Should You Invest in Multifamily Rental Properties to Reduce Stock Market Portfolio Volatility?

The long-awaited stock market correction is finally here and it’s not uncommon to check the news to find out that the Dow is down 600 one day then up 400 the next. The big question if you’re an investor is if you should keep your money in stocks or invest in multi-family rental properties instead.

Why Invest in Multi-Family Rental Properties?

Unlike stocks or other investments, multi-family rental properties are not tied to the economy so you don’t have to concern yourself with losing money when the stock market goes down or the economy begins to perform poorly.

What’s great about multifamily rental properties like duplexes or apartments is that more doors equals more money and whenever one of your tenants moves out, you can raise the rent so that it’s comparable with other rental properties in the same area.

Since multifamily properties are also tied to geographic trends there really is no downside with multifamily investments because people always need housing so you can expect to always have regular cash flow from your properties on a monthly basis.

Residential housing is the most common necessity that people have across the United States regardless of their age, gender or status in life.

In 2018-2019, more people are renting than ever before, especially in the Portland area, where home prices have made it nearly impossible for people to buy a home here unless they are able to save up to $50,000 for a down payment on a home.

Better Than Commercial Properties

Another huge benefit that comes from investing in multi-family rental properties is that they are better than commercial properties because multifamily units are not tied to the economy like commercial properties that obviously feel the effect of negative economic trends in terms of lost sales and lost business.

So, what is it about commercial multifamily real estate that allows it to have significantly less risk than the stock market?

First, it is an investment in the basic need of shelter. Unlike business products that have a useful shelf life but eventually get replaced, apartment buildings aren’t going anywhere. Mankind has always and will always need a roof over its head.

Additionally, think about who already invests in commercial multifamily real estate and how much due diligence and risk mitigation they have done to determine that investing in apartments is right for them.

For example, AAA rated life insurance companies hold a significant portion of their portfolio in commercial multifamily real estate both on the debt and equity sides. These are some of the most conservative investors in the world. They want to grow their money, but they absolutely have to do so cautiously as they have guaranteed benefits that they have to pay out.

Get Property Management in Portland Oregon

Need property management for your multi-family rental properties? Contact Property Management Systems today by calling us at (503) 515-3170 or click here to connect with us online.

 

 

 

 

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