The investment outlook for multifamily properties in 2023 is looking great as steady occupancy and high rents give landlords of multifamily properties a reason to be excited about 2023.
Multifamily investing involves the purchasing of properties with rentable housing units. In these types of investments, a group of investors often work together to mitigate costs, split profit shares, and reduce an individual’s risk. When investing in multifamily properties is managed properly, it can generate steady and reliable income streams in all economic cycles.
Multifamily properties include apartment complexes, and multi-unit buildings such as duplexes, tri and four-plexes, among other property types. These are being snapped up by investors and renters alike. Last year, real estate and rental rates skyrocketed. The annual 20% increase for single-family homes has put dreams of homeownership out of reach for many. As flocks of would-be homebuyers turned to renting, affordable multifamily properties were in short supply. Thanks to the rising demand, rent climbed at least 10% in 65 of 150 large cities.
One big advantage to multi-unit properties over single-family homes is that one vacancy won’t tank your cash flow. For instance, if you have a four-plex, if one unit is open, you still have three other units giving you income. Also, loans on up to four-unit properties still qualify for conventional financing, unlike larger properties that fall under commercial financing.
Additionally, increased rent did not slow the steady stream of renters. In fact, the National Apartment Association found that the US occupancy rate rose to 96.5%, exceeding the 2000’s record high. Basically, people are paying higher rents and staying in their apartments longer.
What does all this mean for you as an investor purchasing rental properties? For starters, the expanding pool of renters means low vacancy rates. Renters pounce on affordable units as soon as they open, and a steady stream of renters leads to stable cash flow. In the past, multifamily investors learned to anticipate months of vacancy in their budgets, but in 2023, the risk for that hazard remains low.
Remember, increasing interest rates are driving renters to your door, but as an investor, they impact you as well. If you purchased investment properties with variable mortgages, prepare to account for those rates in your annual budget. In addition, if you are looking for properties, those rising interest rates make bargains in the multifamily market far more difficult to find. Deals will still be out there in 2023, but you’ll either need to do some digging to find them or you’ll need to refinance.
Also, managing properties can be a full-time job. You are responsible for maintenance and upkeep on all the units you rent. Either you will do the plumbing, electrical and repair work yourself or you’ll have to find a trustworthy company to do them for you. Investing in rental properties through Kimberly's allows you to put those potential headaches into someone else’s hands with our stress-free purchasing process and our property management service. We know that showing, screening and securing a reliable and responsible tenant is your primary concern. We also know that reliable and responsible tenants want to rent from a firm they can trust, and by working with clients and tenants throughout the property management process, we save everyone valuable time and money.
So, when you are ready to invest in a lucrative investment property our premier property management services yield increased rental income, a reduction in expenses, and much more—with one easy point of contact.
We are experienced in wealth management gained through real estate and will offer you a hands-on consultative approach to building your property investment portfolio. Then, once you purchase, we make it easy to transition it to an income-producing rental property.
To learn more about Kimberly's and all the services we offer, go to www.kimberlysre.com.