Here’s Why Now is a Great Time to Invest in MultiFamily Real Estate

market trends and analysis multifamily real estate investing Jul 25, 2023
Here’s Why Now is a Great Time to Invest in MultiFamily Real Estate

Multi-family real estate investing is a strategic investment strategy. It’s far less risky than investing in single-detached properties, and it provides a steady influx of cash flow to help pay back financing for the purchase transaction. Financing is also much easier to secure with a multi-family property, and building inspections are more efficient to complete.

If you’re new to real estate investing, or you’re looking to expand your portfolio with larger properties that increase your personal wealth, multi-family investments are a great strategic lever that you can pull. Currently, in 2023, multi-family real estate investing across Canada is a winning strategy that shows no signs of reversing course.

 Here’s a quick overview of why now is a great time to invest in multi-family real estate.



1. Demand for multi-family rental properties is at record highs


Here’s the biggest reason why multi-family real estate investments are a winning strategy. The demand for these types of properties has never been higher.

In Morguard’s 25th annual edition of the Canadian Economic Outlook report, they quantified the amount of multi-family real estate investments across Canada. In 2021, following a lull from the previous year brought about by COVID-19, investments reached a record high of $14.1 billion.

In the first half of 2022, multi-family real estate investments totaled $7.1 billion across Canada. This trend remains on track with the previous fiscal year and has the potential to even exceed the previous record high. All these insights point to a vibrant multi-family real estate market that can make savvy moneymakers life-changing returns on their investments.



2. Returns on multi-family investments are healthy and vibrant 


It’s not just the amount of investment in multi-family properties that’s on the rise. Returns from those investments are making investors very happy with their respective ventures into multi-family real estate.

According to the Morguard report, the national average return on multi-family investments was 7.4 percent as of the end of June 2022. This marked a 2.2 percent increase over average investment returns from the previous fiscal year.



3. Investment returns are at their highest on the coasts


Canada is one of the largest geographical countries in the world, second only to Russia. Our society primarily clusters around major cities, but those cities are spread out across the entire country. Due to a combination of factors, including immigration and interprovincial migration patterns, some local markets report higher investment returns than others.

STOREYS, the online platform for real estate news, summarized the regional rates of return identified by the Morguard report. According to their analysis, the highest 2022 multi-family real estate returns in Canada were in Victoria, averaging 16 percent.

The second highest returns were on the other side of the country in Halifax, averaging around 13 percent. The two coastal cities were the only markets in all of Canada that posted double-digit returns on multi-family real estate investments.

Larger cities like Toronto and Vancouver saw multi-family investment returns averaging around 6 percent. Interestingly, both Calgary and Edmonton, which belong to Canada’s exclusive list of large urban cities, reported the lowest returns in the country at only 4 percent.

What causes this disparity? The biggest culprit is vacancy rates. Cities that have lower vacancy rates, such as Victoria and Halifax, generate the greatest returns for multi-family real estate investors. Calgary and Edmonton have some of the highest residential vacancy rates in the country, reducing demand for, and returns from, multi-family properties.



What all this data means for your investment prospects


The biggest takeaway from all this market data is that multi-family real estate investment across Canada remains very strong. If you pool your investment capital into large residential properties, the odds remain very much in your favour that you’ll earn a sizable rate of return.

There are still tips and tricks you should use to maximize your potential investment returns. As you proceed with your multi-family investment strategy, keep the following ideas in mind.



Select the right market to invest your money

The data shows that multi-family real estate investing earns significant national returns. However, some localized markets earn even higher returns than the national average. Do your research and look for the most promising cities with the highest returns you can earn from your investment. Pick the right one, and you’ll be laughing all the way to the bank.



Monitor local census data to align with demographic trends 

Government websites containing census data are a great resource for finding how populations move and grow in a community.  Census data and population growth reports are some of the most helpful resources you can use when building your multi-family investment strategy. Use the government data to spot the fastest growing communities, because that data is the biggest indication of growing demand for real estate. Where there’s demand, there’s money to be made!



Join a real estate investing community

Finally, don’t feel like you have to undertake a solo real estate investment journey. By joining a successful real estate investment community, you can learn all the trade secrets from experienced investors. Find a real estate investing mentor who can help you learn all the inside baseball and avoid falling into traps that early investors commonly experience. Make the most out of your investment so you can reap the greatest returns!



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