Here’s Why Brokers Are Missing Out on Opportunities in the Multifamily Market

Multifamily real estate is a great asset class, providing investors with strong monthly income and cap rates that are often much better than single family investments. On top of that, these properties have great potential for appreciation and can offer significant tax advantages to owners. Plus, with high interest rates pricing many homebuyers out of the market, they are turning to renting, causing multifamily units to be higher in demand. As a result, investors have the potential to make some serious gains from buying multifamily properties for their portfolios. Brokers and wholesale partners also have the opportunity to help their clients make the most of this asset class.

Read on as we break down the shifts in the multifamily real estate market today, and how brokers can offer their expertise to ensure both them and their clients aren’t missing out on any lucrative opportunities.

The Shifting Multifamily Landscape

The real estate market has experienced significant changes in the last few years, from rapid growth in certain areas to high interest rates affecting home ownership. One trend has been the rise in secondary and tertiary markets, which includes high population growth in medium-sized cities such as Raleigh in North Carolina, Brownsville in Texas, and Fort Myers & Cape Coral in Florida. The impact of remote work means that people aren’t flocking to major cities like before, but are still considering living in areas with great pull factors. A strategic investment in one of these markets can lead to significant gains for investors.

Another trend to consider is how high interest rates have affected buyer preferences. Many young professionals who would otherwise be making their first home purchases have been priced out of the market. The result is that many of these would-be buyers are choosing to rent instead, leading to strong demand for rental units like those found in multifamily homes.

Overlooked Opportunities Brokers Can Capitalize On

As a broker or wholesale partner, your job isn’t just to provide financing for your clients, but also to offer them strategic insights into real estate markets and investment decisions. In multifamily real estate, there are some great opportunities which often get overlooked, but can be a great benefit to both you and your clients:

1. Value-Add Properties: Properties requiring minor renovations present two advantages to investors. First, they can be financed for less, and second, once renovations are completed they will grow in value, which allows investors to pull equity out and use it to fund further acquisitions.
2. Secondary and Tertiary Markets: The golden rule of real estate is location, location, location. Conducting due diligence allows you to recommend hidden gems of markets to your clients, where they can acquire properties for less and benefit from rapid growth in both property values and rental rates.
3. Workforce & Affordable Housing Investments: Investing in workforce housing is a great strategy, as it often comes with government incentives to help subsidize the cost. Brokers can capitalize on this asset class by conducting research on various government programs and identifying markets and properties suitable for investment.
4. Adaptive Reuse & Conversion Projects: One asset class that took a particularly big hit in the post-pandemic market was office & retail properties. However, investors can still benefit from acquiring these buildings and converting them into usable living spaces. There are some challenges to be aware of with conversion projects though, and both you and your clients should take time to conduct research before diving into such an investment.
5. Off-Market Deals from Alternative Sources: If the open market isn’t offering any promising deals, consider looking into alternative sources, such as auctions, foreclosures, REO properties, and wholesalers. It’s possible to acquire great properties at a discounted price, even if there are certain homes that will need some work to get up to market standards.

Strategies for Brokers to Uncover Hidden Multifamily Opportunities

There are also some key strategies brokers can use to help uncover more multifamily opportunities for their clients. In real estate, due diligence is incredibly important, and in the modern age you can make use of real estate platforms and data aggregators (like ATTOM Data or REiDEAL MASTER) to gather up-to-date info on various markets, and identify opportunities or trends before they gain traction. Equally important is building a strong network of real estate professionals, such as developers, real estate agents, and other brokers/lenders. This can help you gain access to more deals, and properties that are off-market. In a similar vein, building relationships with multifamily property owners allows you to be in the know when they’re looking to sell, and makes it simple for you to broker a deal with them and your clients.

Brokers and wholesale partners play an important role in helping clients expand their portfolios into new asset classes like multifamily homes. They provide extra value by utilizing their expertise to help them identify and secure more deals, and staying informed on market trends and leveraging industry relationships are some the best ways to do this. Having a number of creative financing solutions also helps position you as a one-stop solution for solving all your clients’ financing problems.

RCN Capital

The easiest way to save on an investment is to obtain financing from a real estate lender that can provide you with the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. If you are looking to finance a real estate project, RCN Capital has competitive loan options available.