Factors to Consider When Investing in Multifamily Real Estate

Published June 1, 2017
by Mark Kenney

What are the Factors to Consider When Investing in Multifamily Real EstateĀ  – Multifamily family real estate investment has grown in stature over the years. As of today, owning a multifamily real estate for investment purposes is the second largest share of institutional investment. This has cemented its place as one of the leading real estate investing classes that people can bank on. The rise in popularity and profitability of multifamily investment has meant that more and more people are interested in trying their hand at it.

But not everyone can stand up, find a multifamily home, buy it and hope to make a profit off it in the near future. To be able to do that, a person needs to know what factors to consider when they are looking to invest. This article lists certain factors to consider when investing in multifamily real estate.

Class of the Asset

Different multifamily real estate properties up for sale are divided into different classes as per investment purposes. The class division of the properties is based on the type of the property, the cost of the property and the type of people who are expected to own a share or two in the property. There are three classes of these properties, A, B and C. Class A is the costliest; and as the standards move down, the class changes.


Demographics have an important part to play in the demand for multifamily real estate which will in turn decide the future of the money invested in multifamily homes. Demographics are the characteristics and buying patterns of the people. For example, the rise in student loans has meant that a sizeable majority of people are unable to finance their own homes, paving the way for an increase in demand for smaller family units.

Considering the Factors Affecting Demand

In the investment market, there are features called demand drivers. These are basically factors that will influence the increase or decrease in the demand for multifamily real estate. The higher the demand the more the value of the property and the rent being charged for each unit will increase. Some of these factors include:

  • Population Growth
  • Number of homes being built
  • Jobs being created
  • Standard of living

These are some of the factors that you should consider before one decides on whether or not they should delve into the multifamily real estate investment market.

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About the Author

Mark Kenney
Mark Kenney is a seasoned real estate investor, entrepreneur and founder of Think Multifamily. Mark started his real estate career over 25 years ago and has extensive experience in property valuation, acquisition, and operations. He has a passion for helping others succeed in the multifamily arena.