With an extensive background in the real estate industry and legal field, Beth Polozker has witnessed the many changing trends in the housing industry—and how those changes have impacted financial values. Through her experience in both new construction and apartment management, Polozker has developed a strong understanding of how investments in certain real estate sectors can impact individuals. The multifamily housing sector is one that is particularly interesting due to its growth and the variety of opportunities that it offers.
Multifamily Housing is Growing
Ever since the housing market crisis of recent years, many have proven wary to invest in real estate. However, as the economy has steadily rebounded, new efforts in real estate have raised confidence, created job growth, and produced greater investor interest. Single family home construction is one of the most common real estate investments made today, but Polozker explains that apartment management and multifamily opportunities are also on the rise.
One recent article from Housing Wire suggests, “With the rise in both single-family home prices and mortgage rates in recent months, apartment demand will remain strong so long as the recovering job market does not falter. Consequently, the multifamily sector will continue to benefit from short-term leases, allowing owners to raise rents as the economy recovers—particularly because declining homeownership has boosted demand and new supply remains modest in most markets.”
In addition to these factors, Polozker remains confident in multifamily sector growth based on emerging statistics on 2014 construction trends.
Specifically, according to the recent Dodge Outlook Report on 2014 Construction by McGraw Hill Construction, “Multifamily housing will rise 11 percent in dollars and 9 percent in units. While growth continues, the percentage gains will be smaller than the previous four years, reflecting a maturing multifamily market. This structure type is still a favored investment target by the real estate finance community, which in the near term should lead to more high-rise residential buildings in major cities.”
Polozker notes that while recovery has been slow, the steady progression in multifamily housing suggests sustainability in the market. Based on these growth rates, Polozker believes that greater interest in housing—and the multifamily sector in particular—will cause many investors to reexamine the pros and cons of supporting this market.
When it comes to any type of investment—especially those within the real estate market—it is important for individuals to take time to research the specific details of the strategy. As the multifamily market grows and attracts greater attention, prospective investors look at what potential benefits these investments could deliver.
When it comes to real estate investments, individuals should always assess how consistent the return will be—for instance, how much revenue a property can bring in on a regular basis.
Single-family home investments can present a significant return, particularly if long-term trends prove positive. However, multifamily housing can provide more consistent cash flow over time—as well as the potential for the property to increase in value.
This trend is especially true if the multifamily units are leased and generate monthly rents. Currently, rental rates in the multifamily market have maintained a steady increase as demand has remained high and general consumer confidence has increased.
Many who are new to real estate investing may choose to invest in single-family rental properties, perhaps by purchasing several in different areas. While this strategy can work for some, it is important for new investors to understand that the single-family approach may mean greater costs for maintenance and management.
In a single-family investment, repairs may prove costly—especially if multiple properties demand repair. In addition, single properties can become poor investments if they remain unoccupied for stretches of time.
While multifamily housing properties are larger in size and may present higher initial expenses, they do present more security. For example, cash flow is easier to manage and sustain, as rental units tend to stay unoccupied for a lesser period of time than a single-family property.
The National Association of Home Builders supports this trend in a recent report and states, “The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, dropped two points to 40, with lower numbers indicating fewer vacancies. After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been fairly stable since 2011.”
Multifamily repairs can also cost less, as builders, renovators and other maintenance crews conduct work at a lower price per unit than what the same work would cost at a single property.
Committed to high-quality construction with a strong eye for detail, Minnesota licensed builder Oakland Homes continues to bring amazing new properties to life. Beth Polozker, owner and president of Oakland Homes, is proud to lead this organization with integrity and represent a level of service dedicated to customer satisfaction, comfort, and precision. Additionally, Polozker manages apartment communities in Detroit, Michigan.