Multifamily - The Safest Asset Class in a Recession
Rajkumar Venkatramani M.D.
Helping doctors achieve financial freedom through real estate investing | Real Estate Investor, Physician, Entrepreneur, Best Selling Author
Each time a recession hits, it takes us by surprise - no matter if you’ve been through a recession before or whether you’re heavily involved in market trends examination or not.?
And since, on average, since 1948, the US has experienced a recession every six years, it’s important to know what to expect and how to handle your investments during this time.
So, what happens to real estate in a recession? How much is the real estate market as a whole affected? And, the question on your mind, when is the right time to invest in real estate?
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Passive Investment Opportunity - Watercolors of Centerton
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Why I am Still Bullish on Multifamily
Yes, I am still bullish on multifamily investing. There is lot of real data showing to why it will continue to be a strong asset class.
Let's look at the facts...
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Are rent collections decreasing?
No. Rent collections – the share of rent due that renters pay each month – actually climbed UP in September. Collections improved 20 basis points (bps) month-over-month and 60 bps year-over-year to 95.6%. That marked the best September for rent collections since 2019.
The normal patterns held up in September, with collections registering highest in the most expensive Class A units (97.2%) catering to higher-income renters compared to 96.3% in Class B and 94.1% in Class C, according to data from RealPage Market Analytics.?
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Are apartment rents too expensive?
No. If affordability was the No. 1 hurdle, we would see a clear “flight to affordability” – meaning a shift in demand from higher-priced Class A to lower-priced Class C, and from more expensive submarkets into less expensive submarkets. But that’s not happening right now.
Occupancy nationally peaked in March 2022 and has been steadily decreasing since then in all three asset classes and in essentially all markets across the country. Occupancy in 3rd quarter fell roughly a full percentage point in all three groups.
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Are Renter Incomes Stagnating?
No. RealPage Analytics track incomes among renter households signing a new lease. Those numbers have soared in the pandemic era, and that trend continued in 3rd quarter 2022 thanks to a tight labor market and low unemployment – an environment that has appeared to have especially benefitted young adults who are most likely to rent market-rate apartments.?
Incomes among new lease signers jumped 11.6% year-over-year.?
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Watercolors of Centerton - View Investment Summary
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"Multifamily Is A Great Place to Be Right Now"
Willy Walker, chairman and CEO of Walker and Dunlop, recently said
"multifamily is a great place to be right now".
Walker and Dunlop was the fourth largest lender to the U.S. commercial real estate industry 2020 and has completed over $68B in total transactions in 2021.
In this video, Mr. Walker points out a few reasons why multifamily remains strong:
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So is a multifamily crash coming? So far, there's no data to show this.
Remember: At the end of the day, people need a place to live. You can work from anywhere and shop from anywhere. But you need a home. That’s a long-term tailwind for housing of all types.?
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Watercolors of Centerton - View Info
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The Best Place to Park Your Capital During A Recession
So there you have it. A few recent data points giving you an update on why multifamily still remains strong, even now.
Which is why REIDOC Capital is extremely excited to have our latest passive investment opportunity in a thriving market.
Watercolors of Centerton
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Take a look at our investment summary now and see why Watercolors of Centerton should be your next passive investment.
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Want to learn more?
This is a 506C passive investment opportunity.
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