The 1 Housing Market Trend Grant Cardone Is Capitalizing On — Should You, Too?

Grant Cardone standing outside.
©Grant Cardone

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The prices of multifamily homes are declining and have been since 2022. Though some investors would see this as a sign that multifamily assets are not a hot commodity, that’s not how Grant Cardone is looking at it.

A correction is forecasted for multifamily structures, and Cardone is betting on it. His company, Cardone Capital, has invested close to $1 billion in multifamily acquisitions.

For those looking to invest in real estate, are multifamily homes the smartest move? GOBankingRates sought out experts to find out the pros and cons of buying multifamily assets right now.

Pro: Prices Are Some of the Lowest They’ve Been in Years 

Jonathan Campau is the CEO and founder at Luxuri, a premier luxury real estate and lifestyle brand, and said Cardone is not wrong to jump on these low sales prices.

“Prices are dropping in ways we’re not seeing in single-family [homes], and a lot of sellers are finally adjusting their expectations,” he said. “In some cases, you’re looking at 10%-12% lower than what properties would’ve gone for maybe a year ago, and that opens the door to some serious deals.

He added that this is a “unique window” to buy if you’re in a financial position to do so.

Con: Interest Rates Are High 

Though prices are low, interest rates have gotten higher, which is something buyers will have to grapple with. Gone are the days of 4% rates we saw in 2020 and 2021. On average, 30-year mortgage rates were hovering near 6.71% in April, which was an increase from March, Business Insider reported.

Campau warned buyers that they should take the future of interest rates into account. “It’s a mix of factors, because interest rates went up fast, there’s been some overbuilding, and there’s a ton of debt coming due over the next couple years,” he explained. “That’s creating pressure, especially on owners who can’t refinance easily.”

Pro: Multifamily Homes Are Predicted To Yield High Returns

Experts say multifamily properties are going to bring decent returns in the future. So, if you can confidently make the investment now, it could set you up for success for years to come.

“Broadly speaking, multifamily properties are expected to see strong rent growth in the coming years, because new supply is going to decrease due to fewer construction starts and demand in the sector is forecasted to remain strong,” said Will Matheson, co-founder and managing partner at Matheson Capital.

Con: Ongoing Maintenance Is Higher Than Single-Family

When comparing means of passive income, multifamily assets aren’t necessarily that passive. There’s a lot of upkeep, which can be both expensive and time-consuming.

“Due to the complexity, it may be better to invest as a limited partner with operators who oversee the properties for investors,” Matheson said.

Sources

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