Multi-family Eugene properties remain a good investment, but looking back at 2018 and watching the current trends, we see that some multifamily opportunities will be more favorable than others.
Workforce housing will be a driving force in 2019. Workforce housing, also described as affordable housing, opens the door to investors who want to put money into the multifamily sector and gain a dependable tenant pool. When I refer to affordable housing, I am not talking about government-assisted programs for low-income people who must qualify based off an income need level, I am talking about providing housing for working individuals. Demand for this type of housing will remain strong.
Investors should pay special attention to class B and class C property types. Class A properties are typically new luxury living apartments. Class B and C units are typically more sought out by the working class because of the affordable rents. Because of this demand, vacancy rates will remain lower in the B and C class units.
Four Top Tips for Investors
- Seek Smaller Complexes
Class B and C units tend to be smaller complexes. Some are as small as six to ten units. Smaller plexes often offer more value-add opportunities.
- Go with Your Comfort Level
Even if my clients hire a professional property manager, I recommend that they drive by their apartment complexes on a regular basis. That way they can keep a close eye on their portfolio. Buy in an area of town that makes you comfortable. Know the right mix of units that will appeal to your target audience of renters.
- Develop an Ongoing Relationship with a Good Broker
Many multifamily properties sell without ever hitting the market. As a competitive real estate broker, I have an exclusive list of property owners that are quietly looking to sell.
- Have A Good Team to Assist You It is vital to the success of a passive investor to have a good team continually assisting them in building their portfolio. Is your property manager conducting a yearly rent survey and showing you how your property stacks up against others? Is your insurance agent meeting with you annually to review your portfolio and ensure that you have the right coverage? FEMA just changed many of the flood zone maps—is your property in a flood zone now?
The Rental Trend in Multi-family Eugene
Many investors want to put their money into the housing market, but they are unsure of how to get involved. The high demand from renters for available units over the last 24-36 months has shown that in the right sector there should continue be a healthy supply and demand balance in 2019.
One reason for that healthy supply and demand is the post-recession decline in U.S. homeownership. Between the young millennials who saw their parents lose it all in the last recession and the baby boomers who no longer want to deal with the maintenance of a home, the renter pool will remain strong. According to a recent article in the Washington Post, homeownership rates have slowly climbed over the past two years to 64.3 percent in the second quarter of 2018. Clearly there has not been a rush back to homeownership. Workforce housing properties are attractive in market downturns and during recessions, and they experience less vacancy.
It remains a great time to get into the multi-family Eugene market. Most young millennials are gainfully employed and looking to have their own apartment rather than living in their mom’s basement, and the older generation is looking to live closer to shopping, restaurants, and health care so they can continue to age in place.