What Inflation & Rising Interest Rates Mean to Multifamily Real Estate

Have you ever wondered what the rising interest rates mean for multifamily real estate investors? For the consumers, the increase is bad news, but for investors - it can be a chance to profit!?

Rental Demand?

Rising interest rates on mortgages result in many people being unable to buy a home or maybe even unwilling to spend the money while prices are high. So, these people turn to their last remaining option - multifamilies, which spikes up rental demand. Realpage has found that around 57% of multifamily renters decided to renew their leases this past April, showing a trend of high rental demand. This trend will remain as long as the interest rates are high.?

The Benefits for Multifamily Investors

So, what are the benefits for multifamily investors in the rising inflation and interest rates? Well, besides the obvious advantages of having more tenants in our rental properties, there are some other upsides. Most notably, the economic turmoil creates great buying opportunities for us - deals that were under contract previously are returning with reduced prices due to the buyers’ contracts being dependent on financing. The latter came back with higher rates and the deal fell off because of these higher rates, among other reasons. Price reductions are significant - from 10% to 15% and multifamily cap rates have increased up to 50 basis points! And since our business model is more liquid and we can close faster, we can negotiate a lot more with the seller and get a bargain.??

Now’s the best time to invest in multifamily real estate and if you want to profit with us, get in touch!