• Steady, reliable cash flow
• Upside appreciation and growth
• Low risk/capital preservation
• Good inflation protection

Each year more than a million new households are formed in the U.S. And for a variety of economic and demographic reasons - the rising cost of single-family homes, higher interest rates, slower personal income growth, burgeoning immigration, empty-nesting and divorce among them - about 34% of those households choose to rent.

Moreover, the demographic groups that are most prone to seek an apartment lifestyle, including young adults, empty nesters and one-person households, are projected to grow in the coming years.

As a result, demand has been increasing while supply has failed to keep pace in many parts of the country. In the past year, about 300,000 new multi-family units were built nationwide, compared to a demand for 340,000 units. These numbers help explain why multi-family led all other property sectors in total return on investment over the past 20 years, according to the National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index, the most widely accepted national benchmark index of institutional property performance.

Inflation Protection and Other Benefits

These compelling fundamentals, however, are not the only reasons why multi-family assets are an important part a real estate investment program. Apartment investment provides steady and reliable cash flow; the potential of upside appreciation from property and market improvements, and growth of rental rates. There also are fewer risks - such as reliance on one major tenant or costly tenant installation requirements - with multi-family properties.

Inflation protection is another factor. In periods of rising costs, rents can be adjusted as leases roll each month to keep pace with expenses. Similarly, when properties are physically upgraded, causing them to be more desirable to the renting community, investors can realize the benefits quickly through rent adjustments, resulting in stronger cash flow.

In addition, since multi-family properties, as an asset class, share certain uniform characteristics, investors can benefit from cost and operational efficiencies achieved by experienced and technologically up-to-date management. A real estate investment plan should include a diverse portfolio of attractive, well-positioned apartment properties, whose management, marketing, operations and standardized reporting systems are facilitated through our state-of-the-art.

In selecting its multi-family investments, look for under-performing, high-quality properties, in established economically diversified and growing markets that are supply constrained because of tough barriers for new construction or in an "hot" seller's market.

Look to acquire properties that have not lived up to their full potential but whose performance can be enhanced by an expert's management and marketing skills. Seek properties in communities where market fundamentals will allow you exert upward pressure on rents. Ideally, there will be constraints on new supply, which often arise because of school, tax and environmental issues, strict zoning laws, or simply a lack of available sites.

In your acquisition criteria, you should consider both newer and older properties, that could benefit from upgrading and repositioning in the local marketplace. Properties must also possess superior proximity to quality schools, shopping, transportation, and entertainment.

Apartments investments have been, and continue to be, very attractive, on a risk-adjusted basis. The demographic trends that favor strong fundamentals for selected multi-family markets are still solidly in place. There will be favorable multi-family investment opportunities for apartment investors in the foreseeable future, which should yield steady and reliable cash returns and capital growth."