Multifamily Real Estate as a Wealth Preservation Strategy

Investors have been experiencing much volatility in the stock market in 2022. A global pandemic that has persisted for two years, global political instability, and upward movement of inflation and interest rates in the United States have all contributed to fluctuations in the market. As of mid-February 2022, the S&P 500 was down 8.3% year to date, while the Nasdaq was down 12.3% year to date[1].

What do many investors do during a volatile market once they see some loss in the value of their portfolios? Some may have purchased near the top of the market, so then they flee the stock market during the lows, only to have the despair over losses turn into a buying frenzy on the next upswing. Investors riding this roller coaster often don’t have the most successful outcomes they are craving. Instead, investors should diversify their portfolios to be able to ride the market cycles more smoothly and potentially find steady gains, particularly if the goal is retirement planning or long term wealth preservation.

As part of a diversified portfolio, investors may wish to begin to make or seek to increase investments in hard assets such as gold and other metals, oil, agricultural products, and real estate. This article focuses on why real estate investments, and in particular, multi-family real estate investments, should be considered during a time of stock market volatility.

Although real estate investments are often not as liquid as other types of investments, this strategy can match well with an extended timeline desired for retirement investing. Real estate tends to appreciate over the long term, so the longer this type of investment is held, the greater potential for return. Multifamily real estate investments often provide a steady stream of passive income. There are tax advantages as well, including depreciation benefits, 1031 exchange opportunities, and tax shields for heirs upon inheritance of assets.

The outlook for investing in multi-family real estate is positive for 2022. CBRE Group, the largest worldwide commercial real estate services company, predicts a “record 2022” for the multifamily sector with an expectation of “multifamily occupancy levels to remain above 95% for the foreseeable future and nearly 7% growth in net effective rents next year.”[2] The volume of investment in multifamily real estate is projected to be “at least a 10% increase from 2021 to $234 billion.”[3] With this forecast of high levels of occupancy and increases in rent, investors would find multifamily investment opportunities to be an especially smart choice for portfolio diversification, protection against market volatility, and a long term strategy for wealth preservation.

How can Sequoia help with multifamily real estate investments?

With over 35 years of experience, Sequoia Equities has extensive knowledge of the multifamily real estate market and its benefits for investors. At Sequoia, we know the importance of focusing on the individual needs of our investors. We are always ready to assist our clients with any questions they may have regarding opportunities and advantages of investing in multifamily real estate. Learn more about Sequoia by visiting https://www.elevatetosequoia.com/ or contacting us directly at BizDev@SequoiaEquities.com

[1] Stock Market Volatility: Schwab’s Quick Take, 2/17/2022, https://www.schwab.com/resource-center/insights/content/market-volatility [2] CBRE U. S. Real Estate Market Outlook 2022, https://www.cbre.com/insights/books/us-real-estate-market-outlook-2022/multifamily [3] Ibid.