Multifamily Investing in 2023

Multifamily properties have consistently proven to be profitable investments. Learn more about what to expect from multifamily in 2023.

In 2022, much like the median price for single family homes, we saw multifamily properties rise to the highest point in history and then watched the real estate market decline as high inflation and high interest rates manipulated the economy. The high prices, intense competition, and economic volatility experienced over the last two years have made it more difficult to acquire new properties and many wonder what 2023 has in store.

Real estate professionals should do their research and enter the 2023 market with cautious optimism. There will certainly be challenges for real estate investors in the new year, however, with the right strategy and thoughtful partnerships, there will be opportunities to be successful.

While many factors influence a good investment property, the main thing impacting investors in the coming year will be the type of property they are investing in. As the demand and price for single family residential homes decrease, multifamily properties will remain relatively stable and perhaps even grow towards the end of 2023 according to a Freddie Mac report. The 2023 outlook report from Freddie Mac expects the multifamily market to slow in the beginning, but regain strength by the end of the year, which has not been said for other asset classes.

Why Multifamily

Multifamily has consistently proven to be a profitable investment if done with the proper forethought. Choosing the right location based on market research and partnering with an experienced lender are two things that will surely contribute to your success.

Investing in multifamily real estate may seem more intimidating than investing in a single family home and renting it out, however, it is often a more predictable and reliable source of income.

One of the main reasons investing in multifamily has been, and will continue to be, a wise investment choice is the low probability of complete vacancy. If you rent out a property with multiple units, when someone moves out, it is likely that you will have other tenants occupying a portion of the property. This establishes regular cash flow and is generally less risky.

Another reason many investors see multifamily as a worthwhile investment is the ease of building their portfolio. Why buy 20 individual homes when you can buy a 20 unit apartment building instead?

Based on the 2023 market predictions, especially if accompanied by a recessionary phase, the option to buy even one single family investment property and be profitable will be slim, therefore trying to build your portfolio and cash flow with multiple single family rentals this year will be difficult.

Looking Ahead at the Multifamily Market in 2023

Despite the uncertain state of the labor market, we remain cautiously optimistic about the next year of real estate investing. If the Fed can manage a soft landing, without any major impact on the job market, then stabilize. We believe the multifamily market will persist as other asset classes may take a harder fall over the course of the next year.

Prepare for the uncertain road ahead by staying informed on the market's trajectory, partnering with experienced real estate professionals, and entering the new year with an optimistic, yet pragmatic mindset.

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About CALCAP Lending

A division of CALCAP Advisors, CALCAP Lending benefits from the expertise of a seasoned team of professionals with extensive, successful track-records covering a variety of disciplines and leading large, nationally-recognized institutions. A private money direct lender, CALCAP Lending provides short to mid-term financing for property investors and businesses looking to purchase, refinance, renovate, and construct residential or commercial properties.

Lending FAQs

You've got questions, we've got answers.

What is private money lending?

Private money lending is a collateral-based lending strategy that is often associated with shorter terms and more attractive features. A private money loan offers more flexibility than a conventional mortgage or bank loan.

How does a private money loan work?

Private money lenders provide financing using money from private entities. Private money loans often work as bridges to help investors gather funds to achieve their short term real estate goals, but long term, permanent options may also provide.

Why would I choose a private money lender?

There are many advantages to using a private money lender for your real estate investments! Private money lenders can be more lenient when it comes to borrower credit issues, often there are no prepayment penalties, you can leverage your cash to buy multiple properties, and private money loans are quicker when compared with institutional loans.

Can I get prequalified for a loan?

CALCAP has a responsive loan team who are able to prequalify you. Contact a loan specialist at 833.816.5580 to get started.

How long does the lending process take?

Private money lending can be a quick and painless process. From start to finish, 30 days is common, however, turn around times can be as short as 10 business days.

Can I still be approved for a loan if I have bad credit?

Generally yes, we understand that people have temporary financial issues that come up, and we want to work with you to help you rise up financially to a better place. Offsets to credit concerns may include experience as a real estate investor, good cash reserves, and/or larger down payments.

I am a broker or investor, how can I work with CALCAP?

Business is built on relationships. Ours is no different. CALCAP Value and Preferred Partners receive exclusive rates and services. For more details and to submit your application, visit our partners page.

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