By Jenn LoConte
You know that investing your hard earned money is the best way to plan for your future. Securing and growing your nest egg, paying for your kids’ college education, being able to retire comfortably, and having extra income to enjoy future opportunities are most likely on your long-term investment plan.
Obviously, you want to get the best returns on your investments and in a dependable and secure way. The stock market is one way to invest, but you’re taking a major risk in something undependable. And, depending on the economic climate, you could lose a huge percentage of everything you put into it. No matter what type of investing you’ve done in the past, you should find an avenue that offers stability and dependability while getting those good returns. After all, isn’t that the reason you’re investing in the first place?
Class B Real Estate: Solid, Dependable, and In Demand
There IS a way to invest your hard-earned money without volatility or uncertainty; investing in dependable Multi-Family Class B properties. Also nicknamed “workforce housing,” these properties offer affordable housing options to hardworking people looking for a solid place to call home. They’re not full of extra amenities like a concierge, clubhouse, or garages, but they do offer affordable, safe, and neighborhood communities. And, their demand is on the rise. Here’s why.
Regardless of economic conditions, people need a place to live. When the economy took a turn for the worse, the once popular Class A luxury vacancies increased, as both homeowners and renters looked for more affordable places to live. At the peak of the last recession, foreclosures boomed and the need for multi-family rentals increased dramatically. Their vacancies went down, rents stayed flat or, in some cases, increased. During the recovery even through today, as housing trends continue to improve, the growing demand for more affordable housing also continues to increase.
With Class B housing in high demand, who are the people that live there?
- Echo Boomers
According to the Pew Research Center analysis of U.S. Census Bureau data for 2017 (most recent data), 56 million Echo Boomers (or Millennials) were working or looking for work, making up one-third of the workforce. And, this younger workforce values experience and travel over owning, so renting more affordable Class B properties makes sense.
- Baby Boomers
Baby Boomers who once made up the largest percentage of the workforce population are retiring and now looking to sell or downsize. With the cost of home ownership on the rise and inventory on the decline, they’re also moving into smaller and more affordable rental properties.
- The Rest
Working families, military households, and individuals round out the rest of the population who are moving here. Whether they want to rent or need to rent, Class B properties are filling up at a significant rate. According to Multifamily Executive (MFE), 2017 brought an oversupply of Class A luxury properties sitting vacant because, simply, they’re too costly.
More Bang for Your Buck
Class A real estate is expensive – to build, to maintain, and to rent. Class B real estate is much more cost effective to renovate, is located in solid and well-established neighborhoods located just outside major cities, and rent is affordable. According to a recent article in Pensions & Investments, investors that typically had invested in shiny new Class A downtown towers in major coastal cities are now buying buildings that are in secondary markets and offer more affordable rents.
Class B Real Estate Investing Options
If you’re thinking about investing in Class B multi-family properties, you’ll need to decide which investing avenue you’ll want to take. There are primarily two ways to invest: actively or passively.
This option requires the investor be an active owner or a direct partner in the property. This will require your time, effort, and expertise in multi-family ownership and management, a large undertaking. Additionally, you may need funding assistance, so you’ll need to work with a reputable lender and potentially need to bring in outside investors.
This option allows for you to invest through a fund that, in turn, invests in multi-family properties. In other words, you invest in an investment company. Choosing this option will allow you to invest without the hassle of additional responsibilities and hurdles of finding great opportunities, pulling together all the capital, obtaining loan approval, hiring contractors, and hiring a property manager and maintenance staff to manage the community. It will be essential though, to do your homework and select a fund manager with a solid reputation and sound strategy for multi-family investing.
Larry Hickernell, Jr., Investment Success Manager with DLP Capital Partners, says, “We do more than purchase and renovate. Our strategy is to control the variables. We control the acquisition process, the construction, and the management. Through due diligence and analysis, we have a high probability of achieving our financial objections because we know exactly how to execute on these investments. Once we acquire and renovate the property, we substantially improve management in order to maximize revenue, while reducing delinquency and vacancies. Over time, our assets are worth much more than what they were originally acquired for.”
Join the Conversation and Learn More on Class B Investing
Investing in multi-family Class B properties is a proven method that offers long-lasting and successful growth. Passive investing in a company like DLP Capital Partners offers straightforward investment opportunities with very low risk. Their forward thinking strategy mitigates risk and provides a track record of consistent returns with zero principal losses to investors while generating consistent cash flow and double-digit annual returns.
Want to learn more about multi-family Class B Investing opportunities and why it’s the best way to invest in your future? Join Don Wenner on Sept. 26th at 4 pm, for a live webinar. Don will discuss DLP Capital Partners’ proven investment strategies and how you can invest in Class B real estate without being a real estate expert. Get your questions ready and sign up today!