Shocking truth about future of multifamily
September 7, 2021
Great interview with Neal Bawa and other multifamily apt investor experts. Worth a view here:
To save you time, here are our key takeaways:
- Shockingly, out of ALL the money ever printed by USA, 40% of it ($10 trillion) as printed in the last 12 months; this (partly) explains Bitcoin and other alt assets price jumps
- So expect massive inflation…money is “Iike a genie..once let out of bottle (printed) it can’t be put back”. So expect inflation like the USA hasn’t seen since the 70’s
- We all know real estate esp. multifamily is a GREAT hedge for this inflation e.g. if you can borrow 70-80% mortgage at 3% fixed for 30 years and inflation is higher then that “liability” becomes an “asset” as inflation eats away at your debt for you for “free” while rents can be adjusted for inflation. Lovely.
- Bawa says can’t be conservative in underwriting deals as prices will claim higher and interest rates will rise. Lock it in now
- He prefers tertiary then secondary market as covid/work from home is here to stay and these markets have higher yields and demand
- Go for high interest only loans, esp. bridge loans
- ***Shockingly he suggests using flat entry and reversion
Do you agree, do you think multifamily apt buildings are a core (if not THE core) asset to go long for optimized risk-adjusted returns AND inflation hedge? Do let us know in the comments below.