Stock Investors are Considering Multifamily, Commercial Real Estate as Another Way to Invest

The primary place to investment in the United States has always been stocks and bonds. In fact, the 60/40 stock/bond portfolio is a standard that many investors follow, however this trend of investment points to one of the most stable long-term investments out there: real estate.

In the last 12 months, ending June 30, 2022, all aspects of the stock market were down. The S&P 500 was down 11 percent, Dow Jones Index was down 14 percent and Nasdaq was down 22 percent. The volatile Bitcoin went down 68 percent.

In the meantime, the real estate rent amounts continued to increase during that same period, meaning profits continued to climb for investors.

The annual rent for multifamily properties grew an average of 13.5 percent during 2021 (which is admittedly higher than historical increases) so multifamily properties generated the highest average returns among real estate classes in 2021.  This is a trend that has been going on for the last 40 years.

A point you should consider is that real estate does not follow the typical stock market swings. Stocks and bonds follow the stock market ebb and flow, and multifamily properties are independent of those swings. While this may mean that real estate doesn’t see large swings in gains and losses like some stocks do, it does mean that return profits are more stable and consistent.

Multifamily properties give the strongest average total return (9.75 percent), according to a 2017 report by CBRE Research, however, there are also other types of properties that give average total returns over eight percent as well; hotel (9.61 percent), industrial (9.57 percent) and retail (9.44 percent) & office properties (8.38 percent).

The main reason that multifamily properties top the list is that millennials have a solid desire not to own their homes properties, and now baby boomers have started renting more, as well.

Lease agreements for multifamily rentals also typically last just one year, allowing for faster increases over office, industrial and retail leases, which are typically five years or more.

I remember one of my real estate mentors once telling me “The stock market is a great place to have your money… when it’s not in real estate”.

Do you have a need for commercial/industrial/retail buildings or land? Are you ready to buy or sell a home? Do you want a guaranteed cash offer? We can help you with all of that… just call us at 702 SELL NOW or click on this link to my website

Choose to have an amazing day….Jeff

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