A Guide to the Best Multifamily Investment Opportunities
“There are especially attractive deals in the new construction space especially in high quality assets with a long term hold."
➤➤ Join the GlobeSt.APARTMENTS (formerly RealShare) conference October 29-30 in Los Angeles. The event will analyze the opportunity in the emerging trends and conditions of the multifamily market. Don’t miss out on joining the 1000+ of the industry’s top owners, investors, developers, brokers and financiers as they gather for THE MULTIFAMILY EVENT OF THE YEAR! Click here to register and view the agenda.
PHOENIX—The multifamily asset class may be white hot right now, but there are still attractive investment options in the sector, according to Trevor Koskovich, president of NorthMarq’s Multifamily division.
“There are excellent opportunities happening out there in the marketplace,” he tells GlobeSt.com. “There are especially attractive deals in the new construction space especially in high quality assets with a long term hold. The market is still starved for yields.”
New Construction
New construction spaces are currently appealing because they have good basis points and investors can purchase new products for close to the cost of an older product. “For example, I can buy a new building for $35,000 more than the cost of an old building. Of course I would naturally gravitate towards the new construction,” says Koskovich.
Affordable Housing
Koskovich observes that the affordable housing space is attractive and there are a lot of investors taking advantage of that niche market. The problem is that regulations are so stiff that building affordable housing can get stifling. “As a matter of fact, the difference between the cost of constructing affordable housing versus the cost of putting up a luxury high-rise building isn’t that much,” he says.
Value-add Properties
As for value-adds, “there is a lot of capital chasing those properties,” says Koskovich. “As a result, it can get pricey quick. It’s a competitive environment.”
An investment strategy which includes moderately light renovations to these older properties may offer significant potential upside. Once renovated, these properties often provide renters with a valuable, reasonably-priced alternative to new construction.
Outlook
Koskovich sees the strong multifamily investment trend continue into the rest of 2019, but with a more modest growth compared to last year.
“We expect 2019 to be another strong year for the multifamily industry. Home ownership affordability constraints and consumer trends will continue to drive demand, while a robust rent growth will support property price growth. Investors are still very much active and are seeing and buying assets,” Koskovich says.