An indication of the popularity of multifamily properties is the obvious lack of inventory and the activity when decent properties do hit the market. There is no doubt, small multifamily properties are popular with real estate investors.
The 2-15 unit complexes did get hit pretty bad. There was a lot of speculation, what seems like many years ago in 2003-2007. Many of these properties shot up sky high in price and found willing buyers. Of course, as we all know, most of these came crashing down and went through the arduous short sale or REO process to new owners who often got them at mid 1980′s to mid 1990′s prices and pretty much instant awesome returns.
The larger complexes in the commercial realm never really hit on bad times. What did happen is that construction of new units went down dramatically so rental demand for what was left was pretty high. Also some of the larger complex owners were able to more easily restructure loans, though I know a few owners who, through some diligent work were able to do the same with their fourplexes, but those are rare cases.
I got a little off track, though.
A recent report titled ‘The Year Ahead, Real Estate’s Best Bets in 2012′ by Robert Freedman and Nichole Odijk DeMario in the Realtor magazine, indicates the following trends.
2011
Vacancy rate: 5.4% | Rental rate change: 2.5% | Net Absorption: 238,398
2012
Vacancy rate: 4.6% | Rental rate change: 3.5% | Net Absorption: 126,621
2013
Vacancy rate: 4.5% | Rental rate change: 3.8% | Net Absorption: 102,687
They also note:
“Apartment rentals are once again expected to be the best-performing commercial sector.”
