Once lumped in with single-family residential, multifamily (aka apartment buildings) is now firmly entrenched as one of the four major commercial real estate asset classes alongside office, retail and industrial. The asset class now accounts for around one-quarter of all US commercial real estate investment and is occupying a growing share of institutional investor’s portfolios. Coming out of the 2008 Great Recession, multi-family properties (i e apartments) became one of the most popular asset classes.
As a result, multi-family recovered faster and has performed better than most other real estate investment niches over the last several years. However, long before the Great Recession, multi-family properties had been a staple for both individual investors and institutions like REITs and insurance companies. For individual investors, owning income-producing residential real estate is a proven way to create financial freedom. It’s a timeless asset that serves an essential human need, so it’s in demand in both good times and bad. There are several reasons why multifamily is considered by many to be “best in class” within the investment real estate world both for investors in the property AND investors in the paper (the mortgages that fund the property).