In today’s high interest rate environment how are you managing your real estate investments? Periods of high interest rate environment provide an opportunity for investors to get more creative with strategies. Following are some of the ways to be prudent in your investing business:
- Seller financing: Try to focus on seller financing as its a great way to hedge against high interest rates as one can offer a good return to sellers without the hassle of dealing with any extra paperwork. Along with this as rents remain high the investor also gets a good rate of return.
- Payoff Debt: As you pay off debt this reduces your leverage and also improves your cashflow.
- Refinance High interest debt: Try to refinance high interest debt into loans which have a fixed rate interest for 3-5 years. This way the rates should stabilize before you are in the market for your next refinance or 1031 exchange.
- Generate other streams of income: this will help with improving your cashflow in case your payments change due to the interest rate hikes.
- Raise private capital: this can be used to pay off high interest rate loans backed by real estate and provide good returns to your private investor.
- Shop different banks: Do this and compare the programs between different credit unions and banks which have different loan programs. After all they are competing for your business.
- Choose another investment strategy: One might have to do this as the business cycle changes. If you are one, that has always used rehabbing as your primary strategy then in a high interest rate environment you might have to try lease option, master-leasing, novation, sub-leasing or use of options.