Fed Pushes Interest Rates To New 22 Year High
The Fed’s latest hike puts interest rates at their highest level in 22 years. What does it mean for the economy, property market, and investors?
Higher Interest Rates, More Economic Turmoil
With the Fed saying they do not expect a recession, the odds of further rate hikes in the near future seem even higher.
The officially published numbers put economic growth well ahead of expectations. Even though many business owners would disagree.
This may well be the result of misleading averages. In which a few that are outperforming at great scale are masking the distress and decline of the majority.
The same also appears true of the housing industry. Where some markets continue to experience 40% plus annual growth. While others are seeing steep declines in how much buyers are willing to pay for properties.
Whatever is happening behind those headline data points, we can expect that current monetary policy is going to make credit harder and more expensive to get than any other time in many people’s and company’s lifetime.
How do you deal with this as a real estate investor?
Use Short Term Real Estate Financing
If you are wholesaling properties in days or hours, then high rates won’t hurt you.
It’s just a problem for those that get stuck in longer than expected renovation and construction projects, and long term hold landlords. Who should not be counting on rents and resale prices going up forever.
Transactional funding is probably the best example of great short term real estate financing.
Find The Distressed Owners And Sellers
There are millions of businesses and homeowners already being hurt by high inflation, high interest rates, and mass layoffs. Find those in distress and help them.
You may focus on the lowest hanging fruit, for example those already in foreclosure. Or get ahead of your competition by looking into the leading indicators of this distress and reaching them earlier in the journey. That may be looking at the amount of debt they have, or their location.
Find The Hungry Buyers
There is still no shortage of hungry and interested buyers. Match them up with your deals.
Again, you can hire a better part time CMO or marketing manager to get your listings to stand out above the rest. Or you can find them early and create waiting lists. Hone in on the triggers that indicate they may need to move or buy something soon. This could be mass layoffs by company, deteriorating metro areas with high crime, or rising taxes, and patterns of actively buying investment properties.
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