There’s only so much we can do to hedge our risk. We do as much as we can. For example, with interest rates and debt, we’ll take less debt in this marketplace. We’re also trying to borrow as much fixed-rate debt as possible.
If we’re borrowing floating-rate debt, then we’re buying interest-rate caps. We’ll actually go out into the swaps market, and we’ll buy an interest-rate cap that will cap how much their rate can go up, while we have a loan.
We’re able to get loans that are 30 years in term, even though they’re fixed for five-, seven, or 10-year periods. After the fixed-rate period expires. the loan automatically goes to a floating-rate loan.
Being in multi-family, we learned that we want to go long-term financing; that if something does happen, our loans aren’t due. We’d like to leave enough reserves for liquidity reasons that if something does happen, we do have money left aside to help us stay afloat.