Higher Interest Rates Aren't as Bad as They Seem

As many of you have heard and seen, mortgage interest rates have risen substantially over the past couple years. While the increase in interest rates have certainly had an effect on the housing market, It also comes with a few benefits for investors.

Benefit #1: Less Competition

Higher interest rates drive out competition. With less competition in the market, rental property investors are at an advantage because houses will sit on the market longer which lowers the price. With fewer retail buyers willing to purchase a home at the current interest rates, Investors should ramp up activity to prepare for the environment that is to come.

Benefit #2 : Higher Rents

Since retail buyers are less willing to buy a home at the current interest rates, they are forced back into renting. Using a basic economics principle, supply and demand, we know that an increase in demand without an increase in supply will drive up the price. So in this situation the rents in the area will increase which bodes well for the investor.

Benefit #3: Future Opportunity

The opportunity to refinance at a better interest in the future to increase cash flow. With record low interest rates over the past couple years, many investors will be locked in to those rates because the opportunity to refinance at a better rate may not present in itself in the near future.

While higher interest rates may scare off some buyers, good investors will see the benefits and opportunities that these times bring.