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Get Ahead of the Game: Beat High Mortgage Rates with Investment Real Estate

Get Ahead of the Game: Beat High Mortgage Rates with Investment Real Estate
Mortgage rates are rising: Learn how to beat them the smart way

Unless you've been in a cave for the last 9 months, you've likely heard about how fast mortgage rates are climbing. If you're buying a house that you're planning to occupy, this can be very daunting. However, if you're buying real estate as an investment, and you are purchasing an asset that generates income and can pay down your mortgage, even with increasing interest rates, you can be successful with investment real estate.

Small house on an autumn’s day

It's no secret that mortgage interest rates are on the rise. In fact, they have been increasing steadily for the past few years. If you're like most people, this has caused you to re-evaluate your financial situation and consider alternatives to home ownership. One option that is gaining popularity among homeowners is buying investment property.

Hedging Against Higher Rates with Investment Property

Investment property can be a great way to hedge against rising interest rates. By locking in a low mortgage rate on an investment property, you can protect yourself from future rate increases. In addition, investment property can provide you with a steady stream of rental income. And, if you choose wisely, your investment property can appreciate in value over time.

Of course, buying investment property is not without its risks. Before you purchase an investment property, be sure to do your homework and understand the potential risks and rewards. But if you're looking for a way to beat the high mortgage rates, investment real estate may be the answer.

Mortgage Options for Better Rate Performance on Rental Real Estate

Astute investors are now considering ARMs (adjustable rate mortgages) as an alternative to locking in higher rates on 30 year mortgages. Of course, this strategy is not entirely without risk. Rates could continue to adjust up, but many investors believe that after a short period of aggressive rate hikes, the U.S. central bankers (the Fed) will be forced to pause, or even begin 'easing' rates again in 2023 or 2024, which makes ARMs a potentially attractive option.

Investment real estate is a great way to build equity and generate income. And with mortgage rates rising, now is the time to invest. With investment real estate, you can offset higher rates with tenants, whether short-term (STR) or long-term (SFR), who will pay your financing costs and pay down your mortgage, allowing you to gain equity value with an asset that will likely also appreciate in value over the intermediate to long-term. So if you're looking for a way to beat the high mortgage rates, investment real estate is the way to go.

Don't wait until it's too late. Invest in real estate today and you'll be glad you did tomorrow. Mortgage rates may seem high now, but historically (looking at rates over the last 20-30 years), rates are now roughly at the median.

If you're not sure where to start, talk to a mortgage broker. They can help you find the best mortgage rate for your situation. And if you're looking for an investment property, they can also help you find the perfect financing option for income generating real estate. You may be surprised to find that investment financing options are plentiful, with rates, down payment options and other features that can be customized to fit your direct objective.

Another option, if you're an accredited investor, is to register with HomeStakes for the opportunity to invest alongside us in the investment real estate that we're investing in. Our curated properties are selected for optimized returns, in markets that are continuing to deliver outsized income performance, despite increasing rates or softening valuations. While we currently focus on short-term rentals, we also analyze markets for multi-family and single family longer-term rental investments.

You Can Still Win with Real Estate in a Rising Rate Environment

Rising interest rates have caused many investors to turn to real estate as a way to beat the market. Real estate provides a solid investment that can appreciate over time, providing a hedge against inflation. In addition, real estate can be leveraged using borrowed money, which means that you can control a larger investment with less of your own money.

When interest rates rise, the cost of borrowing money goes up, which can eat into your investment returns. However, if you're investing in real estate, you can use the both tenant payments and equity in your property to improve your financial performance, possibly even originating or refinancing loans at a lower interest rate than the prevailing market rate. This will help you to maximize your returns and minimize the impact of rising interest rates.

So don't wait any longer. Get ahead of the game and beat the high mortgage rates with investment real estate. It's the smart way to go.