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Yes - if rates continue rising, along with prices, then returns will get compressed. Check out my analysis of that dynamic here: https://ramenretirement.com/20
by ramen-san 8y ago
Yes - if rates continue rising, along with prices, then returns will get compressed. Check out my analysis of that dynamic here:
https://ramenretirement.com/2018/05/16/interest-rate-impact/ https://ramenretirement.com/2018/05/16/interest-rate-impact/
Doesn't mean you shouldn't invest - just figure out what sort of returns you're willing to accept (along with the corresponding risk / cushion you need), and hold that line when you run your diligence. FWIW, I think you can still find single family investments in the midwest that will generate 8%+ cash on cash returns (after fully accounting for all direct, and reserved expenses). That's still a pretty good return, but getting harder to find.
It's hard to say when the market will soften or correct, so a dollar-cost-averaging approach to buying RE is probably a good idea (i.e. buy a rental property every quarter, or every half year.).
Given that pretty much everything is going right in the economy right now, my investment stance is more conservative. It's not a bad time to buy, but it's definitely not a fire sale. Bigger Pockets is a great resource. Drop me a line if you ever want to chat in more detail. I've gone pretty deep in the whole space, and have a background in investing and finance.