Grant Cardone reveals the three reasons why the multifamily properties are in a correction: “Over -offer creates an increase in vacancy”

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Grant cardone has sounded the alarm on a real estate correction in multi -family properties and one of its Recent X Publications Added fuel to the fire. The real estate tycoon and the best -selling author have acquired many multi -family properties, but believes that the class of assets is due to a deeper correction.

“Over -offer creates an increase in vacancy,” he told Investors X when he explained the current trend. However, Cardone did not stop. He shared three great reasons why these properties will continue to face short -term pressure.

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Cardone first cited the interest rates of the Federal Reserve. Although the Fed reduced the rates three times last year, they remain much higher than those that were a few years ago. Owners with variable type mortgages should usually increase their costs to preserve their benefit margins during rate hikes, but this reduces the demand for possible tenants.

High interest rates can also make property more attractive to people who can make great payments. As more people buy houses, the demand for rental units will continue to decrease.

However, these higher rates will also limit the purchase power of each potential lessee. High interest rates make it more expensive to get personal loans and have credit card debts. These factors may force owners to keep rental prices or download them to attract new tenants.

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Cardone also mentioned $ 3 trillion debt to mature in the next 36 months. Most multifamily property owners funded their properties in a low price environment, especially borrowers whose loans mature for the next 36 months.

When these loans mature, the borrowers will have to refinance the loans to much higher rates. Cardone says these multifamily owners will have to pay the debt from 20% to 30% to cover the high cost of debt.