times but actually remain profitable. A multifamily property can see income returns from rent payments, parking, and other fees associated with the property, and that’s not taking into account any appreciation of value. Then, there is the actual effect that inflation has on the multifamily market, which some may find surprising. With an economy that has rising inflation, the higher prices of goods and services tend to cause the prices of homes to rise as well. As previously mentioned, the simple fact that people will always need a place to live, and if increased home costs put purchasing a home out of reach for consumers, then the multifamily market sees an increase in rental demand.
As counterintuitive to an inflated economy as it may
investments in your portfolio. Morality aside, an economy with increased inflation seems to only benefit the savvy multifamily investor through secure income sourcing, increased demand, and the ability to raise rent prices to exceed any increase in expenses. Not to mention that a significant portion of apartment financing utilizes a fixed-rate loan structure, making monthly payments predictable and unaffected by the state of the market. All in all, the multifamily market space is truly one of the strongest pillars of the United States economy for a reason.
come across from the consumer standpoint,
higher rental demand also means that the asking rate for rent can also increase. This is a crucial factor to multifamily investments being a hedge against inflation. Increasing the rent ask serves to offset the increased operating costs and expenses, which then cushions the investor against loss. In addition, higher rental rates sometimes lead to an increased value of the asset itself, further providing financial security during such a strenuous economic period. While some may hope multifamily investors don’t get too eager for inflation to rise, it’s definitely not something to worry over if you have strong multifamily
Matthew Sloley Head of Content Janover Ventures matt@janover.ventures
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