Monthly Newsletter: How Does High Inflation Impact Multifamily Investments?

Message From the CEO

Inflation is top of mind for consumers. You notice it when filling your car, going to the grocery store, eating out, or shopping on Amazon. With the current inflation rate ticking up to 9.1% as of June 2022, it directly impacts monthly budgets.

Higher prices may not raise concerns about paying for basic necessities. Nevertheless, they are probably impacting your investment portfolio. Inflation, in and of itself, does not cause the stock market to rise or fall. However, recession fears, decreasing demand for consumer goods and services, and the Federal Reserve raising interest rates tend to have a negative influence on stocks.

On the other hand, Multifamily housing does not move with the stock market and can perform well during inflationary times. Real estate derives its value from the actual property, capital improvements, and its ability to produce cash flow through rents.

When the economy retracts, consumers tend to eliminate discretionary expenses to ensure essential costs like food and housing get paid. Not only does housing demand remain steady in economic downturns, but it can also increase as home buying slows.

Although rising interest rates result in higher operating costs, short lease periods of one year or less allow us to raise rents, reflecting the increase in expenses. Another factor helping profits is fixed-rate loans that lock in borrowing costs. If rates fall during the hold period, we have the option of refinancing, which could result in a partial return of capital during the hold period. The above factors are a few reasons well-managed multifamily housing investments can thrive, even amongst record high inflation and rapidly rising interest rates.

With these concerns in mind, our most recent blog posts focus on the benefits of investing in real estate syndications and how our buying criteria mitigate investor risk.

Jeff McKee

P.S. 2022 is the last year the IRS allows 100% bonus depreciation, which could reduce taxable income. In 2023, the maximum bonus permitted depreciation is 80%. Then it drops to 60% in 2024.


The Benefits of Investing in Real Estate Syndications
With a recession knocking at our door, many investors are seeking investments that perform well during challenging economic times. While no opportunity is right for every situation, the benefits of real estate syndications could be the answer you are looking for. Read More.

How Real Estate Investment Syndications Work
Not everyone interested in real estate has the time and expertise required to identify and purchase properties with the highest profit potential. Real estate syndications may be a better option if you are more comfortable partnering with experts while providing capital. Learn more about how to add real estate to your investment portfolio through syndications. Read More

Guide to Investing in Commercial Real Estate Syndications
Commercial real estate syndications are an excellent choice for investors who want real estate in their holdings but do not want to put the time and effort into finding, buying, and managing the asset. If you are interested in real estate but want a passive approach, syndications may be the best investment choice. Read More.

Market and Buying Criteria Used by McKee Capital Group
With a focus on multifamily housing units in landlord-friendly states across the Southeast, we can consistently deliver above-average returns to investors. Using a conservative underwriting approach, we look for undervalued assets with value-add potential to drive profits. Our current portfolio consists of over 3,400 units and 250M in assets under management. Learn more about the vetting criteria in our latest blog post. Read More.

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