Multifamily owners and operators are facing a growing level of property taxes and, in many metros, the rates of increase make inflation look like nothing, according to a Trepp report.
Rising interest rates, interest cap costs, and the often-brutal reality of refinancing, even in multifamily, which was supposed to be one of the "safe" property types because people had to live somewhere, has been an industry preoccupation.
But as inflation has slowed and people have wondered when the Federal Reserve might stop raising rates, another issue has appeared. Even when it subsides, regular expenses will still likely strain net operating income of properties. Insurance prices that have risen due to climate change-driven natural disasters may be up there for good. And those expenses will matter to lenders who want to be sure that debt service coverage ratios are in a safe range.
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