Ten years ago, investing in multifamily real estate was less like growing your capital and more like trying to survive in the Wild West. “You didn't know what was going on in the market, what supply was, and what demand was,” says Jim Hurley, portfolio manager for the California State Teachers' Retirement System. “It was more an attitude of ‘build it and they will come,' rather than where we are today, which is based on discipline from the equity providers and lenders.”

In this more financially responsible environment, investors have increased their commitment to apartments. The primary reason for this: openness. “The securitization of real estate provided some transparency and market data,” Hurley says.

This increased availability of information has made multifamily an attractive investment for others. This, according to Jeff Allen, president of J. B. Allen Realty in San Juan Capistrano, Calif., is the main reason for the growth of apartments as an investment vehicle. “Institutional investors have realized that on a risk-adjusted return basis, apartments have provided the best returns and the least amount of risk over virtually any period of time,” Allen says.

Another reason for the rise of multifamily: The shaky stock market and corporate corruption of the past few years, which has brought even more private money and pension funds into apartments. “Investors have become very wary of the stock market,” Allen says. “Real estate, I think, has benefited from that. If you look at the flow of money out of pension funds into various assets classes over five years, an ever increasing flow of pension fund dollars are flowing into real estate as an asset class.”