Real Estate Agent · Tewksbury, MA · Member since 2020 · 494 posts · 284 votes
Hi everyone!
I am sure the title caught a good amount of eyes because of our current debt environment. I was curious if anyone is even considering using variable rate debt now to fund acquisitions. Our team personally stays away from variable rate debt in our syndications (at least thus far) and just sticks to fixed debt and leveraging solid relationships with local credit unions on our larger local multifamily projects.
(For reference I am in the hospitality space, not multifamily).
We have not used variable rate in the past, but I am starting to consider it now due to the current environment. We are generally a high cashflow operation so we can stiff a higher debt payment than most, the risk is lower for us on the debt payment side. The only issue is the variable on our investors returns. While we don't see how rates could go much higher than they are right now, they always could. And if they do our investors cashflow payouts get compressed, and that's the part we still don't love about it.