With interest rates rising, and recession looming, how are our dollars best placed to meet our financial goals.
One defensive strategy is commercial real estate investment. Multifamily segment within commercial real estate provides hedge against inflation and multiple tax advantages.
In a recessionary environment, supply of both rental and for sale inventory is constrained. Rental demand increases as home buyers are priced out due to high interest rates. Renters also are reluctant to relocate due to economic downturn and stay longer in rental units.
Apartments perform well both in stable and rising interest rates environment. The agencies perceive multifamily as lower risk compared to office space or housing, interest rates are generally lower compared to the other asset classes. Multifamily provides the opportunity to reset the apartment rents every year thus providing a hedge against inflation. Tax benefits especially bonus depreciation provide means of reducing the tax bill and there are other tax benefits including 1031 exchange options.
Apartments are a strong asset class in tough times and should be part of ones portfolio. Insim properties provides several opportunities to participate in apartment syndications.