Unlocking Hidden Goldmines: Why Now Is the Perfect Time to Dive Headfirst Into Multifamily Investments (We’ve Already Started)
Dave:
Time. I think it’s exactly what you said. You just have to match the debt to the business plan that you have. I invest in syndications that use short-term debt in commercial properties because a value add project that’s going to sell in three to five years, like that I’m okay with, but for me, what I’m looking to acquire right now as I’m trying to pick up 10 to 20 units in the next whatever, six, 12 months in multifamily that I’m going to hold onto for 30 years. And to me, yeah, there’s a chance cashflow might be better in the next seven years if I take a variable rate, but frankly, I’m going to keep working the next seven years. I don’t need the cashflow. I would rather just lock in a rate and know that that is my rate until I retire, and then it’s going to be paid off.
And that’s that. And I’m in a fortunate financial position where if that means I have to put 30% down or 35% down to carry it in the short term, I’m willing to do that. But that just better suits the business model that I’m looking for for this particular unit. That’s what this group of properties I’m trying to acquire, that’s the purpose it serves in my portfolio and I need to find the right debt for that. And I just wanted to call that out because I think a lot of people are looking at multifamily and seeing exactly what Kathy’s saying and seeing, hey, values are down, and that is true. There are good deals now and there are going to be a lot more good deals. I think that’s just clear. But don’t just jump into it and make the same mistake that some of these operators made, which is just taking on short-term debt without considering how risky debt can be when it’s variable rate in commercial real estate. It’s just a different, more risky endeavor than residential.
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