Just like any other type of investment, multifamily assets are subject to market fluctuations and macroeconomic conditions that can impact their overall investment performance. When considering idiosyncratic risks, we can highlight factors such as low occupancy rates (vacancy), changes in interest rates that can increase loan costs, difficulties in refinancing or obtaining favorable financing terms, and unexpected expenses related to capital expenditures (CAPEX).
Regarding main advantages, multifamily investments are considered assets that appreciate over time, offering the potential for long-term wealth accumulation. Moreover, this type of investments often generates steady rental income providing a consistent cash flow for investors. As another advantage, it allows for spreading investment risk across multiple units, reducing exposure to the performance of a single property. Lastly, it is a tangible asset that allows an hedge against inflation and has several tax benefits.
