Blog

Multifamily Properties Slated to Be Hot Commodities in 2022

Published January 7th, 2022 by Gary Sandler

Good news is on the horizon for owners of multifamily properties in 2022, according to projections from numerous real estate sources. A recent article on the subject from the National Association of Realtors included a citation from the National Association of Home Builders touting the fact that “The multifamily market is back with a bang!” (nar.realtor)

In its 2022 US real estate market outlook, CBRE noted that “The multifamily sector is set for a record-breaking 2022”. CBRE is the world's largest commercial real estate services & investment company.

Several factors are driving the optimistic projections. Higher single-family home prices and tight single-family inventory which are driving buyers to the rental market are two of the most prevalent. The lifting of eviction moratoriums, projected rent increases of seven-to-eight percent and occupancy rates expected to exceed 95-percent are also on the hot list. Most importantly, net operating incomes are expected to rise. Since multifamily property values are often based on the NOI, the value of these assets will rise accordingly so, if you’ve been contemplating a multi-Family acquisition, call Easy Loan Helper or logon to www.easyloanhelper.com 

So, what does it all mean for buyers, sellers, and owners of multifamily properties in key areas? Owners who intend to hold on to their properties will see lower vacancy rates, higher incomes, and increased values and buyers who purchase early in the year, will be able to take advantage of positive increases in income and value of their properties as the year progresses.

Sellers who choose to list their properties for sale are in a unique position. In addition to attracting local investors, key states and cities have been appearing and continue to appear on the radar of out-of-state and country investors. It is those investors who will have a significant impact on sales prices local sellers can achieve. The simple fact that investors who own properties in other areas of the country, such as California, where high expenses and rents capped by rent controls reduce the NOI and in turn, Owners here are eager to move their “equities” to more lucrative areas of the country such as Texas, Nevada and Florida.

An excellent example of this phenomenon is a California investor receiving three-to-four percent return who moves his or her equity to a Las Vegas- Henderson property generating a six-or-seven percent, or higher rate of return. What makes that type of scenario unique is that in the past, many investors would only purchase properties that produced yields in the seven-to-ten percent range. The yield, expressed as a capitalization rate, often translates to the value of a given property.

For example, an investor who pays cash and desires a nine-percent return on a property that generates an annual net operating income of $45,000 would not want to pay more than $500,000 ($45,000 ÷ 0.09). On the other hand, an investor who would accept a six-percent return would be willing to pay as much as $750,000 for the same property ($45,000 ÷ 0.06). The NOI is the amount of money left over after all expenses are paid.

The bottom line is that property owners of multifamily properties who desire to sell this year, stand an excellent chance of hitting a home run, especially if they’re fortunate enough to sell to an out-of-state investor who is moving their equity to hotter markets.

If you’ve been considering the acquisition, refinance, renovation or cash out of a multifamily, or other commercial real estate asset anywhere nationwide, now is a great time to obtain your free program and rate quote from Mark McDonough of Easy Loan Helper Commercial Division by calling Mark directly at 832-640-2303 or e-mailing him at mister.mark@easyloanhelper.com

See you at closing.


Original Article By: Gary Sandler


‹ Back