Why Now Is ‘THE’ Time to Invest in Multifamily Real Estate

I've been somewhat hesitant to disclose my thoughts on this particular subject. The reason? I'm convinced that we're standing on the brink of the most exceptional opportunity to invest in multifamily real estate, and I didn't want to reveal all my secrets prematurely.

Disclaimer: I don't have a crystal ball. Circumstances can change, and this isn't advice — but this is precisely what I'm preparing for personally.

My Start: The Best Time Nobody Believed In

My real estate journey began in 2009, during the housing crash. I started as a mortgage broker and then began investing in single-family homes. Everywhere I turned, people told me I was crazy. Some literally laughed in my face. But their skepticism only strengthened my conviction that I was entering the market at the perfect time.

It's easy to quote Warren Buffett: “Be fearful when others are greedy, and greedy when others are fearful.” It's something totally different to actually execute that in real life. When I made my first $20k from a house flip, I wanted more fast. But in retrospect, my haste cost me — those properties I sold for a quick profit doubled in value over time, leaving a massive opportunity loss. By taking my $20k payday right away, I left another $100k on the table. As the years passed, I calculated the millions left behind due to lack of patience and knowledge. I told myself I would be 100% prepared the next time a golden opportunity presented itself. That time has finally come.

The Multifamily Debt Cycle: A Tidal Wave of Opportunities

In 2020, when I was actively researching and buying multifamily properties, the market seemed reasonably priced. Then COVID struck, stimulus checks poured in, and everything changed. People had free money to spend, prices soared, and cap rates became irrational. Banks provided seemingly unlimited funds, so almost anyone could get a loan for multifamily. (Does this sound familiar? Like the lending practices before the ‘08 housing crisis.)

During this time, I attended roughly 100 webinars with syndicators raising money for multifamily projects. Out of those, we didn’t invest a single dollar. Each investment hinged on everything unfolding perfectly — rents continuing to rise, cap rates staying low, interest rates staying low. If you’ve ever purchased a property, you know “everything going perfect” is riskier than it is realistic.

Most of those deals did close, mainly through bridge loans, locking in rates for 2–5 years, with projected exit cap rates in the low 4s. Now, as those deals near maturity, they’ll need to sell or refinance. The expected massive payday is here, but the economy looks nothing like they imagined. As many deals struggle to meet their overambitious projections, new opportunities are emerging. The market is switching from favoring sellers to favoring buyers.

The Shift in Real Estate Investments

Office building investments have taken a significant hit, inevitably dragging down the overall commercial real estate market. This downturn unveils unique opportunities as investors seek alternative assets. Three main options have emerged: warehousing, assisted living, and multifamily. COVID fast-tracked the remote work era, and suddenly, once-attractive office spaces became undesirable. Office investors now face challenges, with some defaulting on loans. Interest rates have nearly doubled, rents have fallen, and occupancy rates are abysmal.

Two things happen as a result. First, lenders become increasingly cautious — they must reevaluate portfolios and tighten lending practices, slowing the market and forcing sellers to reduce prices. In 2021, submitting an offer required at least $100k in non-refundable earnest money on day one. Now, brokers are contacting potential buyers months after offers were due, attempting to generate any interest. Second, investors redirect their funds — many who once favored office spaces still need the growth and tax advantages of real estate, but they're steering clear of office. They're moving into long-term, stable asset classes like multifamily. Whether it happens in 6 months or 2 years, billions of dollars will flow into alternative assets, creating a surge similar to 2021 — where more money chases fewer investments, pushing prices up.

On Timing the Market

Wise investors know you can’t time the market. Yet emotions tell us to buy low and sell high. Historical data shows most investors sell right before markets go up, then buy right before the market falls. Enter FOMO — the instinct to follow the crowd. But this article is not saying to time the market. It is always a great time to buy multifamily. Now is just the best time in a long time.

There are really only two ways to avoid mis-timing the market: fight all your natural instincts (virtually impossible), or completely forgo the idea of timing. We simply adapt our strategy based on current conditions. In a buyer’s market, be cash-heavy to execute quickly. From the beginning, our strategy has been to buy every property at a 15–20% minimum discount of current values. We then stabilize the property and generate cash flow while waiting for the right time to refinance and lock in long-term, low rates.

Interest Rates in a Volatile Economy

One thing is certain: the immediate future will be bumpier than smooth. We’ve already seen banks fail, lenders tightening restrictions, and inflation continuing despite rate increases. Something has to give, and the economy will eventually ‘break.’ Even the Federal Reserve acknowledges this — referring to it as a “soft landing.” Historically, the Fed’s primary weapon during tough economic times is cutting interest rates. We don’t know when, but we know rates will drop. When rates drop, more buyers come to the table, forcing values to rise. Even if we’re currently paying higher rates, we won’t be stuck with them forever. When rates drop, we’ll be ready to refinance, locking in 10-year fixed loans at the new, lower rates. Lower interest rates typically correlate with higher property prices — the perfect recipe to maximize appraised values, pull out capital tax-free, and lock in a new rate for the next decade.

In the past century, the longest recession was the Great Depression at 43 months — before the Fed had today’s tools. Since then, the longest has been the 18-month downturn during 2008. Regardless of whether the current recession ends in 2 months or 43 months, tough times don’t last forever. The buying opportunity a recession offers is rare, occurring maybe only a few times within an entire lifetime.

People literally laughed in my face when I started buying single-family properties in the midst of the Great Recession. The years following that laughter saw home values rise 130% — the greatest increase in U.S. history. Had I let emotions guide my decision, I would have missed the greatest opportunity for wealth creation in my life.

Until now.