“Invest in inflation. It’s the only thing going up.” – Will Rogers
Have you been wondering if now is a good time to be investing in real estate? Will apartments be worth more in 10 years?
Don’t worry, you are not alone in wondering this!
Many people who are putting their money into multi-family deals are thinking the same thing. They don’t want to miss out on a better opportunity.
That is why this is such a great question. It makes you think…
Is my investment a good one? Will my investment keep its value?
These are all valid concerns, but I am going to explain why multi-family apartments are going to do substantially well in the next 10 years.
Multi-Family over Single-Family
The big difference between multi and single-family homes is how you make your gains.
Single-family is based on a lot of speculation. The price of homes fluctuate year to year based on what people are willing to pay for the property and the market cycle.
Things go up. But things also go down.
Multi-family, on the other hand, is more stable. It is based on the income of the property or the rents. So, if you can increase the value of the property or increase rents, then you will have higher profits.
This is why multi-family is often superior to single-family.
You can more easily control the cap rate of the multi-family property. By finding ways to increase the value of the property, rents will increase.
And that is a simple equation.
Rents rising = increase in value.
Now, these are all great points for multi-family deals, but let me tell you more about why apartments will be worth a lot more in 10 years.
#1 Demographic Changes
I recently discovered this interesting non-profit called weareapartments.org.
They have accumulated data from all across the US, and they predict that there will need to be 4.6 million more apartment units by 2030.
Wow! That’s a lot of units.
And that’s a whole lot of investment opportunities!
One of the reasons behind the need for all these units is that the demographics of the U.S. are shifting. Even during COVID-19, people are moving out of the big cities like New York, Los Angeles, and San Francisco.
These same people are then moving to places like Atlanta, Denver, and Salt Lake City.
On top of this, many people are moving away from the suburbs and rural areas and moving into apartments in these up-and-coming cities.
This means a whole lot of new tenants moving in, and a whole lot more money to be made.
But even with more tenants, that’s not the only factor increasing the value of multi-family apartments.
#2 The Fed Printing Money
I know, I know! But hear me out. No politics, I promise!
Since the recession of 2008, there is now 2.5 times more currency in circulation.
This means that the Federal Reserve has been printing so much money, there is over twice the amount of money in circulation than just over a decade ago.
This comes from the major deficit spending on both political sides without much fiscal responsibility. Not saying that this is right or wrong, just that there is a lot of money being printed.
And looking at our current and future COVID spending, this will only continue.
Great, the government is printing money. What does that mean for my investments?
Well, the more money in circulation, the higher prices for everything.
Yep, I can tell you are ahead of me. This is inflation.
But, just because your coffee doesn’t cost you a quarter anymore, doesn’t mean you can’t profit from inflation.
When you have a real, physical asset like multi-family apartments, it usually rises in value alongside inflation. Meaning, as the prices of goods go up, so does the value of your investment.
#3 Higher Construction Costs
But that is not the only way that inflation will affect your investment.
If you have inflation, goods cost more and services cost more. Therefore, anything you build is going to cost more.
What this means for you is that getting into a deal now will only make your investment more valuable in the future.
Looking at the combination of these three factors, you can see how compelling real assets like multi-family apartments are. It’s only going to grow.
There is this old saying that I love.
The best time to plant a tree is 20 years ago, the second best time to plant a tree is today.
Take action today, find opportunities to invest in deals instead of letting time pass you by.
So, what I encourage you to do is take action today. Look into opportunities to invest or find ways to educate yourself on the many benefits of multi-family investing.
And if you are wanting to learn more, then I have you covered!
Check out our special report about investing. It compares the stock market to real estate, and it also includes how the pandemic affects your investment future.
If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.
