11% interest rates

[MattReno]

it's not historically infeasible that this could happen. So what exactly is the best strategy for investors in the housing market when we have interest rates that high?

 

[happylandlord]

it's not historically infeasible that this could happen. So what exactly is the best strategy for investors in the housing market when we have interest rates that high?

CASH FLOW....one way to ensure your properties can ride out the storms is to ensure our investments cash flow. Something to consider is a 65% heloc 15% mtg mix. Bank the cash.

happy_landord

 

[Thomas Beyer]

it's not historically infeasible that this could happen. So what exactly is the best strategy for investors in the housing market when we have interest rates that high?

Worry about it then. That is unlikely in the developed world.

Usually CAP rates adjust by drastically reduced real estate values when interest rates are this high.

High interest rates implies very high inflation which is highly unlikely.

 

[kfort]

Take a look at the balance sheets of many many governments of different levels across the globe.. 11% would bankrupt a great number of them. Our world functions on cheap debt (currently).

Closer to home, Ontario Quebec and GoC would be examples of this

 

[Thomas Beyer]

Take a look at the balance sheets of many many governments of different levels across the globe.. 11% would bankrupt a great number of them. Our world functions on cheap debt (currently).

Closer to home, Ontario Quebec and GoC would be examples of this

Plus AB and ON, and very very soon, BC.

Like EU Canada is on a dangerously slippery slope into ever more socialism, ie ever rising debt and taxes, hoisted onto taxpayers by naive (or bold faced lying) politicians catering to an ever increasing share of entitlement seekers.

 

[MattReno]

Okay let me just alter the conversation. If you had a crystal ball and you knew that the interest rates were gonna go up to 11% or considerably higher than they are now how would you position yourself to make a lot of money off of that information ahead of time.

 

[Matt Crowley]

At rates that high, you will see loan-to-own businesses develop out of MIC's. As noted above, values will be crushed and equity washed out. Result will be a change of wealth for highly leveraged equity-side investors to debt-side investors.

Countries won't be bankrupt if they mark the debt to market, higher interest rates means lower present value of the loan.... so extend the balloon payment, change the mix of interest / principal, or pull a Venezuela. I'm not sure if anyone has noticed this but bankers rarely lose and aren't held responsible for bad social outcomes.