Interest Rates Rising
What Does It Mean For Landlords?
With the recent increase of interest rates this week by the Fed, and the promise to continue to raise rates 7 times this year, I want to address the question of, do interest rates directly impact investment property values? Additionally, is there a direct correlation between the Fed rate and the interest rate that a commercial bank charges for an apartment loan?
This week on The Apartment Dealer Show I address these questions and take an in-depth look at the structuring of a multi-family purchase/sale and how interest rates play a key role in an investor’s rate of return, and how rising interest rates create upward pressure on CAP Rates. (Upward does not mean a higher price in case you are wondering.)
There is no doubt that interest rates will continue to climb this year. In order to hedge inflation, the Fed has no choice but to act now and act swiftly. At the same time the Fed is in a precarious position as to not move rates too fast as to cause a recession, but at the same time not be passive to the point where we end with HYPER inflation.
The bottom line for multi-family investors is this shift we are experiencing impacts landlords of all sizes whether you look to purchase, sell, or hold investment real estate. Watch now and prepare yourself for the days ahead.
Video – CA Multi-Family 2022 Market Forecast
Playlist – Apartment Renovation Series