Spearheaded by the Novel Coronavirus (COVID-19) global pandemic, there is a great deal of uncertainty surrounding the current economic climate. Despite unemployment reaching record highs, and the stock market trending downwards, it’s still a great time to invest in multifamily properties.
Below we will discuss five reasons why you should consider investing in multifamily properties even amid the current COVID-19 pandemic.
- Multifamily Properties Tend to Perform Well During Recessions.
Historically, Multifamily Properties perform well during recessions. Therefore, while a majority of property owners were worried about their tenant’s ability to pay rent during the Coronavirus pandemic, at least for now, those worries appear to be somewhat exaggerated. According to NMHC’s Rent Payment Tracker, 87.7% of households paid rent through May 13, 2020, which is a sign that multifamily properties will perform well amid the COVID-19 pandemic.
- Safer Investment Compared to the Stock Market.
The Stock Market has been a rollercoaster, and with elections in November, things are not expected to get any better anytime soon. While Multifamily properties are not 100% recession-proof, they are a safer investment compared with stocks in a down market. Multifamily properties provide consistent incomes and tax benefits that act as a hedge against inflation. With the Feds lowering interest rates and pumping trillions of dollars into the economy coupled with the rising cost of living, the value of the dollar will decrease.
- Tax Benefits.
Multifamily properties can operate as spectacular tax shelters for investors. Notably, the Tax Jobs and Cuts Act of 2017, allows multifamily investors to take significant “paper losses” and depreciation, in their first year of ownership. In addition to depreciation, cost segregation, interest deduction, repair deductions are other tax benefits that multifamily investors can use to their advantage.
- The Time is Right!
The time is now for purchasing multifamily properties. Investors should not expect the market to “bottom out” anytime soon. However, with lower interest rates, and a plethora of opportunities amid the COVID-19 crisis, if you have the capital, this is the perfect time to purchase multifamily properties. Additionally, as the current COVID-19 pandemic is having an international financial effect, Foreign investors are piling into this US real estate play as a coronavirus safe haven. This trend is most likely to continue.
Overall, Multifamily investing, while not completely recession-proof, fare much better than other types of investments during a recession. With this being said, there will be good opportunities in the coming months for multifamily investing, particularly if you desire to sell some stocks and diversify your investment portfolio. To learn more about existing opportunities and off market opportunities in emerging neighborhoods, schedule a call with me here.
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Authored by: Stanley Montfort
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