Debunking Misconceptions: Multifamily Real Estate Investments Aren’t Just for Large Institutions
By: Craig Martin, Managing Partner
When it comes to multifamily real estate investments, a common misconception is that this type of investment is reserved solely for large institutions. However, this couldn’t be further from the truth.
Multifamily real estate investments come in various sizes, scales, and prices. From duplexes and small apartment buildings to large complexes, there are opportunities that fit different budgets and investment goals.
A large portion of multifamily acquisitions are not “all cash” purchases. Traditional bank debt typically covers 60-70% of the acquisition price, meaning the investment will require the purchaser to cover the remaining 30-40%. Joint Ventures or partnerships with other investors, and even crowdfunding platforms are utilized to help cover a portion of the 30-40% equity requirements. By exploring different options, many investors find that the cash hurdle to purchase multifamily is not insurmountable.
Additionally, the idea that multifamily investments require specialized knowledge that only large institutions possess is misleading. While experience and expertise are very important, there are abundant resources available to aid individual investors. From local real estate investment groups and neighborhood builder’s groups to property management companies, there are plenty of ways to gain knowledge and connect with other investors.
Finally, the belief that multifamily real estate is inherently riskier or less profitable for individual investors is unfounded. Like any investment, multifamily real estate comes with risks, but it also offers potential rewards. With careful planning, due diligence, and a focus on local market conditions, individual investors can achieve success in multifamily real estate.
Multifamily real estate investing is not just for large institutions. With various property sizes, financing options, and resources available, these investments are accessible and can be very rewarding. By debunking these misconceptions, we hope to encourage more investors to explore the opportunities that multifamily real estate has to offer.
Please note that this is a general guide and the specifics can vary based on individual circumstances and market conditions. Always do your due diligence and consider consulting with a real estate professional before making an investment decision.