Monthly Newsletter – March 2022

Message From the CEO

Over the years, working with investors and potential investors, I have discovered commonality among many of the questions potential investors have regarding real estate syndications.

To address this need, I added a blog under the resource tab on my website. In addition to posting to the website, this monthly newsletter will provide a way to quickly review the most recent articles.

If you are interested in learning more about commercial real estate investing, real estate syndications, and adding depth to your portfolio through multifamily properties, these topics will address the most frequently asked questions.

Jeff McKee

World Events Impacting Commercial Real Estate Investments: Russia’s Invasion of Ukraine

On the 24th of February 2022, Russia invaded Ukraine, dominating headlines over the past two weeks. The world responded by condemning Russia, cheering on Ukraine, and opening doors to the millions of refugees it created. With no end in sight, the economic impacts will continue to ripple across the world.

Rising gas prices became the first and most obvious consequence of war. Russia produces an estimated 9.7 million barrels of oil per day. If the US stops buying oil from Russia because of the conflict, we could see prices continue to climb for the foreseeable future especially as the US seeks to ban importing Russian oil.

Inflation was already at the highest level since the 1980s. The war in Ukraine is likely to exasperate the situation. Higher oil prices impact the cost of all goods because of higher transportation costs. It will also drive up electric and home heating costs, swelling inflation to even higher levels. The Federal Reserve is expected to raise rates in March 2022 and has signaled that it will continue to mitigate inflation through interest rate adjustments.

The market’s reaction to the war has been increased volatility and sharp declines. The Dow lost 700 points the morning after the invasion. The S&P fell by 1.3% the first week of March, with the Nasdaq losing 2.8%. Market rallies have been short-lived as tension and uncertainty rule the day.

Market volatility, higher inflation, and rising interest rates will directly impact commercial real estate investments.

In many cases, multifamily properties in the right location can be an excellent way to diversify market holdings and serve as a hedge against inflation. Multifamily units tend to have short leases renewed annually, allowing managers to make cost adjustments to rental rates in line with market trends. So, while rising interest rates increase the cost of borrowing, higher rents tend to offset those costs. Real estate also tends to be less volatile than the stock market, which can be beneficial in uncertain times.

Last Month’s Posts on our Blog:

What is Multifamily Real Estate Investing

You understand the popularity of real estate investment strategies but have little appetite for the long process of buying, fixing, and selling properties. Learn how to forgo becoming a landlord and earn more without the time commitment through multifamily real estate investments. Learn more here.

The Benefits of Passive Investing

You recognize that delegating enhances efficiency and productivity. What if you could delegate investment decision-making to expand your portfolio into commercial real estate. Recent changes in the law now allow you to participate in deals once reserved for multi-millionaires. Today you can add commercial real estate to your portfolio through real estate syndications. Learn more here.

Changes to Bonus Depreciation for Investors

Capital gains, business write-offs, and depreciation are the secret weapon high earners use to reduce tax burdens. Yet one of the best depreciation schedules available in recent memory is ending this year. Learn how this law could reduce your tax burden in 2022 by purchasing anything from business vehicles to investment real estate. Continue reading here.

How Real Estate Investing Compares to Traditional Stock Market Investing

When your stock market portfolio is large enough to provide a solid foundation, you may want to step up your game with alternative investments such as real estate. If you are ready to add depth to your portfolio, owning commercial property can increase returns without taking on more risk. Learn how adding real estate to your existing portfolio can strengthen your financial security. Read our post here.

Recently Closed Deals:

We recently closed two deals in Atlanta. The first was Life at Marketplace and the second 1890 Adams house for a combined 658 units. Both communities will drive returns through improved property management, renovations to individual units, and upgrading amenities. Life at Marketplace has an anticipated hold period of five years, whereas the Adams house has a hold period of six years, with expected annual return rates of over 20%.

Learn more about investing with McKee Capital group in our introductory video.

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