I believe the answer is yes. Here’s why:
1. There is a high demand for apartment living. The millennial crowd does not want to buy a home as they figure out their professional lives and need the flexibility of renting, while baby boomers are looking to downsize and are renting in record numbers. Thus, the vacancy rates are very low in most areas of the country.
2. Banks have resolved their balance sheet issues and are once again looking for high-yielding multi- family projects that cash flow and produce income.
3. There is significant money from non-institutional entities available from JV equity partners, bridge financing, mezzanine financing, and preferred equity firms that are looking for multi-family projects to invest in. Many of these entities from the East and West Coasts and Chicago have realized that there are very nice return opportunities in the “B” and “C” markets around the country, especially in the Midwest.
4. CMBS (Commercial Mortgage-Backed Securities) financing has come back in a large way in 2014 into the multi-family sector. The CMBS market can compete with Fannie and Freddie on interest rates and/or loan-to-value- ratios which was not the case 18 months ago. Further, the low interest environment is driving investor demand to the high-yield CMBS in the securities markets.
For all of the reasons above, as well as my experience running a multi-family real estate company, I predict that for the remainder of 2014 and the foreseeable future, the multi-family sector is a good investment for those looking for cash producing properties, as well as properties that can be flipped for a profit over a short period of time.