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Implementing Renter’s Insurance

Renter’s insurance is starting to become offered, and sometimes required in leases at an increasing rate across the country. Considering the pros and cons of implementing a renter’s insurance plan, it is important to understand the best approach for your property.

Not only can renter’s insurance protect tenants and their belongings from events such as fires, floods, leaks, and theft, but it can also act as another line of defense for a property owner when it comes to liability. So in many cases, it can prove very beneficial to offer or require your tenants to purchase a renter’s insurance plan.

Click here to learn more about how renter’s insurance benefits both the tenant, and the property owner.

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Millennials in Multifamily

Over the past few years, a growing trend in the multifamily industry has been the prominence of renters from the Millennial generation. Now more than ever, millennials are looking to rent instead of buy, partly because they don’t want to be tied down by a 15-30 year mortgage on home, especially if they acquired debt from student loans. Naturally, as millennials grow older and start families they will look towards buying homes, but for now, millennials are here to stay in the renting sector.

As of last year, the U.S. Census Bureau found that millennials have overtaken baby boomers as America’s largest generation. Furthermore, earlier this year, Yardi Matrix reported millennials hit their prime renting years between 20-34 years of age, which should add roughly 2 million millennial renters to the market this year. The same report stated the amount of millennial renters will peak in 2024 with an astounding 70 million millennials looking to rent. Based on these figures, millennials should drive a heavy amount of demand to the multifamily industry for the next 7-9 years.

Not only are millennials flooding the housing market with their rent-first mindset, but they are also redefining the desired product needed to fulfill demand. Upgrading to black or stainless-steel appliances is most likely not enough to captivate the average millennial renter. From an aesthetic standpoint, millennials tend to lean towards rustic, modern designs with clean and quality materials that can provide a comfortable social experience.

Here’s a quick video from Multifamilyexecutive.com where some of the industry’s leading architects discuss what millennials look for in a living space. 

They have grown up in a time of surging technological advances, so millennials look for features like a cool computer cafe/lounge with fast internet, USB wall plugins, or even light dimmers and remote-controlled fans in their units. These are just a few examples of characteristics that any generation might prefer and enjoy, but with so many options at their disposal, millennials will give their business to whoever provides the best overall experience.

From an apartment owner’s perspective, it may seem expensive catering to the millennials as a target market, but there are affordable materials and strategies that can achieve their desired product. Also, millennials are generally willing to pay the extra cash to live in a comfortable, clean, inviting space with a location that is convenient to reach work or social events. The millennial generation is, and will continue to be a large part of the multifamily market for many years to come, so it’s no surprise to see the market shifting in a new direction.

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How the Recent Election Could Affect the Multifamily Industry

While it’s still early on in the new presidential term, owners and investors are trying to test the waters and understand how the multifamily industry will perform with Donald Trump as president. Every election cycle has an affect on the economy in terms of Gross Domestic Product (GDP), unemployment rate, inflation, and other important economic statistics. Whether Trump’s affect will be positive or negative remains to be seen, but it goes without saying the real estate world will see and feel the consequences of his actions and policies. 

In a recent Forbes Magazine article, KC Sanjay, leading economist and analyst for Axiometrics, sums up how Trump’s emphasis on creating jobs, growing GDP, and tax reform might impact the multifamily/apartment sector. If you’d like the read the two-page article in its entirety, you can click here, or on the link provided below.

 How The Trump Presidency Could Impact The Apartment Market 

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Should You Be Investing Real Estate or the Stock Market?

Good investors are always looking to both grow and protect their wealth while weighing risk and reward. There’s no doubt the stock market and real estate investing are two of the best ways to achieve investor success. The hard part is knowing current and upcoming trends, and how they affect the risk and reward of current and potential investments.

As an investor, you don’t have to be exclusive to stocks or real estate. In fact, it is very common for successful investors to have a stake in both investment types. Having said that, every investor has their own preferences, motivations, and priorities when it comes to where and how they invest their money.

If you’re looking for information on which investment strategy best fits your needs and wants, click here to learn some of the advantages and disadvantages of real estate and stock market investments.

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Selecting the Right Property Management Group

Hiring a good property management group can make or break the success of a property. Choosing the wrong company can tank an entire operation in an instant, while making the right selection can prove to be profitable rather than costly. Every management company will insist they are the best of the best, but it’s up to you do the research and decipher which company is the best fit for your current, and maybe even future properties. 

There are a number of things to consider when interviewing a property management company such as cost, track record, maintenance operations, marketing/advertising,  and so on. Every company operates differently, so you need to know what you’re looking for in a company before you start your search. Contract discussions should only begin if the company meets your management expectations from an operational standpoint.

