Preparing for Real Estate Interest Rate Hikes

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Preparing for interest rate hikes should not alarm the real estate investor.

Let’s face it. Interest rates have remained at all-time lows for over 15 years. Never in the history of our country have interest rates remained so low for such a prolonged period.

Most real estate investors were children during the last interest rate hike in America if they were born at all.

Therefore, understanding real estate interest rates is imperative to the continued success of investors in the 21st century.

What’s the Reason for the Rising Rates?

Interest rates are rising for one primary reason – inflation. Inflation has insidiously crept up over the past year.  

July 15, 2022, statistics show that the most recent CPI report reflected an inflation rate of 9.1%.

Does this make you cringe? Do you know what that means for real estate? More than likely, most people do not. 

You may have speculated about its relevance, but you may not know what it truly means for your local real estate market.  

Guess what?

No one does. While these numbers are relative to reflecting how costs have risen, it remains unclear how consumers will react or more than likely adjust to rising costs in general.

So, what do we know? The Federal Reserve is raising interest rates hoping to curb rising inflation. You may also be asking yourself:

  • Will raising interest rates be effective?
  • Just how much will the Federal Reserve raise the rates in hopes of slowing inflation?
  • What does the hike in interest rates mean for real estate markets nationwide?

    • The answers to these questions are unknown; however, you will answer them long before the speculating experts host information on various new outlets.

    Becoming the Master of Your Market

    Mastery is a prestigious achievement from innumerable hours spent studying and practicing a discipline.

    What is your discipline? You must thoroughly learn, comprehend, and operate profitably in your real estate market.  

    How will you attain mastery? It would help if you did the following:

  • Observe economic shifts or lack thereof in your local labor market.
  • Maintain open communication with public and private lenders. Where are they comfortable lending, and where are they most concerned with standing loans?
  • Real estate agents may not be the best source for discounted properties, but potent agents are knowledgeable about buying patterns and the disparity of potential sellers. Maintain open solid relationships with savvy real estate agents.
    • How long are properties remaining on the market?
    • What types of properties are selling? What types are not?
    • Who is purchasing properties? Who has disappeared from the market altogether?
  • City Managers and City Planners can disclose upcoming changes in the local economy with information such as:
    • New businesses
    • Incentives for businesses
    • Property tax adjustments
  • Estate Attorneys are incredible resources, especially in an aging community.

    • Mastering your market is a dynamic undertaking. It requires your complete attention.

    In his video, Preparing For Real Estate Interest Rate Hikes, Glenn Schworm, founder of Home Flipping Workshop, explains the intricacies of navigating a real estate market facing rising interest rates.

    The effects of rising interest rates are yet to be known in your community. The first person to know will be you.

    What’s Next for the Investor Facing Rising Rates?

    Perhaps some experienced investors consider this to be a simple answer. Get training. 

    As a real estate investor, you have the unique position of operating between the retail real estate market and the wholesale market.  

    Everyone is trying to prepare by using anticipation through academic means. If they guess right, then all is well. 

    Do you want to run your real estate investment business by guessing? Of course not, and you don’t have to either. 

    Connect with Glenn and Amber Schworm at the upcoming training at the Home Flipping Workshop.  

    You needn’t guess. You can know. 

    You can become the master of your market, achievable by focusing, practicing, and creating disciplines that work regardless of economic conditions.

    Contact the Home Flipping Workshop to become a master now.