Financial Advisor · Atlanta, GA · Member since 2018 · 12 posts · 2 votes
Hi
If one is buying an income property with a mortgage, what are your thoughts on buying properties in a rising rates environment? Do you think this is positive for a rental investor as higher rates may make ownership costs higher for some buyers thus increasing rents? Or would higher rates pressure prices that one doesn't generate a positive ROI on a rental property in a rising rate environment? What is the optimal deposit % versus financing in a rising rates environment, and any thought on the optimal mortgage term for a rental property investor?
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
8y
The renters push back on rental increase and look for more affordable place to live. During the Great Recession many tenants together demand landlord to reduce rent ~20-30% less in our area. In our area unless borrowers are willing to put a hefty down payment for mortgage cash flow initially is always negative assuming full occupancy. It is a passive tax loss for people in high tax bracket who bet property values will go up. Now the brave ones go to lower appreciation states and hope apartments, MF will bring more cash flow for income. Each person has different needs, income so you need to generate your own.
Real Estate Agent · Syracuse, NY · Member since 2018 · 13 posts · 6 votes
8y
Rising interest rates should put downward pressure on home values, as higher rates increases costs and therefore decrease demand. I wonder if the effect on home prices will offset the increase in costs - at least in part.
Here is a good article on the relationship between interest rates and property values from Investopedia: