AREI 82: Inflation and How the Feds are Handling It with Suzy & Michael
In this episode, we talk about inflation and what the fed is doing to kind of curb inflation through quantitative tightening and our take on it from the articles that we've read. Disclaimer, Susie and I are not “learn it” economists, however, we do read economic information all the time because we find it very, very important to make sure that we have the correct fiduciary responsibility to our investors. Come join us and listen in!
In This Episode,
[00:01 - 00:43]
• Welcome to today's show.
• Why are multifamily assets such a good hedge against inflation?
[00:46 - 03:15]
• The Consumer Price Index was reported to be at 8.3%.
• Markets took a DUMP again.
• "Inflation Reduction Act" and how it will have little to nothing effect to stop inflation.
[03:18 - 05:11]
• Where are all these price hikes coming from? And what range they are in right now?
• Had inflation peaked and when will it moderate?
[05:14 - 11:29]
• How the FED is tapering the inflation through "Quantitative Tightening"
• The Good and the Bad, after increasing the US dollar value increased.
• Companies who do a lot of international businesses are greatly affected.
• Increase of the dollar and the devaluing of international currencies.
[11:32 - 14:19]
• Three things you can do as a multi-family investor or operator during high inflation.
• Secure a fixed-rate loan with a longer maturity date.
• Continue to increase rents as inflation drives them, but don't bank on it long term.
• Always underwrite conservatively, and focus on the rent growth and the exit price, because that is really where you win.
Memorable Quotes:
"We are seeing a cooling in the market right now. So make sure that you have your cap rates in line with industry standard. Increase in cap-rates by about 10 VIPs per year for the whole period is fairly conservative.
So if you buy it at a six cap, expect to sell it in five years at a six and a half cap. So that's 10 bases points per year." - AREI
Until next time…
Explore more. Adventure awaits.
