Are rising interest rates affecting Los Angeles multifamily real estate? It’s a question that everyone has been asking…
The short answer is no (not yet) from what we’re seeing. Everyone has seen a slow down on the residential side due to rising interest rates but small multifamily in Los Angeles (30 units or less) has not been affected at all.
What we’re seeing is people pulling money out of stocks and investing into multifamily because it’s the only asset that hasn’t dropped in this economy. Rents keep getting stronger and generally during downturns, it feels like an overall safer investment.
Cap rates are not decreasing and rents continue to be strong. We personally have less than 2% vacancy rates in our management and that’s a major reason why people keep investing into this market.
But are there any risks? Yes, the risk in currently investing in multifamily is rent control. The eviction moratorium will last until June 2023 and could be extended beyond. There is also code enforcement and other restrictions that have changed in the past two years causing challenges for current owners.
So…a slow down on the multifamily side could happen but we haven’t seen it yet! We are currently in a changing market so it’s important to stay connected and up-to-date.
Check out our Los Angeles Multifamily Real Estate Networking Group if you’re interested in staying current on market updates, investing, real estate education and much more.
