What Rent Cuts Mean For CRE Investors
For the last three months, rent growth has been slashed across almost all major US markets, and many major US metros have actually seen market rent growth turn negative as a result of business closures and tens of millions of job losses across the country.
And because most multifamily leases are short-term in nature and generally expire every 6 to 18 months, the residential sector is being hit particularly hard by this right now, with renewals and new leases expected at discounted pricing or with significant concessions up front.
So with some major metros already seeing high single-digit rent drops in the multifamily space, what does that mean for investors going forward, and how can you protect yourself from an unexpected rent drop on new deals you’re looking at investing in right now?