Multifamily
Apartments
Residential buildings with 5+ units. The most accessible CRE sector for new investors, offering stable demand and manageable complexity.
What is Multifamily Real Estate?
Multifamily properties are residential buildings containing five or more dwelling units. This sector includes garden-style apartment complexes, mid-rise buildings, high-rise developments, and townhome communities. It's widely considered the entry point for commercial real estate investors due to its relative simplicity, stable demand, and manageable capital requirements.
Unlike single-family residential investing, multifamily is classified as commercial real estate because it involves multiple income streams and is valued based on income generation rather than comparable sales.
Key Characteristics
- Stable, recession-resistant housing demand
- Economies of scale in property management
- Multiple income streams reduce vacancy risk
- Lower capital requirements than other CRE
- Easier financing with conventional mortgages
- Intensive management and maintenance
- Higher turnover from tenant changes
Typical Returns
Cap Rate
4.5% - 7%
Cash-on-Cash
6% - 12%
IRR
10% - 16%