Interest Rate Hike - Are you still buying?

Real Estate Agent · Columbus, OH · Member since 2019 · 292 posts · 364 votes

How high do you think the interest rate would go? I am seeing 6.5% for commercial loans right now. What are you seeing? Are you still buying in this environment?

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Andrew PostellPro Member

Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes

@Harrison Chow 100% still buying. I love it when things get challenging. It makes my competition go away. Still buying and will still be buying.

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Adam Martin
Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes
4y
I am under contract for a conventional at 6%. It was originally a shock as I just refinanced several at 3.5% last year however I only expect them to go up from here. It has actually got me looking to buy faster to beat the increases instead of slowing me down. I don't like it at all but historically they are still slow and while it is turning deals that would have been great a few months ago decent they are still workable for now.
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Harrison Chow
OP
Real Estate Agent · Columbus, OH · Member since 2019 · 292 posts · 364 votes
4y
Quote from @Adam Martin:

I am under contract for a conventional at 6%. It was originally a shock as I just refinanced several at 3.5% last year however I only expect them to go up from here. It has actually got me looking to buy faster to beat the increases instead of slowing me down. I don't like it at all but historically they are still slow and while it is turning deals that would have been great a few months ago decent they are still workable for now.

Yeah that's funny because I have a feeling that this might drive the price even higher because investors are trying to get more properties while the rates are still fairly low. Is your 6% commercial loan?
1 Reply
Chris VarsekBusiness Member
Real Estate Agent · Beach Park, IL · Member since 2021 · 69 posts · 38 votes
4y
I'm buying for sure. These are still historically low rates. Even if a recession does come (likely at some point), there is so much generational demand from millenials that prices will keep going up, just not at the same velocity (think 5% vs 15% annually). Frankly, I'm far more worried about the stock market than the housing market for the next 5-10 years
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Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
4y
@Harrison Chow 100% still buying. I love it when things get challenging. It makes my competition go away. Still buying and will still be buying.
12 Reply
Fernando Sosa
Member since 2022 · 2 posts · 5 votes
4y
Just got a lock for an investment property for 6% and 25% down

they told me they wanted 25% down because it’s a duplex which I guess needs more money down.

not happy about the interest rate but I guess it’s only going to get higher.. which is great because I think I’m getting this deal because the seller has an adjustable loan

so I wonder if this will make good deals from people that need to sell
0 Reply
Tanh Truong
Investor · Cincinnati, OH · Member since 2018 · 136 posts · 87 votes
4y
I'm in Ohio and we're still buying. We haven't seen commercial rates tick up yet, while residential has. I think it's important to highlight what your plan for the property is (i.e., hold for short term versus long term).
2 Reply
Joe Miller
Real Estate Broker · Columbus, OH · Member since 2021 · 203 posts · 247 votes
4y
@Andrew Postell That is the mentality we need. Still buying and will buy.
Have seen residential increases in rates in Columbus. Be cautious if you get pre-approved months ago, you can not assume the rate is the same if you go to buy. Something to keep in mind.

2 Reply
Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
4y
Still buying, as long as it cash flows, we will raise rents.
5 Reply
Calvin WatkinsPro Member
Realtor · Columbus. OH & Dayton, OH · Member since 2020 · 37 posts · 37 votes
4y
I am still actively pursuing purchases in Ohio. If you can make it cash-flow or find the highest and best use for the property to make it work why stop? Keep the fundamentals in line and maybe take a positive twist on it and remember that higher interest rates will likely lower the competition so your offers have a higher chance of getting accepted.
Remember real estate is a long term play so short term hikes in interest shouldn't deter you if the location is a deal.
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Account Closed
Real Estate Agent · Arlington · Member since 2016 · 162 posts · 100 votes
4y
Yes, I am. The high rates are on the short term. There's no way rate hikes can be sustained long term. Sure, maybe 50 bps for a few times, but then BLAMO - recession right before an election? No way! Once cracks turn up in the economy, look for:
- an abrupt pivot in Fed talking points - rates will decrease precipitously
- more free hand outs in the form of stimulus (to buy votes)
If you buy now (even at higher rates), you can always refinance later. If you don't take the opportunity to finance now, there may also be a clamming up among banks and strong hesitancy to lend.
2 Reply
Account Closed
Real Estate Agent · Arlington · Member since 2016 · 162 posts · 100 votes
4y
Not to mention that Euro Dollar options have been trading in such a way that is assuming rates may go NEGATIVE!
1 Reply
Cole Simpson
Rental Property Investor · Columbia, SC · Member since 2020 · 302 posts · 186 votes
4y
Absolutely I am buying, as much as I can, rents won't drop and if they do it won't be ,much, if it cash flows it will always be a good deal. Also Inflation at 8%, prices are going up.
0 Reply
Chris Webb
Investor · Central Virginia · Member since 2020 · 394 posts · 253 votes
4y

