Although the past nine years or so have seen historically low interest rates, the Fed is again considering a rate hike in the near future. And, while this proposed rate hike – only the third since 2008 – would potentially increase interest by 0.25% (or 25 basis points), even this seemingly minuscule rise could impact you as a real estate investor.
For instance, by increasing the federal funds rate, the effective “benchmark” mortgage rates will also likely increase – which means that mortgage rates in the future are likely to be higher than they are right now, in turn, negatively impacting real estate investments as the cost of money goes up.
This is not just the case with the purchase of any new properties, but it could also mean an increase in your monthly mortgage payment on units that have been purchased using an ARM (Adjustable Rate Mortgage).
With that in mind, if you are in the process of purchasing more property, then it may very well make sense to try and lock in a lower rate of mortgage interest now in order to take advantage of “less expensive” debt before these costs go up.
On the other side of the coin, rising interest rates could mean that fewer people will qualify for home mortgages, which may signal that there will be an influx of those who are looking to rent their future housing rather than buy.
If you’re considering the purchase of additional properties – or even if you would like to free up more of your time in terms of managing and maintaining your current real estate investment(s) – it could be time to consider partnering with an experienced property manager. Doing so can provide you with the ability to still profit from your investments, while at the same time not having to worry about spending an inordinate amount of hours in the process. For more information on the services that are available through an experienced property management team, Contact Us.