There are plenty of reasons to consider investing in rental property, ranging from regular profits from rent and tenant fees to rental property management companies, which can help landlords reduce and manage their properties. Now, new research shows that another benefit can be seen in the emerging success of the American housing industry: according to research from the CBRE Group, positive economic factors combined in 2014 to drive the largest year multifamily investment since 2007.
According to the report, propensity to rent, an improving job economy and new development deliveries in the U.S. caused multifamily properties to rise to $106 billion in 2014. This was was not only a 7% increase over the previous year, but also surpassed the high of $105.1 billion set in 2007. CBRE noted that multifamily properties are the first sector to return to this profitable level.
Property investment companies report that multifamily properties are considered a safe choice for international investors looking to relocate or pursue financial ventures in the U.S. This was certainly true in 2014, as insurance groups and property companies from China and Taiwan pursued and purchased numerous properties in the country. However, property investment companies also noted that other factors, including surging rental demand, helped fuel this progress.
Because of this success, experts noted that many properties have been subjected to aggressive pricing, reflecting the large amount of capital attracted to the sector as demand increases. Likewise, some property investment companies reported downward pressure on cap rates, averaging 6.1%, down 10 basis points from the previous quarter. However, in their report, CRBE guessed that this would have no impact on the success and desirability of multi-family properties: the firm reported that they anticipated total investment volume in 2015 to match or exceed the levels noted in 2014 as foreign and domestic investors continue to take advantage of positive conditions. With these glowing reports, potential property investors may find that there is no time like the present to join this trend. However, in order to remain competitive, experts suggested hiring rental property managers and services to help maintain a property’s appearance, finances and more.