Created by Freddie Mac, AIMI (Apartment Market Investment Index) is a valuable tool designed specifically for the multifamily market. It combines key indicators to provide a unique snapshot of investment conditions across the United States and in major markets.
How Does AIMI Work?
At its core, AIMI compares rental income, the lifeblood of your investment, to the overall cost of investment. It factors in two crucial elements:
- Multifamily Property Price Growth: This reflects how quickly property values are rising.
- Multifamily Mortgage Rates: This represents the interest rate you’ll pay on your loan.
By analyzing these factors, AIMI reveals how investment conditions are evolving over time.
Learning from AIMI’s Insights
Take the example of Dallas leading up to the Great Recession: AIMI started dropping in 2004. This signaled a warning sign. Why?
- Rising Mortgage Rates: This made borrowing more expensive.
- Rapid Property Price Growth: This drove up the overall investment cost.
These factors combined meant that while rental income remained stagnant, the cost of investment was rising – a red flag for potential investors.
The good news is that AIMI can also identify opportunities. During and after the recession, AIMI rose. This indicated an improving investment environment. Why? Property values fell faster than income, making investments more affordable per dollar of rental income.
AIMI in the Modern Market
Post-recession, AIMI stabilized for a while as income grew steadily and mortgage rates declined. However, since 2016, it’s been trending downward. This suggests less favorable conditions due to high property price growth outpacing even strong income growth.
However, a ray of hope emerged in 2019. A significant drop in mortgage rates caused AIMI to rise. This is because lower interest rates translate to a lower cost of capital for investors.
The Power of Historical Comparison
AIMI allows you to compare historical values. For instance, the AIMI value in 2019 was similar to 2010. While the underlying factors used to calculate AIMI might differ, the index result paints a similar picture of market conditions.
The Final Word
While investors consider a variety of factors when making decisions, AIMI offers a powerful tool to analyze market trends and understand the overall investment environment. It also provides a sensitivity table, allowing you to see how variations in key drivers can impact the index value.
So, the next time you’re considering a multifamily investment, be sure to check out AIMI. It can be your quick and valuable guide to navigating the ever-changing multifamily market landscape.
Stay informed. Stay empowered. Stay with Liberty Capitus.
What’s your financial growth plan?
If it’s not apartment investing, listen up.
![The Blue Dot Effect [A Harvard Study] … and how it’s secretly affecting your investment decisions](https://libertycre.com/wp-content/uploads/2025/03/image-12.png)
