If you’re like many multifamily owners in Oregon right now, you’re torn due to the changes related to rent caps as well as the new screening laws that were passed in Portland. Many investors are wondering about increased government involvement and how that will impact their relationship with their tenants. I sense that some are frustrated but don’t know what to do, so they are taking a “wait and see” approach.
Wait and see might not be best option, however. It’s possible that neglecting to explore all of your options right now could come back to bite you down the road. Real estate prices remain strong and capital is flowing freely right now, but many leading analysts anticipate that we are near the end of an economic cycle and could be headed into a possible recession soon. That means that interest rates will go up and lenders will require more money down to meet their debt coverage ratio. This will also kick some buyers out of the buying pool because they will lack either the down payment or the liquidity requirements after the deal closes.
This article provides some good information that you might want to read if you are considering making a change and thinking about how quickly you might need to do it:
Commercial real estate pros remain confident in their readiness for an economic downturn, and they might be tested sooner rather than later. The monthly yield curve between three-month U.S. Treasury bills and 10-year Treasury notes inverted for the first time this economic cycle, Cushman & Wakefield found in a new report.
The article provides insight into the inversion of the monthly yield curve between three-month U.S. Treasury bills and 10-year Treasury notes, and the link that is often found between that inversion and a recession starting between 5 and 18 months later.
However, as Cushman & Wakefield’s latest report notes, “There is no recession today, nor is one likely to arrive any time soon. GDP growth is expected to end the year at 2% to 2.5%, and we anticipate commercial real estate market performance will remain strong.”
When it comes to you real estate investments, thinking ahead and preparation are always a good idea. It’s important to remember that no one anticipated the last recession—not even Alan Greenspan. Call me if you would like to discuss your options. The professionals at Pacwest Commercial Real Estate are Eugene multifamily experts. We can be reached at 541-912-6583.
Link to original article here.