High Mortgage Rates
Some of us bought our first homes in the mid 80’s, when the rates were around 18%, and still managed just fine. Of course the main benefit of a lower mortgage rate is the ability to afford more real estate for the same money, but when investing in real estate there is much more to consider.
Real Estate Investing
If you plan to purchase a property to flip, you should determine who will make the necessary repairs and improvements, how much it will cost, how long it will take, how much money you are losing while the home is off the market, the market value of the property after improvements, and how marketable the property will be based on current market conditions. A savvy investor will do lots of homework or be experienced enough to know these things, and more, before placing a bid on a property.
Most investors have cash reserves in place to purchase property quickly, but there are those who borrow to purchase investment property. Keep in mind if you must borrow to purchase an investment property that financing terms are a little different for investments. Your interest rates will usually be considerably higher and the length of the loan shorter. Be extra careful if you will be making payments on a property to rent or flip. Don’t get stuck with a payment you can’t afford on a property you can’t rent or sell. Flipping property isn’t something to go into without caution. It is important to work with someone who has experience before trying this on your own. You need to work with someone who is familiar with the area and current market conditions. It is important to get the best deal you can on the property.
Buying a Home for Your Place of Residence
When buying a long term property such as your next place of residence, it’s okay if you don’t get it for a “steal”, so long as you feel you have paid a fair price, because you will hold the property long enough for it to appreciate. It’s more important to make sure you are getting what you need to live a happy, comfortable life. Your home will continue to appreciate over time if you properly maintain it and make repairs as needed to keep your home in top condition.
Any Type of Real Estate Purchase
With any type of real estate purchase, whether it be commercial, your dream home, or a quick flip property, you should be careful to consider all factors that will affect the future value of the property such as….
- The condition of neighboring homes
- Nearby businesses
- Plans for zoning changes
- School districts
- Distance to pleasing amenities such as shopping, parks, restaurants, and employment
- Distance to unpleasing views, odors, noise, or pollution from landfills, water treatment centers, railroads, etc
There are many more things to consider in the purchase of any real estate, but most experienced real estate professionals are capable of guiding you through the process. As you can see from the two charts below, rates are still historically low and it’s obviously still a great time to purchase your dream home or investment property. History 1971 – 2019
History and Current Rates
Current 2018 – 2019
