EFFECTS OF INFLATION ON APARTMENT COMPLEX EVALUATION
Let's talk about the effects of inflation on apartment complex evaluations and let's see if we can do in about 1 minute.
So we know that rent track inflation, so rents are going to be going up, which means the income for the properties are going to be going up.
We also know expenses are going to go up because everything is going up.
But because of the proportion of income to expenses on apartment complexes, overall the income side is going to win out.
And so the overall evaluation of your apartment complex will be up now.
If you're concerned about the increased cost of loans, that's a real thing.
The Federal Reserve has raised interest rates, so if you're getting a new loan, you have to account for that.
If you're buying something new, if you're already in something, if you already own something, it shouldn't affect you because hopefully you locked in that interest rate.
I think most people did.
We were at historic lows.
Why wouldn't you? So, but if you're buying something new, you can take advantage of that because there are a lot of assumable loans out there where you can assume those older loans that had that locked in interest rates.
Also, sellers are becoming more flexible.
You might be able to get some seller financing or they might come down on the price a little bit.
And banks are extending interest only periods.
So you could get a long interest only period and then when interest rates come down, refinance.
And you haven't been paying principal in the meanwhile, so you're still cash flowing.
So lots of flexibility, lots of ways to still make great money in this hard asset during inflationary period.
To learn more, check out my video called inflation.
Is it a bad thing?