How Will a Rise in Interest Rates Affect Real Estate Investors

Brian Carpen, an Editor for the ‘The Banker,’ points out interesting facts in regards to the risks of avoiding increased interest rates. A decision made recently by the Fed has led a few folks to celebrate, but most people are still stunned by the move.

last updated Wednesday, May 17, 2023
#Real Estate Investors #Real Estate Flippers

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John Burson

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CONTENTS

Most people reading this know the long-term economic impacts of increased interest rates. Still, it's essential to understand that this is one of the most significant challenges for real estate investors. The answer to this question lies in the property you focus on.

One of the most significant challenges attributed to the low-interest rates is that home flippers now target first-time home buyers. Carpen also thinks that low-interest rates are permanent and that any slight adjustments will result in increased interest rates. In Carpen's assertions, there is a greater expectation of reduced interest rates among the new generation homeowners. He also equates his assertions to when a mortgage of around 30 years came with an interest rate of as low as 9%. He also thinks that if such interest rates go up, it will be more difficult for the borrowers to adapt to the new changes.

He considers that raising the interest rates will shock some new generations of borrowers, with politicians seeking to derail the whole process. Such a delay is meant to slow down the process for someone else to occupy the office and face the uncertainties that the wait will have caused in acquiring the loans. If this was to happen the way we picture it, it is closely related to how the current government entered the Whitehouse at the time of "managed depression."

When it comes to real estate flippers targeting to hit the market for the first time, they will still face the challenge of increased interest rates, leading to the loss of potential buyers. How this will affect the interest rates on different real estate properties is yet to be seen. Are you sure of this kind of effect? Kindly share your thoughts on the impacts of increased interest rates on those wishing to invest in real estate. Your opinions can be negative or positive, depending on the properties invested in.

 
 
 

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