The sector’s growth is set to continue because, frankly, everyone needs a place to rest their head, and people are increasingly delaying or forgoing homebuying due to financial and lifestyle factors.

1. toby mcCosker - Formulating a Multi Family Real Estate Investment
Strategy
The apartments sector has risen from an alternative category within real estate investment
to a legitimate asset class of its own.
The coming-of-age of the millennial and Gen Z cohorts, aging baby boomers, the Great
Recession, and shifts in lifestyle preferences have all contributed to this rise.
The sector’s growth is set to continue because, frankly, everyone needs a place to rest their
head, and people are increasingly delaying or forgoing homebuying due to financial and
lifestyle factors.
As in any type of investment, those who invest in apartments must approach it with a
realistic strategy. This starts with an understanding of the below:
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investment opportunities.
What does ‘multi family’ mean and what are the different types of multi family
developments?

2. Multi family means apartments.
In the commercial real estate world, the two terms are interchangeable.
There are different forms of multi family developments in which investors can invest. A few
of them are:
affordable housing—affordable to those with a median household income or below as
rated by the national government or a local government by a recognized housing
affordability index
transit-oriented development—a type of urban development within walking distance of
public transportation
garden-style apartments—an apartment building having direct access to a backyard or
garden, or a low-level apartment building or building complex surrounded by lawns and
trees, shrubbery, or gardens.
micro-apartments—one-room apartments that are typically less than 300 square feet but
are self-contained, designed to accommodate a sitting space, sleeping space, bathroom, and
kitchenette
mixed-use—a combination of uses in one building or complex; when multi family is
involved, it usually sits above ground-floor retail, office, or other uses
How does multi family investment work?
Whichever form of multi family property investors choose to invest in, they are effectively
collecting rent as income from that property.
The rent goes toward debt accrued in acquiring, constructing, or upgrading the asset;
operating expenses; and profits to be distributed to investors.
Multi family operating expenses can include management of the property, repairs, taxes,
utilities, renovations, tenant services, and a host of other options.
These expenses vary by size of property, number of units, neighborhood in which the asset
is located, and the amount of money the owner wishes to invest in the property to attract
and retain tenants.
Keeping operating expenses low by investing little in a property can end up costing owners
more in lease turnover and vacant units caused by lack of appeal to renters.

3. It’s important to note that every time a tenant doesn’t renew their lease, the owner must
invest money in making that apartment presentable to a new tenant, which could include
new paint, carpeting, appliances, etc.
The more often this is done, the higher the expense—without the tenant in place to offset
the expense with rental income.
What are some different strategies for multi family investment?
By market—At Trion, we believe in investing in markets that do well when times are bad,
not markets that do well when times are good. Using that strategy, successful multi family
investments are less tied to economic cycles and generally can weather downturns.
By property type—Some investors prefer affordable housing because there is always a
demand for it, while others swear by transit-oriented multi family because cities are so well
populated that vacancies are usually quick to fill. They get to know the market for these
properties and become attuned to both the pluses and the red flags for which to watch.
By risk level—Different investors have different levels of risk tolerance. Those who are low
on the risk-tolerance spectrum are more likely to choose to invest in well-maintained, well-
managed multi family assets in primary markets than properties that need considerable
renovations before they can turn a profit.
By price—Most investors know how much they are willing to spend on a multi family asset
and only consider properties within that range. This strategy narrows their scope and can
save them a significant amount of time weeding out properties that are outside that range.