One of my biggest financial regrets was choosing not to buy a multifamily investment property in my late 20s. Instead, I went for a four-bedroom, three-and-a-half-bathroom single-family home. While the house, at approximately 2,300 sqft, wasn’t enormous, it was more than my girlfriend and I needed. Two of the bedrooms and bathrooms were barely used, making it feel like a wasteful use of the $1.52 million it cost us. The hefty mortgage of $1,216,000, requiring a monthly payment of $6,200, only added to the stress.
Looking back, I should have opted for a two-unit building instead, priced similarly, with each unit having two bedrooms and one and a half bathrooms, each around 1,350 sqft. Living in one unit and renting out the other could have significantly lowered our living costs over the past decade and boosted our passive income by at least $2,000 a month. Investing in multifamily properties makes more sense when you’re young and child-free, allowing you to capitalize on pre-vetted properties in dynamic cities where growth rates are high and valuations more reasonable.
The housing market remains robust despite the economic shifts caused by recent rate hikes since 2022. The value of cash flow is rising due to falling interest rates, making it an opportune time to invest in multifamily properties. This is further underscored by Airbnb’s IPO in December 2020, where it doubled its share value on the first day, signaling a strong comeback for travel, hospitality, and real estate.
Given these dynamics, now is the time to deepen your real estate investments. CrowdStreet, a platform that caters to accredited investors and serves as a Financial Samurai sponsor, offers valuable insights into multifamily properties. They suggest focusing on three promising investment opportunities: Build-to-Rent (BTR), micro-units, and student housing.
BTR properties combine the appeal of single-family rentals—such as yards and driveways—with the benefits of a managed community, minus the HOA fees. These properties generally see lower tenant turnover and command market rate premiums over traditional multifamily units.
Micro-units, typically smaller but efficiently designed to feel larger, cater to young professionals in major cities where rents are high. These units often provide luxurious amenities to make up for their smaller size and can command high rents relative to their square footage.
Student housing offers a resilient investment, especially as universities modify campus housing policies and push more students to seek off-campus living options. Despite the pandemic’s initial impact on this sector, the demand for off-campus housing is expected to remain strong due to ongoing university enrollment and the absence of high-quality on-campus accommodations.
CrowdStreet is keenly focused on these areas, sourcing investment opportunities that promise solid returns in the evolving real estate market. By investing through platforms like CrowdStreet, you can gain access to multifamily properties in emerging 18-hour cities, benefitting from lower valuations and potentially higher growth rates due to the ongoing spread of population into less dense areas.
For those interested in broader personal finance strategies, joining the conversation with over 60,000 others at Financial Samurai, a leading independent finance blog, can provide firsthand insights into navigating the complexities of investing and personal wealth management.
