Multi-family rentals are poised to be a better investment than single-family rentals in 2022. Several factors point to this:
- Multi-family investments scale faster than single-family rentals (one 100-unit multifamily acquisition is less costly and less expensive to maintain compared to a portfolio of 100 single-family units)
- Modest vacancy rates marginally affect cash flows for multi-family properties relative to single-family rentals
- Current FannieMae and FreddieMac programs offer better leverage alternatives that can only be matched by large securitization programs for a select few single-family rental companies
- Multi-family investments require modest investments for maintenance since services are standardized across units; maintenance programs for single-family rentals tend to be tied to individual properties
For these reasons, the multi-family market is better positioned to prosper and grow relative to the single-family rentals market for the next decade. Real estate investors looking for the next big growth opportunity should look to multi-family.
Albert L. Lord III is the Founder and Chief Executive Officer of Lexerd Capital Management LLC. Lexerd is a real estate firm that primarily sponsors investments in opportunistic multifamily assets throughout the United States.