What are the Multifamily Investment Risks? Part 1

Property in Los Angeles

Are you planning on investing in multifamily rental properties in Los Angeles or elsewhere in the United States?

As with every investment, there are going to be some risks involved with investing in multifamily rental properties, that’s why in this article we will break down the risks involved, just so you will be more knowledgeable about multifamily before you invest in your first one.

Changing Economic Conditions Can Affect Multifamily

In 2019 the economy in Southern California and nationwide as a whole can be considered to be “stable” at the moment but, if the economy dips into recession like it last did in 2008, another recession could affect multifamily rental properties.

How? If there are massive job losses in Southern California, tenants will naturally not be able to afford to pay their rents, and will have to move where the jobs are. Increased vacancy rates may lead some owners to lower rents in order to fill their apartments, this will also affect the demand for multifamily rentals in California.

How the Next Dip in The Real Estate Market Could Affect Multifamily

Yes, another economic recession could affect multifamily rental properties in Southern California but a change in the real estate market could also affect these types of rental properties as well.

The real estate market always operates in cycles or peaks and valleys, just like the equities market, so if we hit another valley in the real estate market this could affect the value of multifamily rentals in SoCal and the rest of the United States.

Investors who plan on buying multifamily rentals need to be fully aware of the “stage” that the real estate market is in just so they don’t buy at the wrong time in the market cycle and ultimately lose money.

What Other Risks Should Investors Be Aware Of?

Besides the risks that we’ve already mentioned in this article, some of the other risk that investors need to be aware of when they invest in multifamily rental properties include competition from other multifamily rentals in the area, possible litigation risks, and management risks.

Contact MW Real Estate Group

Thankfully, with a skilled property manager professionally managing your rental properties in Los Angeles you can rest easy in knowing that you’re protected from much of the perceived risks that come with owning multifamily rental properties.

MW Real Estate Group is a leader in sourcing, acquiring and managing multifamily rental properties in Los Angeles and we look forward to the opportunity of working with you!

To learn more about the services that we can offer you contact us today at (213) 927-2117 or click here to connect with us online.