We continue to have mixed signals and no clear guidance on the direction of the U.S. economy. From a multifamily perspective, however, we can find some positives from the recent recession.
These positives did not just pop up. We had a significant decrease in revenue for a season. We continue to have the pain of higher collections. Today, I present for your consideration five small silver linings for multifamily that have occurred at the back end of this recession.
Moderate rental revenue increases. While rental increases may be un-even throughout the country, rents are increasing. This is a reversal of fortune from when the recession began where rental rate decreases were significant.
A calm interest rate environment. Yes, it’s difficult to obtain a commercial mortgage today. But for those that can, long-term interest rates are at historic lows. There is no better time in recent history to enter into a fixed rate mortgage.
Labor costs have remained flat. From property staffing to vendors, the cost of labor has remained relatively flat. As we learned to do more with less, staff levels decreased during the recession allowing for a slow roll come-back of staffing as revenue allows. This is a prudent approach in any business, including multifamily.
Stable commodities prices. Fuel prices aside, many of the items we purchase for property operations are hard pressed to seize price today. Thus, we remain in a stable price environment in many operational supply categories. This includes appliances and other fixtures. Products that have increased usually have a petroleum base driving costs higher, such as carpet and paints.
Real Estate Taxes. While every municipality is looking for ways to increase revenue they are hard pressed to increase valuations, and therefore taxation, in the current environment. Granted, valuations cannot deter local government from increasing tax rates, but valuations based on current rates permit no significant increases in real estate taxes.
About This Blog
Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. We discuss best practices in multifamily management and methods related to how to buy apartment complexes. Our focus is sharing strategies and tactics that can be implemented and measured. For more information, visit: www.MultifamilyInsight.com