What Are Multifamily Properties?
Multi family is legally defined as a building or structure that is designed to house “several different families” in separate housing units. The most common type of multifamily housing is an apartment building. Duplexes, quadruplexes, and town homes also qualify as multifamily housing. The entire building or structure may be owned by an individual, an entity, or, as is the case with condominiums, by individuals who have purchased units.
Most people’s definition of Multi- Family properties are limited to Apartments.
But Multi family properties extend well beyond apartments buildings to include:
- Senior Apartments
- Student Housing
- Nursing Homes
- Assisted Living Facilities
- Mobile Home Properties
What Makes Multifamily Properties So Unique?
The multi family property sector has several very unique features that are not available in any other property class. These uniques dynamics is the result of several global conditions: Massive Population Growth and longer Life Expectancy. These dynamics have created a very unique environment for growth and have resulted in :
- Long Term Demand For Multifamily Properties: From the beginning of careers to the end of life cycle, Multi Family properties are utilized. At the start of life These properties are desired for College graduates, newly married couples, expanding families to the end of life cycle which includes Assisted Living Facilities, Nursing Homes and ultimately Hospice Care Properties. No other property class has this type of long term demand and projected growth.
- Financing In Abundance: There is plenty of money available for financing Multi-Family properties. Banks, Hedge Funds, REITS and foreign investors consider Multi Family properties to be relatively safe investments and for these reasons , there are Trillions Of Dollars available for financing commercial Multi Family properties.
- Best Market Terms : These properties have some of the best financing terms available. The cost of the money is very cheap with rates as low as 3% Interest rates that are fully amortized over a 40 year terms, Non-Recourse Loans, No Personal Guarantees and financing as high as 100% LTV.
- Subsidized Financing Programs: Because housing is so important to the Federal, State local Governments, there are plenty of subsidized programs available for investors at the Federal, State and local levels as incentives to investors to invest in the multi family properties. These include Low Income Tax Credits (LITC), loan forgiveness programs, guaranteed rent programs and many other variations.
Multifamily property investing will be strong for several decades. And for this reason, there will always be financing available in many flavors for multifamily investing.