Hi @Harrison Chow, short answer is yes. Interest rate is just an input to my spreadsheet. It helps determine my price and terms.
2 Reply
Matthew CrivelliBusiness Member
Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
4y
@Harrison Chow
People are still buying! Honestly I think flipping is a really good option right now. Notice the rates on short term loans didn't move much? This is because institutional lenders still see these rehab projects as low risk. The investor can then decide to keep the property if it can cash flow at the new rates of 6.5% +.
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Harrison Chow
OP
Real Estate Agent · Columbus, OH · Member since 2019 · 292 posts · 364 votes
4y
Seems like everybody is still buying!! LOL
1 Reply
Eric Bilderback
Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
4y
Yup as @Account Closed said options are trading in a way which is predicting negative rates in the future. I think we are past the point of no return, our debt sadly needs to keep growing in order to devalue the dollar and the governments debt. I wish it were not that way but that is how I see the future and I am cautiously buying real estate with that as the macroeconomic background.
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Sam YinPro Member
Los Angeles, CA · Member since 2021 · 584 posts · 738 votes
4y
@Matthew Crivelli just submitted offer today on a fix and flip of a SFR. Offered $170K over asking because I know there is a lot of room and hoping to beat other bidders. I'm offering $1M, and might got to 1.1M. Factoring a $230K rehab, but hoping to be closer to $150K. Expecting to flip for $1.6M before end of 2022.
Went through a broker, got a 4.99% rate today for a 30 fix/amortized, with 20% down payment. However, had to pay about 1.25 points to the broker.
I think it's still a good time to buy and many lenders still feel confident about the market. They must... because multifamily long-term holds are still lending around 4%, amortized at 30 yrs, with 25% or more DP.
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Victoria Young
Member since 2022 · 6 posts · 3 votes
4y
I'm on the fence about doing a cash-out refi on a rehabbed property in MD. I don't have a unit to buy and am reluctant to sit on that money while being charged a higher rate than I could make in dividends. Investment refinances are at least 5.50-6% I think. Need guidance.
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Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
4y
Quote from @Victoria Young:

I'm on the fence about doing a cash-out refi on a rehabbed property in MD. I don't have a unit to buy and am reluctant to sit on that money while being charged a higher rate than I could make in dividends. Investment refinances are at least 5.50-6% I think. Need guidance.

refi at a higher rate than current? just need to evaluate your ROE. I don't mind leaving something low leverage, just use other cash.
0 Reply
Victoria Young
Member since 2022 · 6 posts · 3 votes
4y
Yes, current rate is 5.375 and I owe 69K. It's worth 375K and I'd like to pull out cash in the hopes of finding my 3rd rental property. Can't invest time to look and buy for 3rd unit yet because I'm deep into 2nd rental renovation-and that house is involved and complicated. I estimate completion in July, but wanted to refi #2 now because I'm concerned rates will get higher. What are your thoughts? Any suggestions are greatly appreciated as this cash-out will be my first using the BRRRR method.
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Victoria Young
Member since 2022 · 6 posts · 3 votes
4y
Quote from @Victoria Young:

Yes, current rate is 5.375 and I owe 69K. It's worth 375K and I'd like to pull out cash in the hopes of finding my 3rd rental property. Can't invest time to look and buy for 3rd unit yet because I'm deep into 2nd rental renovation-and that house is involved and complicated. I estimate completion in July, but wanted to refi #2 now because I'm concerned rates will get higher. What are your thoughts? Any suggestions are greatly appreciated as this cash-out will be my first using the BRRRR method.

1 Reply
Victoria Young
Member since 2022 · 6 posts · 3 votes
4y
Sorry, I want to refi rental #1 now, not the one I'm currently renovating.
1 Reply
Rich Hupper
Broker / Investor · Tewksbury, MA · Member since 2008 · 1k+ posts · 351 votes
4y
Its not what you sell it for its what you buy it for. Just remember that. You can make money in any environment if you buy it at the right price.
1 Reply
Oliver De Ausen
Rental Property Investor · Hawaii & Maryland · Member since 2019 · 31 posts · 24 votes
4y
I'm about to do a 270 day lock in @ 6.1% for a new build in FL, with a 1.25% fee of the loan amount. It's hard to see investments at this rate, but I guess its cheaper than inflation...
1 Reply
Eric GoldmanBusiness Member
Lender · PA · Member since 2019 · 359 posts · 192 votes
4y
if the numbers work they work. we have seen rates higher in the past. rates go up and down.
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