Wondering if now is a good time to invest in real estate? Will apartments be worth more in 10 years?
Don’t worry, you’re not alone!
Many people who put their money into multi-family deals wonder the same things. They don’t want to miss a better opportunity.
That’s why this is such a great question. You wonder, “Is my investment a good one? Will my investment retain its value?”
These are all valid concerns, but hopefully multi-family apartments will do extremely well over the next 10 years. This is why.
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The big difference between multi-family and single-family homes is how you make your profits.
Single family investments are based on a lot of speculation. The price of houses fluctuates from year to year based on what people are willing to pay for the property and the market cycle.
Things are going up. But things also go wrong.
Multi-family houses, on the other hand, are more stable. It is based on both the value of the property and the rents. If you can increase the value of the property or increase the rents, you will have more profit.
This is why multiple families are often superior to single-family homes.
You can manage the maximum rate of a multi-family home more easily. By finding ways to increase the value of the property, rents will rise.
And that’s a simple comparison.
Rents rise = increase in value.
I recently discovered this interesting non-profit called We Are Apartments.
They have collected data from all over the US and predict that there should be 4.6 million more apartments by 2030.
That’s a lot of units. And that’s a lot of investment opportunities, but you have to be careful where you invest.
One of the reasons behind the need for all these units is that the demographics of the US are shifting. People are moving from big cities like New York, Los Angeles and San Francisco. Those same people then move to places like Atlanta, Denver, and Salt Lake City.
In addition, many people are moving out of the suburbs and rural areas and moving into apartments in these emerging cities.
This means that a lot of new tenants are coming and that there is a lot more money to be made.
The Fed Prints Money
Since the recession of 2008, there is now 2.5 times more currency in circulation.
This means that the Federal Reserve has printed so much money that there is more than twice as much money in circulation now as a little over a decade ago.
This is due to the large spending deficits on both political sides without much fiscal responsibility. I’m not saying this is right or wrong, just that a lot of money is being printed.
And looking at our current and future COVID-19 releases, this will only continue.
Great, the government prints money. What does that mean for my investments?
Well, the more money there is in circulation, the higher the prices for everything.
Yes, I can tell you that you are ahead of me. This is inflation. But just because your coffee doesn’t cost you a quarter more doesn’t mean you can’t take advantage of inflation.
When you own a real, physical property, such as multi-family apartments, it usually increases in value along with inflation. This means that as the prices of goods rise, so does the value of your investment.
Construction costs rise
But that’s not the only way inflation will affect your investment.
Under inflation, goods cost more and services more. That’s why everything you build will cost more.
In fact, this is already happening. According to the analysis of BLS data by Associated Builders and Contractors, the price of softwoods is up 73% in the past 12 months and iron and steel are up 15%.
This means that closing a deal now will only make your investment more valuable in the future.
If you look at the combination of these factors, you can see how attractive real assets such as multi-family apartments are. They will only grow.
There’s an old saying that I love: the best time to plant a tree was 20 years ago. The second best time to plant a tree is today.
Take action today and find opportunities to invest in deals instead of letting time pass you by. Look into investing opportunities or find ways to educate yourself about the many benefits of multi-family investing.
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