Buying a Multifamily Property: Navigating the Current Real Estate Market

The real estate market is in a dynamic phase, with prices on the rise but showing signs of potential short-term fluctuations. Is buying a multifamily property a sound investment at this juncture?

Understanding the Current Market

While overall real estate prices are ascending, the current trend might represent a temporary respite. According to market analysts, this upward movement could be a short-lived anomaly, with a possible consolidation in the next 6 to 12 months.

The Pros and Cons of Investing in Apartments

Buying an apartment unit can be a viable investment, provided you have a clear strategy for converting it into a rental property. However, it's crucial to assess your financial situation and goals. For a long-term investment, a three-bedroom condo in the city can be an excellent choice. The ample rooms can be rented out, gradually recovering your initial investment.

Steady Rental Income in Later Years

A steady source of rental income can be particularly advantageous for individuals approaching retirement or in their later employment years. Across the nation, apartment rentals typically provide a rental yield of 3 to 6 percent annually during the first few years of steady occupancy.

US Laws and Investment Considerations

In the United States, you can't buy apartments; only condos are available for purchase. For personal use, buying a condo over renting can be a wise choice if you can afford the mortgage, have no plans to move frequently, and do not own pets that require a yard. Conversely, for a short-term or seasonal rental such as during ski season, an Airbnb could be more suitable.

The Ongoing Stock Market Decline

The stock market has been in decline since the intensification of the spread of the Coronavirus. This has prompted some investors to withdraw their funds at the earliest opportunity, while others are seeking to diversify their investments by investing in real estate.

Real Estate as a Diversification Strategy

Real estate has proven to be a robust asset class, especially during economic downturns such as the one we are currently experiencing. In today's low-interest-rate environment and growing rental demand due to fewer individuals being able to afford homeownership, buying investment property could be an excellent strategy. The return on investment will consist of long-term appreciation and cash flow from rental yields.

Stability and Resilience of Real Estate

Owners of rental properties fare better in uncertain economic conditions compared to other types of investments such as the stock market. Historical trends suggest that real estate markets are more resilient to stock market volatility, offering a stable haven for investors.

Delinquencies and Rental Demand

Tenants generally continue to pay rent during a recession, and eviction records often hinder their ability to secure other rentals. Today, more people value the security of having a home, a trend that shows no sign of waning. Property managers associated with our network haven't observed an increase in non-payment of rent.

Conclusion

Buying investment property during the ongoing scenario of the COVID-19 pandemic may present a golden opportunity for those who make strategic choices. Historically strong markets with fundamentally sound economies are likely to recover more quickly. Be prepared to take risks and think outside the traditional box. Unique investment opportunities are indeed out there for those willing to explore them.