How are rising interest rates affecting multi unit property values?

As you know, The Fed just raised interest rates .05% after a raise in March of .025.The most recent raise is the largest since 2000. This is being done with hopes of of reducing 40 year high levels of inflation.

How does this affect you as an owner of multi unit properties? Should you sell? Should you buy? The inventory has increased, but is still low, so there is a healthy demand for properties and lots of available exchange dollars available looking for uplegs.

CONSIDER CARRYING SOME PAPER. If you are willing and able to carry back some of your equity, it makes your property more valuable. It makes financing much easier and if your building is paid off you may be able to do an installment sale. This is something you need to discuss with your CPA and your real estate attorney before you move forward. If it turns out to be viable, this may bring you a higher price for your property and some additional monthly income.

CHECK YOUR RENTS If you are able to raise your rents don’t miss out. Some cities such as West Hollywood have moratoriums. Additionally, of course the statewide rent control (AB 1482) has limited the amount of annual raises, so check to see which rules apply to your property. Check with the city where your building is located, your Apartment Association or give us a call.

CHECK YOUR CURB APPEAL. When you drive by your building, do you see cars, debris and unattractive landscaping? You are competing with other buildings for potential tenants and a few inexpensive repairs and cleanup, maybe a little paint can result in much better rents on your next vacancy. Often, the presentation makes a huge difference, as it does in a restaurant!

What we at PRS PROPERTIES CAN do for you is give you a good idea what your property is worth in the current market as compared to other similar properties.  We can review your profit and loss statement and suggest changes that may allow you to get a higher value than you may have thought.

We can do a rent survey to help you understand rental values in the area. Remember, we are apartment owners too! We have investors looking and quite often, we can put together an offer without a listing. We have several buyers looking now who have purchased buildings from PRS in the past and are now looking for additional assets. Many times, buyers prefer to buy “off-market” buildings because they feel that they are getting something not available to the general public.