In Search of Yield, More Multifamily Investors Explore Affordable Housing, Smaller Markets

In a competitive market for multifamily acquisitions, more investors are looking at niche plays.

In late August, investment firm Starwood Capital Group bought 21 affordable housing properties in Florida and Texas containing a total of 4,448 apartment units. According to Mark Keatley, managing director at Starwood Capital, the firm is “confident this portfolio is well-positioned to deliver attractive risk-adjusted returns to our investors.”

That statement is particularly relevant today because many investors are having a hard time finding apartment properties that they can buy at prices low enough to give them an attractive risk-adjusted return. They continue to buy billions of dollars in U.S. apartment properties, however. To make these deals work, a growing number of investors are putting their money into higher-yielding property sub-types, including affordable housing and apartment properties in secondary and tertiary markets, according to Brian McAuliffe, president of capital markets with real estate services firm CBRE.

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