Jason Hartman talks with Venture Alliance member Mike Zlotnik about cap rates in today’s interest rate environment. Mike explains what happens to cap rates (and commercial real estate investing as a whole) when interest rates start rising. After years of artificially low interest rates, we’re starting to see rates finally rise, so strap in and learn how to navigate the waters and get some real life numbers of the true impact.
[4:54] Real estate is so tax favored that it can become a bit of a trap, where you have to pay some serious taxes if you want out of the game
[9:52] There are signs of a shift in the marketplace, but thanks to Commandment #5 it doesn’t mean much to us
Mike Zlotnik Interview:
[13:18] We are definitely in the period of abnormally low interest rates, and the Fed is raising them at a pretty rapid pace
[16:29] We’ve been spoiled by artificially low interest rates
[19:17] The inverse relationship between cap rates and prices
[23:53] A real life example of the impact of higher interest rates
[27:53] We live in a world where the Federal Reserve and the Treasury don’t have to make sense
[33:09] Can the US government afford high interest rates?
[37:24] Why are rates going higher?
[40:26] How to prepare for higher rates