One vacant apartment in a 40-unit building represents 2.5% of the property. A slow turn or weak renewal can move the economics quickly, making operating discipline unusually visible at this scale.
Family offices are taking on more of that exposure directly. The 2026 North America Family Office Report by Campden Wealth found that direct investments now account for 45% of the average private-markets portfolio among respondents, ahead of funds at 36%. Direct investing also featured prominently at Opal Group's Family Office & Private Wealth Management Forum we attended in Newport this July.
Real estate fits the instinct for control particularly well. Families can choose the asset, shape the hold period, and see where capital is being spent. On a smaller apartment property, however, ownership becomes unusually sensitive to execution. A 40-unit building rarely has enough scale to hide weak leasing or sloppy expense control.
Direct Ownership Comes With an Operating Job
Control is a large part of the attraction. A Family Office Survey by Knight Frank found continued appetite for direct real estate ownership, with families drawn to the ability to shape strategy and retain the economics of the investment.
Removing a fund layer leaves the property-level work intact. Someone still has to decide how aggressively to price a renewal, whether a vacant unit needs a faster turn, and which repair deserves capital now. Those choices eventually show up in net operating income.
Direct investing already takes up a meaningful share of family office resources. Deloitte found that family offices spend 22% of their time on direct investing and another 30% on portfolio management. Real estate pushes that involvement closer to the asset, where performance continues to be shaped long after the acquisition closes.
Small multifamily makes that connection unusually visible. Returns often depend on ordinary operating decisions repeated well, with little distance between a leasing mistake and the property's cash flow.
Forty Units Leave Little Room for Drift
In a 40-unit building, every apartment represents 2.5% of the property. A handful of unexpected vacancies can therefore move occupancy quickly. One slow turn matters more than it would in a 300-unit community, and a weak renewal season reaches the income statement sooner.
Rent fluctuations carry the same weight. An additional $100 per month across 40 occupied units equals $48,000 of annual gross rent. Missing the same amount because leases were priced poorly has the opposite effect. Small changes compound because the asset has fewer units over which to spread them.
Expenses behave differently at this scale as well. A large unexpected repair can absorb a meaningful share of annual cash flow, while recurring inefficiencies have fewer units to dilute their impact. Local oversight becomes critical because the owner cannot rely on portfolio scale to smooth every miss.
The attraction of small multifamily is partly rooted in the same feature. Better execution can reach the bottom line quickly. Faster turns, disciplined renewals, and tighter vendor management can improve income without waiting for a major redevelopment or a dramatic change in the market.
Control Works Best With Local Execution
Direct ownership can stay lean when day-to-day execution sits with the right operating partner. Clear accountability matters because the asset still lives or dies on leasing, capital decisions, and expense control.
A third-party manager can handle day-to-day operations. An experienced local partner, on the other hand, keeps the business plan tied to leasing conditions and property-level performance. The family office retains visibility and decision rights without turning every vacancy or repair into an internal task.
Alignment matters most when the asset is too small to justify a large internal team and too operational for passive oversight. Reporting can show occupancy and collections after the fact. Strong asset management identifies the causes early enough to change the outcome.
For family offices pursuing direct real estate, small multifamily can offer control, durable income, and a clear path to value creation. The same characteristics make the operating partner consequential. At Gilberti Group, we believe direct investors should know exactly where returns are expected to come from and who is responsible for producing them at the property level.
To discuss direct multifamily opportunities and Gilberti Group's operating approach, schedule a conversation with our team.
