During the boom in multi-family housing, we have seen a large compression in what we consider very aggressive cap rates. Why is this happening? The Fed continues to keep rates artificially low in an effort to stimulate the economy and promote growth in gross domestic product (GDP). Many investors are left to wonder what all of this means for them, especially as it relates to multi-family property investment.
That said, these low rates make the multi-family market – which currently yields a much better return on investment (ROI) than almost any other product – attractive to investors. Not only will low interest rates make multi-family real estate the favored product, but in select markets, the high demand and low supply will also give investors better operating fundamentals and returns. The key will be, picking the “right” markets.
Read more...M-F Investment: Are Caps Rates the Best Indicator in Today’s Market? | Commercial Property Executive
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