally perform well.
The situation in the covid-19 pandemic is no different: office assets in particular has seen a sharp nosedive on the back of recommendations to work from home. Retail property is also suffering after the closure of shops for many weeks. Multi-family properties have, however, maintained their steady base.
Consistent demand
Everyone needs a home and this basic living requirement makes up the main base for the solidity of multi-family property. Demand of homes remains constant whatever the bigger economic or health picture.
And in many places, this demand comes up against a housing shortage. This is the case in many parts of Florida, for example. The Sunshine State consistently posts inventory levels for both single-family homes and apartments at below six months’ supply. With less than half a year available, a market shows signs of inventory shortage.
Rents are paid
Just as everyone needs somewhere to live, people also prioritise paying for their housing over other financial commitments. Recent research shows that the vast majority of American tenants have paid their monthly rents despite financial difficulties during the pandemic.
According to the National Multifamily Housing Council, 93.3% of 11.4 million households paid their rent in May and 89.2% paid in April. The figures show a very low default rate that contrasts with that in commercial property. Forbes cite a study showing that just 47% of commercial tenants paid their rent in April and even fewer (44%) did so in May.
Interest rates low
Rock-bottom interest rates also make now a good time to invest in multi-family properties. In early June, they fell to yet another all-time low (3.44%) and analysts expect little change over the next few months.
The current rates (this time last year, mortgage interest stood at 4.04% in the US) mean investors can use them to remortgage or leverage their current assets. Investment in new units for your portfolio is also a possibility.
Prime multi-family properties
One of the difficulties that foreign investors face when they want to buy multi-family properties in the US is a reliable source. BRIC Group has a range of buy-to-let units in Florida, many of which offer a 2-year rental guarantee. All are located in sought-after areas, come fully equipped and offer some of the best investments on the market. Properties start at US$102,000. Find out more about Florida buy-to-let property.
(Source: Forbes)
