Are Multifamily Properties Recession Proof? Part 1

Multifamily residential is a classification of family dwelling where several separate housing units are contained within one building, or several buildings within one complex. The most common form that we see is apartment buildings. Multifamily units provide housing to millions of Canadians across the country.

Multifamily properties can range in size, from properties as small as a duplex consisting of two units, to a large apartment complex comprised of hundreds of units. Although each type of property has many of the same characteristics common to all investment real estate, it is also true that many real estate investors deem multifamily property to be their investment of choice.

So are multifamily property investments still a safe bet during times of relative economic uncertainty?

The answer is yes. Apartment buildings and condominium complexes continue to appeal to purchasers who are looking to maintain a stable and consistent cash flow.

Throughout 2015, Edmonton’s economy continued to show promise despite a less than ideal setting in Alberta. Yet the greater challenges in the energy sector are expected to continue during 2016, and likely beyond. The province has pledged to spend $34-biliion over the next five years to help spur economic growth.

Vacancy rates are hovering at around 4 percent, which is a healthy number, and is not expected to rise significantly in the next year. With the exception of 2009, average rental prices in Edmonton have increased every year since 1995. The continuing difficulties in equity markets in Alberta will ensure that multifamily properties remain a much sought after commodity.

Here are a few additional considerations for multifamily property investors:

  • Multifamily properties usually offer a better chance for a positive cash flow. (Some houses actually provide negative cash flow.)
  • Multifamily properties are more cost efficient. A new roof on a 20 unit building won’t cost as much as roofs on 20 single family houses.
  • Cosmetic improvements and better management have a greater impact on the value and cash flow of a multi-unit than a house.
  • This is why you need to choose the correct partner to manage your apartment building – they are the CEO of your operation.

If you are thinking you might wish to purchase a multifamily investment property, talk to our team first. We can help you make the best choice for your needs.

Contact us here.

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