Perhaps the most important rule of thumb when looking for a property management company is to ALWAYS interview multiple companies before making a selection.  Managemyproperty.com does a great job in simplifying what you should and shouldn’t do during the hiring process while providing additional detail, if desired.

Click here to learn more about the best way to find the right property management company for your real estate.

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DFW on the Move

In a recent article in D Magazine, author Brian O’Boyle briefly discussed projected and current trends in the Dallas-Fort Worth (DFW) area for multifamily housing. To sum it up, DFW continues to be a hotbed of growth with buyers focusing on “value-add” products.  In addition, a projected 29,000 new units are to be added to market, along with construction entering some of the northern suburban areas.

O’Boyle is the founder and vice chairman of ARA, A Newmark Company Dallas office. ARA is the largest full-service investment advisory firm in the nation that focuses exclusively on the brokerage, financing and capital sourcing of multifamily properties.

You can read the article in full detail by clicking here, or the hotlink provided above.

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Why We Choose Multifamily

In our last post, we discussed the dilemma of investing in multifamily or single family properties. We also briefly stated that we are firmly on the multifamily side of the argument. The purpose of this post is to elaborate on some of the major points that have us convinced multifamily investment is the way to go.

It goes without saying one of  the biggest motivators to invest in the real estate market is to grow one’s wealth, assets, and portfolio. Which leads us to an aspect of multifamily property we think most, if not all, investors desire: scalability.

Instead of growing a portfolio one by one, building by building, investing in multifamily allows investors to acquire numerous properties with one purchase. After successfully acquiring a third or fourth property, it is not uncommon for investors to have exponentially grown their real estate portfolio at a much faster rate than single family investment. Furthermore, the monthly income scales with the portfolio size, mitigating  some of the risk of the investment.

Another crucial reason we find multifamily to be more beneficial than single family is professional  property management.  Yes, single family owners/investors can and do hire property management companies to oversee operations, but it is not nearly as cost-effective on such a small scale compared to that of multifamily properties. Often times you’ll find single family owners managing their own properties, which requires a lot more time and effort most investors are looking to exert.

On the contrary, an efficient property management company can become one of a property owner’s best assets. The company you hire becomes the face of your property, as it will be handling day-to-day operations, making critical financial decisions, and interacting with current and future residents. As a result, owners and investors can focus on growing and improving their wealth elsewhere without having to micromanage a property.

In addition to professional management, we find the process of valuing a multifamily property to be a very beneficial perk on both the buying and selling sides of a transaction. Like other businesses, multifamily properties are evaluated based on performance. For example, when reviewing a property, appearance and location are important things to consider, but that’s only the tip of the iceberg. The big indicators on a property’s value include net operating income (NOI) trends, capitalization (CAP) rate, and cash-on-cash returns.

Therein lies an opportunity for a competitive advantage we always look to capitalize on, and one of the biggest reasons we are exclusive to multifamily real estate. To a certain extent, once we gain ownership of a property, the value of said property is largely dictated by our actions and decisions. Consequently, when we look to sell, we can have the confidence the value of the property has improved to help meet our expected investor returns.  Buyers will take current value based on NOI and CAP rate in addition to perceived future value when making their offers.

In contrast, in the single family arena, no matter how well we implement operational efficiencies we would have little control over what our ultimate resale value would be.  Most likely, no single family home will sell for more than its value as determined by a broker’s comparative market analysis (CMA) or bank appraisal.

While we could go in to never-ending detail on all of the aspects that make multifamily property investment work for us, we feel these are some core characteristics any investor can find attractive.

*Attached is a Business Insider Article in which New York Times bestselling author and expert contributor to networks such as The Huffington Post and CNBC, Brad Cardone, discusses his experience in multifamily real estate.

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Multi vs. Single Family Investment

Whether to invest in multifamily or single family has been a heated debate in the real estate world for a long time, and it seems like it’s here to stay. There are equally as many loyalists, positive, and negative traits on each side of the argument. While single family often has lower overall maintenance costs, multifamily can easily have lower vacancy rates. So how is someone new to the real estate industry supposed to know which direction to take?

While we at EPIC are solidly on the multifamily side of the debate, when it comes down to it, it’s a matter of personal preference. How much time and money are you willing to put in to your investment? And how much work do you plan on dedicating? Your answers to these questions will indicate whether multifamily or single family best suites your wants and needs.

Click here to read more in depth about the multi vs. single family power struggle.