How Do Rising Interest Rates Affect Real Estate Investing?
Typically with higher interest rates, demand decreases and the cost of housing can potentially be negatively impacted. However, while many news outlets focus on the national state of the market, real estate is very local.
Texas is still seeing very high demand for housing, primarily for the following reasons:
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1500 people a day are moving to Texas
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Millennials are reaching peak homebuying age
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Low housing inventory
It’s hard to predict exactly what will happen, but it’s important to focus on the specific market where you are looking to invest. Most experts remain certain that long-term growth remains unaffected.
What does this mean for Rental Estate Investors
Real estate investment will continue to allow investors to enjoy a passive income, excellent returns, tax advantages, diversification, and the opportunity to build wealth.
However, not all deals are created equal, and real estate investing can be risky if you don’t know your numbers!
Here are some important factors to consider:
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Rising labor and supply costs. One sure way to lose money on an investment property is to underestimate the costs of repairs and maintenance. Have your contractor walk the property with you, and add at least a 10% overage to your budget.
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Overpaying for a deal. Appraisals are an important part of the process. Most “bad deals” can easily be avoided by properly determining the value of a property.
You can lower your risks by doing your due diligence. Before putting anything under contract, we encourage all investors to complete a free deal analysis. One of our experienced team members will help you analyze the deal in order to help with risk management.
We will continue to send important and relevant market data as well as strategies for this changing market. Stay tuned to future emails for updates.
Your success is our #1 priority, which is why we tell many investors to walk away when the numbers don’t make sense.
We want to make sure you know your actual profit potential, which is why we review every deal for you up front!
Don’t lose money in your next deal! Use Investmark Mortgage and maximize your success!
Mike Hanna is a real estate investor, mentor, author, and public speaker. He has been an active real estate investor since 2002 in both single family and multi-family properties, and has been in the hard money business since 2005.