Wisrem Commodity Trading and Investment Consulting

Executive Summary

The US multi-family real estate sector demonstrates remarkable resilience as we emerge from the COVID-19 pandemic. Accelerating migration to sunbelt states, remote work flexibility, and demographic shifts create compelling investment opportunities for institutional and individual investors alike. Our analysis identifies key markets and investment strategies for 2021-2023.

Market Performance 2020

COVID-19 Impact Assessment

The pandemic created unprecedented challenges but revealed the fundamental strength of residential real estate:

Rent Collections: Stabilized at 95.7% by Q4 2020, exceeding worst-case scenarios
Occupancy Rates: National average of 95.1%, down only 80 basis points year-over-year
New Supply: 340,000 units delivered in 2020, 15% below 2019 levels
Transaction Volume: $93 billion in sales, down 30% but recovering strongly in Q4

Multi-Family Rent Growth by Region (2020-2021 Forecast)

Sunbelt Markets (Phoenix, Austin, Tampa) +4.8%

Secondary Markets +2.1%

Gateway Cities (NYC, SF, LA) -2.3%

Source: CBRE Research, CoStar, Real Capital Analytics

Key Investment Themes

1. Sunbelt Migration Acceleration

Remote work flexibility triggered unprecedented population shifts from high-cost coastal cities to affordable sunbelt markets. Key beneficiaries include:

🌵 Phoenix, AZ

• Population growth: +2.5%
• Rent growth forecast: +5.2%
• Average rent: $1,285/mo
• Cap rates: 5.0-5.5%

🎸 Austin, TX

• Population growth: +3.1%
• Rent growth forecast: +6.8%
• Average rent: $1,485/mo
• Cap rates: 4.5-5.0%

🌴 Tampa, FL

• Population growth: +2.8%
• Rent growth forecast: +4.5%
• Average rent: $1,380/mo
• Cap rates: 5.2-5.7%

2. Suburban vs. Urban Dynamics

The pandemic accelerated existing preference shifts toward suburban locations offering more space and amenities. Investment implications:

Garden-style apartments: Suburban properties with outdoor space commanding rent premiums
Urban core challenges: High-density gateway cities face 12-24 month recovery timeline
Lifestyle amenities: Home offices, outdoor spaces, package lockers becoming essential

Investment Fund Strategies

Pooled Capital Structure

Multi-investor fund models offer optimal risk-adjusted returns in the current environment. Recommended structure:

Fund Parameters

Minimum Investment

$50,000

Target Fund Size

$15-25M

Target IRR

14-16%

Hold Period

5-7 years

Asset Selection Criteria

Market Selection: Focus on sunbelt markets with population growth >2% annually
Property Class: Target B+ to A- properties offering value-add opportunities
Unit Mix: Emphasize 2-3 bedroom units aligned with remote work demand
Age/Condition: Properties 10-25 years old suitable for renovation/repositioning
Leverage: Conservative 60-65% LTV to maintain downside protection

Risk Considerations

Key Risks to Monitor

✓ Supply Pipeline: Some sunbelt markets have 24+ months of inventory under construction
✓ Interest Rate Risk: Rising rates could compress cap rates and valuations
✓ Economic Recovery: Employment growth critical to sustained rental demand
✓ Eviction Moratoriums: Policy uncertainty affecting rent collections
✓ Competition: Institutional capital increasingly targeting same markets

Conclusion

US multi-family real estate presents compelling investment opportunities in 2021, particularly through pooled investment funds targeting high-growth sunbelt markets. The combination of demographic tailwinds, limited supply, and structural demand shifts creates favorable conditions for value creation over a 5-7 year hold period.

Our recommended approach emphasizes geographic and property type diversification, conservative leverage, and active asset management to capture 14-16% target returns while managing downside risk. The sector's demonstrated resilience through the pandemic reinforces its position as a core institutional real estate allocation.

US Multi-Family Real Estate Investment Outlook 2021: Post-Pandemic Recovery