2025 Multifamily Debt Problems

[Matt Smith]

Hi Everyone, I have a very general question in regards to commercial real estate. There is a lot of news around how multifamily is in trouble with ARM's and overpriced purchases in 2025. I own 2 small multifamily properties (4 unit and 8 unit) and it sounds like the big opportunities lie in big commercial property (ex. 100units and up). Can someone please explain the reason some operators are having trouble with big multifamily properties right now? Thanks!

[Brian G.]

@Matt Smith generally speaking it’s a combination of rising interest rates which have caused cap rates to increase (thus wiping out equity), debt is resetting at higher rates, rising opex costs due to inflation and stagnant or softening of rents due to an increase of supply.