Single Family Vs. Multifamily Investing! Which One Will Outperform In 2022?
Single Family Vs. Multifamily Investing!
Which One Will Outperform In 2022?
Real estate investors are facing a new environment in 2022 and they are looking to position their portfolios accordingly to maximize their returns and future cash flows.
As the demand for single family housing is accelerating and demand for multifamily housing is booming, real estate investors are asking an important question.
Which one of these 2 could outperform in 2022?
Single Family Investing
Single-family homes can be a good real estate investment, especially in locations where there is a significant demand for houses or where you can secure below-market prices.
New home sales are expected to hit 920.000 in 2022 compared to 800.000 in 2021, and existing home sales are expected to hit the 5.9 million mark in 2022 compared to 6 million a year ago.
Single family homes are less expensive, have relatively low tenant turnover, help diversity an investment portfolio and are easier to exit as investments, but on the flip side, single family home investments have slower growth, lower cash flow, repairs add value to only one property, have significantly less scalability potential, and historically have attracted very high competition.
All these factors contribute to finding very few attractive investment opportunities in single family homes that is making them a more suitable option for investors with smaller investment resources.
Multifamily investments are more expensive to finance and are suitable for more sophisticated investors with higher financial resources but offer a superb opportunity to grow your portfolio faster, have significantly bigger potential to profit from economies of scale and future accelerated cash flows, and offer excellent appreciation value potential and control over your income and asset value.
Net demand for market rate apartments in 2021 was at 673 000 units which is the highest number in three decades. On the supply side, nearly 360,000 market-rate apartment units completed in 2021, 682,000 units are under construction and 426,000 are scheduled to complete in 2022. Class B and Class C multifamily homes are in high demand and investors can find appealing value-add remodeling options that will justify increased rates as renters are willing to pay higher rents if the improvements match their preferences and life style.
By positioning their properties according to the shifting customer demands, real estate investors will not only have an opportunity to cover the booming demand for multifamily properties but also potentially win over larger part of the SFH customer segment willing to make compromises between square footage, convenience and more active lifestyle.
By doing so, real estate investors will solidify their portfolio and profit from the future property value appreciation and cash flow and reap the rewards of the booming demand for multifamily housing that is very likely to outperform in 2022.
Staying ahead of the competition
Even during competitive markets, real estate investors can be creative and discover value-add opportunities and future booming hot spots that could yield them above market average returns.
Smart real estate investors are continuously improving the quality of life at their multifamily properties.
This strategy gives families fewer reasons to consider a single-family home purchase by renovating their properties with better amenities, great entertainment options and green and natural outdoor space that keep their tenants in touch with the nature that perfectly matches the lifestyle and preferences of the shifting preferences of millennials, baby boomers, and generation Z that value their freedom and convenience more than anything else, and properties that will offer the amenities and quality of life they seek, will win the race in the market place.
Whether you invest in single-family homes, multifamily properties, or a combination of asset classes, build to rent or acquire and renovate to rent, it is an individual choice that needs to be aligned with your personal preferences and investment goals.
Knowing what your investing goals are and making strategic choices that will get you closer to achieving them is the greatest approach to ensure you meet and keep them.
Ready to start your next investment project?
Please contact us to learn how we can best help you to turn your next investment project into a success.
Email: [email protected]
Telephone: (954) 570-0300
Address: 850 SE 7th Street, Deerfield Beach FL 33441
About Adivo Construction
We are a national general contractor with over 50 years of combined construction expertise specializing in the value-add improvements of apartment communities.
Our mission is to assist our clients in finding the right balance between capital expenditure and appreciation potential by designing and executing customized renovation programs that are focused on increasing cash flow return and overall return on investment.
We have completed over 100 repositioning projects for publicly traded and privately held domestic and foreign companies in states such as Florida, Texas, Kentucky, Oklahoma, Georgia, South Carolina, Utah, North Carolina, Tennessee, Indiana, Michigan, Missouri, Arkansas, Ohio, Arizona, Nebraska, and Kansas.