The current financial situation is one where credit based income property buyers have exceedingly low prices, combined with exceedingly low interest rates, and a looming boom of new renters. This window of opportunity will not last indefinitely. Once the Federal Reserve is forced to act against inflation by raising interest rates, it will quickly spike mortgage rates and collapse the affordability of real estate.
This will have the effect of placing downward pressure on prices, which will increase the capitalization rate for income properties. Unfortunately, credit-based investors will not benefit from this changed marketplace since the high interest expense may not be fully covered by the rent revenue from tenants. In this way, the upcoming marketplace will be one where cash buyers hold all of the power.
Jason Hartman suggests this is a wildly opportune time to seize the opportunity to acquire prudent income property with leverage at historic rates of affordability before it vanishes. It is very likely that the current rates of total affordability will not occur again within our lifetimes, as they represent a combination of market corrections and manipulations that cannot persist indefinitely. By taking immediate, positive action it will allow you to capitalize on the prevailing market trends as they propel you to wealth. (Top image: Flickr | 401(K) 2013)
The Jason Hartman Team
