With rising inflation, how will your loans for investing be impacted?
In the past few years, everyone with money rushed into the real estate industry. All that money flowed freely, making real estate investing relatively easy and cheap.
But with rising inflation, that money is now leaving. Here are some changes you can expect around loans for investing.
What Does a Rising Federal Fund Rate Mean?
To combat inflation, the Fed has started raising their rates. They do this to raise the cost of credit, making less money available across the board.
And obviously, this affects us as real estate investors.
When interest rates rise, money tightens up. There’s less of it available for everyone, and lenders adopt stricter requirements.
While this makes loans for investing harder to get, it also means there will be less competition. Many current investors won’t be able to qualify for loans for investing with rising inflation.
What Will Investing Look Like with Rising Inflation?
It’s hard to say when money will start coming into the real estate market again. Lenders don’t know where exactly home prices are going. And property values are one of the main factors that decides the availability of funds.
But while everyone else is running out of the real estate market, you want to be running in. Why? Because that’s when prices will be the lowest. If you have the leverage to get into properties at low prices, you can refinance when interest rates come down. This is how you capture the wealth real estate investing offers.
This is the time you want to buy, yet it’s also the time where loans for investing are hardest to come by.
You’ll need to be prepared and qualified to take advantage of the upcoming market.
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