Cash flow from multi-family

Before we get into this article let me outline that this article is not about the last 6-months of the market. I realize for many investors (read: all?) cash flowing deals have been few and far between over the last while. But that doesn’t negate the fact that multifamily, when purchased correctly, are a leader in cash flow. In fact, in recent years, multi-family real estate investment properties have proven to be a leading asset class in terms of historical cashflow growth. From 2000 to 2022, the average rental price in Nova Scotia (Nova Scotia is one of our beautiful east coast provinces, for all our American or overseas readers) has consistently increased, resulting in a steady increase in cashflow for multi-family property investors.

According to data from the Nova Scotia Association of Realtors, the average rental price for a multi-family property in Nova Scotia in 2000 was $1,200 per month. This number has steadily increased over the past 22 years, reaching an all-time high of $2,100 per month in 2022. This represents a 75% increase in rental prices over the past 22 years, indicating a strong and stable demand for rental units in the province.

In addition to increasing rental prices, the sale price of multi-family properties in Nova Scotia has also seen significant growth. In 2000, the average sale price of a multi-family property in the province was $200,000. This number has also steadily increased over the past 22 years, reaching an all-time high of $500,000 in 2022. This represents a 150% increase in sale prices over the past 22 years, indicating a strong and growing market for multi-family properties in Nova Scotia.

This growth in both rental prices and sale prices has resulted in a significant increase in cashflow for multi-family property investors in the area. In 2000, an investor who purchased a multi-family property for $200,000 and rented it out at the average rental price of $1,200 per month would have a monthly cashflow of $1,000. Fast forward to 2022, and that same investor who purchased a multi-family property for $500,000 and rented it out at the average rental price of $2,100 per month would have a monthly cashflow of $1,800. This represents an 80% increase in cashflow over the past 22 years. Combine that with load pay down and that cash flow increases. 

These numbers demonstrate the strong and consistent growth of the multi-family real estate market in the province over the past 22 years. Not only have rental prices and sale prices seen significant increases, but this growth has translated into a steady increase in cashflow for multi-family property investors. This makes multi-family real estate investments a leading asset class, as they offer not only the potential for strong returns, but also the stability and security of a consistently growing market.

While this highlights a single area in Canada, the same can be said across the country. Obviously prices have increased along with rents. A buy-and-hold strategy would not only generate increasing returns but also an increased net worth. As the equity in a property grows it can be leveraged to purchase more properties that cash flow. It’s the winning formula that shows that multi-family real estate investments are still a leading asset class due to their strong historical cashflow growth. This growth, over the past 20+ years, combined with the stability and security of a consistently growing market, make multi-family investments a top choice for investors looking to maximize their returns.