The most recent interest rate increase from the U.S. Federal Reserve is just the latest in what’s predicted to be a series of hikes extending into 2019. If all goes as planned, this will bring interest rates to 3%, which could drive mortgage rates — which are typically quite higher than the prime rate — even higher. In fact, economic analysts say that mortgage rates over 4% are here to stay, assuming there is no dramatic and unexpected flux in the nation’s economic conditions. A time with higher mortgage rates isn’t ideal for the real estate market, but with the right strategy, real estate investors can thrive! That’s exactly what we’ll explore in today’s article from The Short Sale Gal Kristine Zelazo.
How Can You Thrive When Mortgage Rates Are Increasing?
Today, 30-year fixed mortgage rates are averaging around 4.375%, while 15-year fixed mortgage rates are averaging around 3.625%. Of course, an individual’s credit score will have a major impact on the actual interest rate that the borrower receives.
Many investors assume that higher mortgage rates spell fewer home sales, and while this can be a side effect, it’s not necessarily a bad thing. High mortgage rates can create conditions that are very favorable for real estate investors who have acquired rental holdings, along with investors who are in search of buy and hold opportunities. Mortgage rate hikes mean that would-be home buyers are forced to rent for a longer timeframe, so this creates more opportunities in the rental sector of the real estate market. Investors who own multi-unit properties can also turn a healthy profit, selling to others who are seeking to acquire a profitable rental property.
Additionally, higher mortgage rates mean that refinancing may not be an option for an increased number of homeowners. This is be beneficial for real estate investors who work with distressed properties, as it can result in an increasing number of opportunities associated with short sales, REOs and foreclosures. So real estate investors who are seeking new opportunities may wish to focus on the distressed property niche. Many investors find this market sector very fulfilling as it allows them to help individuals who are struggling to emerge from a bad financial position.
Investors who have the ability to serve as a lender may opt to focus on this business niche, as it allows you to offer borrowing opportunities to individuals who may not qualify for other opportunities.
What’s more, higher mortgage rates mean there will be a slight reduction in the number of home buyers. This leads to less competition for real estate investors who are seeking to acquire new properties (although the tradeoff is that it could take a bit longer to sell a property…although the real estate market remains quite strong so the effect of higher interest rates should not be overly pronounced.)
Ready to Get Started in Real Estate Investing?
If you’re getting started in real estate, consider working with a real estate investing mentor like The Short Sale Gal, Kristine Zelazo. Getting started in real estate investing can be somewhat challenging, but when done right, you can stand to make significant profits. You’ll have lots of advantages in this regard when you work with a real estate investing and short sale expert like Kristine Zelazo, better known as The Short Sale Gal.
Kristine has even launched a new program, called The Bird Dog Program, which is designed to help individuals get involved making money on real estate deals and short sales.
Based in Florida, Kristine works with both buyers and sellers and she is an experienced negotiator. So if you’re an investor seeking to get started in buying short sales and need a great mentor or wish to pursue a short sale transaction for the sale of your property, turn to Kristine Zelazo, the Short Sale Gal!
To get started with selling your home, simply complete the home pre-sale form to provide Kristine with additional information on the property in question. Then, call 800.664.0616, x802.