How Does The Fed Dropping Rates Help The Real Estate Investor?

I was going to be cute or obnoxious here and say that the Fed dropping rates a half point doesn’t really have too much bearing on the long term real estate investor. But that simply would not be true, would it?

But my point would be made, all the same.

There are at least a dozen bloggers smarter than me on the subject of the Fed and it’s relationships to the overall economy. I’m just a Kansas Jayhawk who works with real estate investment property day in and day out.

Interest rates go up. Interest rates go down. Unemployment rates go up. Unemployment rates go down. Vacancies go up. Vacancies go down.

The point? That owning real estate investment property is not a short term deal. (Yes. Yes. I know flipping is. But I’m not talking about that.) It’s finding the RIGHT property that will meet your criteria today. Cash flow before taxes. Expected appreciation. Expected vacancies and rent rates, etc.

Here in Kansas City I really do not see any reason to worry. If you are buying for that 5-7 year trade-in window why get too worried about the daily fluctuations of interest rates? No. I’m not advocating careless disregard. But if you keep waiting for them to drop further you may miss a rental property that was worth thousands more.

Conversely, if you rush to buy an income property because you are terrified rates will go back up at the next meeting you may buy a rental property that would have been better left to someone else.

Follow these headlines carefully. But keep you eyes focused clearly on the goal. Then follow your plan.


Filed under Personal Real Estate Opinions

3 responses to “How Does The Fed Dropping Rates Help The Real Estate Investor?

  1. carlivar

    The Fed rate cut is a short-term band-aid that is going to cause serious long-term damage to the economy.

    Take a look at these articles about:

    7a.xml” REL=”nofollow”>China’s reaction

    Better not sit on any cash. Inflation’s going up up up. (actually I guess that’s an argument to buy real estate… but if we go into recession, and I think that is becoming more and more probable, that makes me uneasy about the rental market. Choose your poison… U.S. is simply in deep trouble).

  2. carlivar

    Whoops that Saudi Arabia article is a bad link. It is here.

  3. carlivar

    Argh blogger is messing up my links. China article also is here.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s