Ep. 109: Why We're Happy to See Rents Level Out; The Migration Trends You Should Know; Why Arizona is Seeing a More Diverse Economy
In this episode of "Kiss My Assets," Jamison Manwaring, the CEO of Neighborhood Ventures, and Heather Andrews, Investor Relations associate, discuss some common questions about multifamily real estate investments. They address the topic of taking on debt for projects, explaining that while it increases risk, it is common practice in real estate due to the availability of low-interest debt. They emphasize the importance of keeping debt levels low and share their aim of keeping debt under 60% of the building's value. They also discuss the right time to sell a building, highlighting the need for investors to understand the investment timeline and the importance of generating cash flow before considering a sale.
They use the analogy of an analog clock to explain their approach to buying and selling properties. Rather than trying to buy at the lowest point and sell at the highest point, they aim to buy around seven or eight and sell around 10 or 11. They mention that they prefer not to be forced to sell and consider factors such as property stabilization, cash flow generation, and interest rates when deciding on the right time to sell.
The conversation then shifts to recent headlines, particularly inflation and interest rates. While inflation is decreasing, it remains higher than expected, and the Federal Reserve plans to continue raising rates until it reaches the target range of 2%. The hosts explain that it may take several months to a year for inflation to come under control. They also mention that other global economies are on the same page regarding interest rate policies. The hosts conclude by noting that despite inflation, the government has increased social security benefits to match the rise in living costs.
Overall, the transcript provides insights into the use of debt in real estate investments, the timing of property sales, and the impact of inflation and interest rates on investment strategies.