Investing in the most intense housing market anywhere...
A “multifamily” property is a housing structure occupied by multiple families. Obvious, right? Well everything gets less clear from there. In the Bay Area, multifamily properties are at the center of some of the most complex issues in any corner of the real estate industry.
The strict definition of a multifamily property is one that consists of five units or more. This is really for no other reason that the primary lenders Fannie Mae and Freddie Mac cut off their private mortgages for owner-occupied properties at four units. Conversely, the commercial lenders we work with typically won’t fund deals under five units.
That said, a multifamily property is really any multi-unit housing property intended to generate income rather than be personally lived in, and at NAI we’ve worked with two-unit duplexes, three top-floor units atop a ground-floor storefront, and everything all the way up to massive high-rises or resort-like complexes.
In virtually any other geographical area, the biggest threat to a multifamily investment is the development of new housing. An old property may appreciate less after newer properties flood the market. But in the Bay Area, we can’t seem to build enough housing fast enough, and no matter how many new units come onto the market, existing properties still gain value.
Our region is in high demand. People come from around the world specifically to live and work here. This has led to a tug-of-war between market forces driving prices and rents higher versus sociopolitical responses seeking to enforce rent controls, protect tenants, avoid displacement, address growing homelessness, and stave off a housing crisis.
This is why we’re here. Finding or selling a property is only a small part of our investment advisors’ role. Their true value comes from their awareness of the full landscape around housing in Northern California. When it comes to the countless questions a property owner or buyer might face, they know how.
