Did you know that 66% of Americans set new years goals that are directly related to their finances?
Whether it’s paying off debt, generating more savings, implementing a budget or investing, more than half of the U.S. population have made plans to adjust their finances in the new year.
A recent study has shown that even though these financial goals are still being set in 2023, 81% of people believe that inflation and the overall state of the economy will make it much harder to meet these goals.
As you set your own goals for the new year, maybe you can relate.
You might wonder how you’re going to generate extra money to pay off debt. You may worry that you won’t be able to stay within your budget due to the high costs of everyday living.
You might think that investing isn’t an option because you need every extra dollar after expenses to go towards your savings. Or you might just be overwhelmed with finances in general and aren’t sure which actions to even take.
If this is you, you’re in the right place! At XSITE Capital, our mission is to educate and encourage people to make decisions that are best for them, specifically when it comes to multifamily real estate investing.
We believe that everyone deserves the opportunity to learn and take action on the things that will better their present life and future dreams.
Last month on the blog, we addressed how interest rates, inflation and a possible recession can impact your commercial real estate investments so you can know what to expect with the ongoing economic changes.
With that, we also want to share three main reasons why commercial real estate IS still a good investment in 2023 so that you can take confident action as you work toward your financial goals this year!
The talk of a recession has been going on for a few months now and with a recession people tend to become very cautious about where they put their money.
This is totally understandable because you want to make sure you’re putting your money somewhere that is safe and will produce a quality return for you in the future.
While it’s true that a recession can negatively affect your investments, the good news is that when you invest in multifamily properties, you can rest easy knowing that your investment is protected.
Historically, multifamily assets have shown to be recession resistant because, at the end of the day, people always need a place to stay.
When a recession hits, there’s typically an influx of people selling their homes that they can no longer afford, which means that the demand for apartment rentals or other multifamily properties will see a significant increase.
This is good news for you as an investor in multifamily properties as this can boost the cash flow that you receive thanks to more tenants occupying the property.
Whether or not a recession will actually hit in 2023, we aren’t sure, but what we do know is that people are already taking precautions which means that the demand for rentals is already happening and now is a great time to get involved with investments of this type.
Many times when people think about investing, they jump straight to the stock market because they haven’t been properly educated on how real estate can be a quality investment as well.
The only real problem with solely investing in the stock market is that it can be very unpredictable and can take a massive hit at any given time, especially during economic downturns or world events.
Commercial real estate on the other hand has proven to be trustworthy decades after decades and remains fairly stable regardless of the economic state.
The main reason for this is because housing is and always will be a basic necessity that all people need. Because of this, you can trust that multifamily properties will continue to appreciate in value which ultimately means that you will receive more return on your investment.
This isn’t to say that investing in the stock market is bad. We encourage that too, but more than anything you want to make sure that your investments are diversified – meaning you have money in multiple places – so that if one takes a negative hit, you have the other to fall back on.
One of the biggest challenges that people often face in real estate in general is the ability to receive the funds they need to purchase or invest in a property.
This can become even more difficult when the economy is in a downturn because banks become more strict with their loan process and have more requirements than you might typically see.
While this can cause difficulty for you if you were to purchase a single-family home, there is a much easier financing process when it comes to commercial real estate.
Banks can confidently predict that the cash flow of a multifamily property with multiple tenants will be consistent and steady versus a property that only houses an individual or one family.
What this means for you as an investor is that the bank doesn’t look at solely your income to grant you the loan. Instead, they will look at the details, history and projections for the property so they can accurately gauge the return.
This is why getting involved in deals that have been thoroughly researched and scouted for you is so important and is the very reason that we take our property selection process so seriously at XSITE Capital.
Linking arms with an investment group that takes the time to ensure a property will be lucrative is your best bet to receive a healthy ROI and that’s exactly what we do through our Investor’s Club!
So, if you have big financial goals in 2023 and are looking for ways to make them come to life with ease, we invite you to join us.
When you join the XSITE Investor’s Club, you will receive:
Overall, we’re here to empower and support you in your personal journey!
Here’s to 2023. 🎉
– The XSITE Capital Team
Did you know that not all apartment investments are created equal?
In this post, we discuss why investing in multifamily apartments is so valuable, but it’s important to know that there are different commercial real estate asset classes and you want to make sure you’re choosing to invest in the class that’s best for YOU specifically!
Keep reading to learn about the different classes of multifamily apartment investments so you can strategically add to your investment portfolio.
Class A apartments are newer (<20 years old) and they offer high-end finishes like granite countertops, stainless steel appliances, and hardwood floors.
With this class of properties, maintenance is also performed immediately.
Class A properties are conveniently located in cities near mass transit or downtown hot spots that typically attract affluent renters with high price tags.
Bottom Line: Class A Properties typically have low cash flow compared to high initial investment. The cash flow is highly sensitive to recessions (when tenants will often move to Class B or Class C Apartments). Traditionally, only accessible to Institutional Buyers.
Class B apartments are between 20-40 years old and offer standard furnishings like laminate countertops and black/white appliances.
With this class of properties, there is often some deferred maintenance.
Bottom Line: Class B Properties typically have Cap Rates of 5%-6% and there’s a higher cash flow than Class A. Open to Private Buyers as well as some Institutional Buyers.
Class C apartments are typically much older than the other two classes – at least 35 years old.
These type of properties are in constant need of maintenance and are often located in less desirable locations.
Bottom Line: Class C properties typically have Cap rates between 6%-8%. With these, there are lots of value-add opportunity for investors and there are high cash flows due to low initial investment, but lower cash flow in the long run.
Note: We do not recommend Class D / Warzone Apartments, which are often risky and have very heavy management load.
Double-digit returns are quite common for multifamily investments, as long as you choose the right opportunity for your liquidity requirements, cash flow needs, and available investment capital. It is important to work with your financial advisors and investing team to make sure potential investments are a good match for you.
Are you ready to join a community of knowledgeable investors? Click here to join the XSITE Investor’s Club!