Family Offices Directly Investing in Multifamily Residential Properties

Benefits of Investing in a Multi-Family Property

For investors seeking real estate investment opportunities to grow monthly income and long-term wealth, multifamily property investments are a great option for several reasons. Multifamily residential real estate continues to be a solid investment for those seeking to build capital over the long term, as they typically accumulate wealth faster than single-family homes and are less complicated than investing in office space, retail, hotels, and other property types. Listed below are some of the additional benefits. 

- Cash Flow & Tax Benefits: Ample cash flow, appreciation of assets and tax benefits

- Leverage & Control: Allows investors to manage a greater number of assets with significantly less of their own capital

- Scale Faster: Achieve scale faster by acquiring a multi-family residential property versus single-family rental units

- Easier to Finance & Less Risk: Higher cash flow and the lowered risk of a vacant building mean less risk for the lender

- Community Improvement & Growth: Adds value to communities by providing a quality rental option with the opportunity to provide affordable housing

What Makes Multifamily Residential Real Estate an Attractive Investment for Family Offices? 

Multifamily residential properties have long been a favored investment of family offices because they produce high risk-adjusted returns over the long term as compared to other property types. According to Evergreen Property Partners’ annual survey, multifamily residential apartments have extended their lead as the top real estate investment option for family offices.

Now, more families that generated their wealth through other industries and sectors are allocating capital towards real estate, allowing them to create and maintain wealth for generations to come. Since the start of the pandemic, banks have pulled back on lending for many early development projects, and family offices are stepping in to help bridge the gap.

Regional Breakdown 

Geographic location often plays a significant role in the investment preferences of family offices. Throughout our research we have found that 61% of total family offices live in North America, 27% live in Europe and 12% are throughout the rest of the world. Here, you can see that 70% of family offices interested in multifamily residential properties are based in North America, followed by Europe at 27%. 

Asset Class Interest Breakdown 

Asset allocation can be a key determinant for total return potential and risk characteristics. Throughout our research, we found that 56% of family offices invest directly, while 81% of family offices invest in private equity. Additionally, 65% of family offices allocate to real estate.

Most asset class interests align with the family office landscape. However, it appears direct investments continue to be the most popular regarding family offices investing in multifamily residential real estate at 96%. Next is private equity at 82%, venture capital at 48%, hedge funds at 32%, long-only at 28%, and fund of funds at 11%.

Assets Under Management Breakdown

Here, we outline the assets under management (AUM) breakdown of family offices that have directly invested in multifamily residential properties.

The most prevalent among this sample size are family offices with AUM between $400M-$1B at 28% followed by those with AUM between $50M-$100M at 19%.

Next are those with AUM between $100M-$400M and those with AUM between $1B-$1.5B at 15%, respectively.

Industry Origin of Wealth Breakdown

FINTRX data shows that 19% of total family offices made their wealth in real estate. About 25% of total family offices made their wealth in private investing, 8% of total family offices made their wealth in retail, and 11% made their wealth in the technology space.

Here we provide the top five industries regarding industry wealth origin of family offices investing in multifamily residential real estate. 

Real estate leads the group at 59%, followed by private investments at 22%, financial services at 14%, retail at 8%, and technology at 7%.

Direct Transactions

Direct investments continue to gain traction throughout the family office space, particularly with regard to single-family offices. Over the past decade, family offices have accumulated the assets and talent required to allocate capital directly into the private space.

Data here shows the percentage of multifamily residential family office investors that directly invest in a specific sector out of the total number of multifamily residential family office investors. 34% of multifamily real estate investors also invest in technology, 32% invest in consumer goods, 30% take interest in the financial services space, and 29% of this specific subset directly invest in business services.

Conclusion

FINTRX provides comprehensive data intelligence on 850,000+ family office & investment advisor records, each designed to help you identify, access, and map the private wealth ecosystem. Explore in-depth dossiers on each family office and investment advisor. Access AUM, source of wealth, investment criteria, previous investment history, sectors & industries of interest, and advisor growth signals amongst other key data points.