My acquaintance owns an apartment building, they have great reviews as a landlord. The common thing in commercial buildings is to carry short mortgages and then refi the balloon payment. Interest went from 3.5% to 7%. The cash flow cuts by 30% because now paying more interest. Rents are flat and don’t increase. Is it fair that the banks are now making the extra 30% of proceeds? Maths are not my strong suit so please don’t critique my numbers with great efforts.
The bank is likely not making more on the interest, as they have their own borrowing costs which have increased in line with the Federal Reserve Bank putting interest rates up to cut inflation.
