Multifamily Investing 2024: What Investors Need to Know

Perhaps one of the best features of multifamily investing is the potential for added diversification to your real estate portfolio. Even if you’re managing single-family properties, you can add multifamily investing to your investment strategy to hedge against the potential pitfalls of single-family rentals—while simultaneously enjoying both advantages. These benefits should analyzed on a case-by-case basis and should always be discussed with your investment advisor before committing funds. 

As the demand for housing continues to rise, multifamily investing can help boost rental income and appreciation, offering investors a double win.

Multifamily Investing 2024: What You Need to Know

Now that you have a solid understanding of multifamily investing, you’ll need to be aware of some of the current trends for multifamily investing and some that may pose a challenge for those looking to get into multifamily investing in 2024.

1. Soft Landing. A “soft landing” in the real estate market refers to gradually easing economic conditions without a sharp overturn. Multifamily real estate is expected to see a smooth transition from a period of rapid growth to a sustainable level of activity. Stable property values and increased transaction volumes reinforce this soft landing.
2. Trend Towards Market Normalization. Following a volatile period during and after the pandemic, recent data indicates that the multifamily market is stabilizing. Rent growth peaked in early 2022 and has slowed to under 2% nationally, while vacancy rates have stabilized around 6%. Despite this not sounding entirely positive, it means investors can now make more informed decisions with reduced market volatility.
3. Interest Rates Are No Longer Rising and Expected to See Cuts. While some experts expected interest rates to decrease through 2023, the US economy had other plans. However, the Federal Reserve finally began capping interest rates, and many experts expect it to make cuts in 2024. For multifamily investors, borrowing will be cheaper and could increase demand for multifamily units, driving up property values and rental incomes.
4. Shortage of Single-Family Properties. The housing shortage continues in 2024 with a lack of inventory, high prices, and increasing mortgage rates, making it difficult for many Americans to afford single-family properties. This shortage continues to contribute to increased demand for multifamily units and should drive this year’s increase in rental prices.
5. Oversupply of Multifamily Properties. Developers are addressing the shortage of single-family homes by expanding the supply of multifamily housing, with the national pipeline adding over 1 million rental units. While this has led to a higher vacancy rate, it ensures a sufficient supply of multifamily properties, averting a shortage similar to what’s seen in the single-family sector.
   
   

However, an oversupply can potentially contribute to lower cap rates and decreased profits. Thankfully, while a historic surge of completion in multifamily units will occur in 2024, a downturn in new construction is anticipated.

• More Long-Term Rentals. As home ownership continues to remain out of reach for many Americans due to mortgage rates and other factors, long-term rentals are expected to become more common. This increased demand could potentially decrease vacancy rates and increase rental incomes.

• The Influence of Remote and Hybrid Work. As remote and hybrid work become more commonplace in post-pandemic society, multifamily units featuring home office spaces are experiencing increased demand. Investors can capitalize on this trend by enhancing the value of their properties through the incorporation or retrofitting of existing spaces to cater to the needs of remote and hybrid workers, potentially leading to higher rental income.
  
  

Despite economic challenges such as slowed growth, growing vacancy rates, and oversupply, investors can navigate these hurdles and leverage certain economic aspects to their advantage in 2024.

One strategy is for multifamily investors to focus on improving or renovating existing properties rather than purchasing new ones, which can increase cash flow without incurring high debt costs.

Additionally, investors can opt for passive investment through real estate investment firms like Canyon View Capital, which offers properties in stable markets acquired before interest rates surged. This approach provides the potential for rising rents and reduced debt costs without the hassle of property management, enabling investors to earn passive returns.

Canyon View Capital Makes Multifamily Investing Easy

When making an investment decision, it’s essential to consider all your options before committing to one. Even with some of the hurdles we’ve seen over the past year and potential challenges ahead, multifamily investing in 2024 is still an excellent option for many investors looking to diversify their investment portfolios. 

With over 40 years of experience, CVC’s professionals excel in managing multifamily properties. Our deep understanding of rental market dynamics allows us to provide investors with lucrative opportunities. Partnering with us offers a path to the same passive returns they can expect from managing rental properties in stable markets without worrying about the time, resources, and energy required to keep them running.