Investors and Savers Are Concerned About Rising Interest Rates

Investors and Savers Are Concerned About Rising Interest Rates

The goal of any investor is to diversify their portfolio. Some people tend to be savers while others are wanting to make money to invest in other projects. No matter where a person falls on the investment spectrum, everyone gets a little antsy when the interest rates are on the rise. Have no fear because there is still much profit to be made regardless of where the interest rate stands. However, both investors and savers should be wary of a few pitfalls and avoid them at all costs.

The Involvement of the Federal Open Market Committee

Anyone that has paid attention to the housing market has noticed that the interest rates are slowly creeping back up. Gone are the days of getting a home with a two or three percent rate. The hike is all part of a plan guided by the Federal Open Market Committee.

Investors worry that these rates help when it comes to money market savings accounts and certificate of deposits, but will it hurt the housing market? The good news is that the housing market is doing great. It’s unlikely that a crash like 2008 will ever be repeated. So the market can take a bit of a shift and remain unscathed.

The Difference in a Savers/Investors Approach

Just how much has the interest rate increased? The most recent increase happened in September of 2018. The rate rose 2.25 percent. In December of 2019, the rate is set to grow another three percent. Lastly, the FOMC says that the interest rate remains steady into 2020 and will then level off. Investing cash into savings accounts, money market mutual funds, and other accounts that are affected by interest rates can undoubtedly benefit savers. While savers may be elated by the news of the rates, investors are concerned.

Savers should know that present-day rates are not like days gone by where one couldn’t find a decent rate. Anyone that holds a bond will face a mixed bag. When the interest rates are on the rise, the value of existing bonds decrease. Part of the reason for the decline is that these older bonds must vie with newer ones that offer higher yields. It’s advisable to keep bonds maturities for a short while until the rates plateau. Any dividends made from the old bonds can then be used to invest in new, more profitable, ones.

Making Wise Investment Decisions

Investors are concerned because the stock market has taken a bumpy ride this year and the increase in September only added fuel to the fire. An excellent place to invest is in commercial mortgage securities. The rising rates cause mortgage REITs to increase dividends. Be careful about pulling money out of the market to quickly invest it into a savings account that may ultimately lose money because of inflation. Stay the course and keep the investment portfolio in line with risk tolerance and age.

What to Know When Investing in Vacant Land

What to Know When Investing in Vacant Land

It’s important to consider the ways that investing in a vacant plot of land differs from other types of real estate investments before committing your resources. A vacant plot of land presents different challenges, but it also offers unique opportunities. Learning more about these differences can help you determine if this is the right route for you, and it can help you identify the best opportunities in your market.
Plan a Quick Exit Strategy
The market for vacant plots is even more volatile than the market for residential and commercial real estate. It won’t take much for the market to take a downturn, leaving you with a plot of land that is essentially worthless to developers. To avoid that situation, you should have a quick exit strategy before you even make an offer on the land. You shouldn’t plan to hold onto the land for more than 36 months at the longest.
Don’t Let the Land Sit Idle
Even as you begin looking for land developers, your first concern should be to look for ways to earn passive income from the land. Depending on the location of the land, you can put up a billboard, divide it up into parking spaces, or turn it into a fruit and vegetable garden. There’s no reason this land can’t be earning you money from the moment you take possession of it.
There’s More Work to Be Done
Once you buy the land, you may think that you’ll just sit back and wait for developers to start submitting offers. That’s not quite how it works. If you really want to appeal to developers, it’s up to you to do the legwork to get the land ready for development. This means getting the land surveyed, applying for the necessary permits, and getting the property zoned. For larger plots, you might also have to get the land subdivided. Developers will look for land that already has been prepared in this way, which is commonly known as entitling the land.
As is the case with any type of real estate investment, it’s also up to you to do your research in advance of investing in any property. This means conducting title searches to ensure the land has a clear title and researching the market to evaluate the land’s potential value. As long as you do your due diligence, investing in land and offering it for development can be a lucrative opportunity.
How to Find Investment Properties

How to Find Investment Properties

Investing in real estate is an exciting opportunity, but, for those new to this type of investing, there are many unanswered questions. One of the biggest concerns new investors face is in finding the opportunities that will earn them a good return on their investment. There are actually a number of different ways to find new real estate investment opportunities, but you will still have to do your due diligence in researching any property you do find.
The Grapevine
This is still the best way to discover new properties that have just been listed and those that may be hitting the market soon. Since most properties don’t stay on the market for long, finding out about them early is often vital. Let people know you’re looking and you may hear about listings ahead of the public.
It’s hard to meet anyone who’s not familiar with Craigslist and it nears the top of the list for the most visited websites in the world. Think of it as a global classified ads site and you’ll begin to understand the significance it plays for investors. You can find deals for just about anything on Craigslist and that includes real estate.
Do Your Own Marketing
This is similar to word of mouth advertising, except that you’re trying to reach a much larger audience. By using print and digital marketing to notify the public about your real estate investing interests, you’ll bring sellers to your front door. This can help you find opportunities that will never reach the public eye if you act quickly enough.
This is a real estate listing site that specializes in sharing listings for commercial properties. The site hosts listings for apartment complexes and smaller multifamily homes as well as for restaurants, shopping centers, and other small business real estate ventures. LoopNet is often a good site to visit to find your next investment opportunity.
As you search the internet, you’ll likely find more sites that offer listings for real estate investment opportunities. While you may have to continuously check these sources until you find the right venture, your perseverance will pay off. It’s better to search for a longer period than to jump into an investment opportunity that carries too much risk. If you take the time to determine what you’re looking for in an investment opportunity, your chances for success will be multiplied.
Why You Should Invest in Single-Family Rentals

Why You Should Invest in Single-Family Rentals

After a year marked by stock market volatility, many investors are looking for alternative investments to stocks. Such investors should consider the advantages of investing in single-family rentals.

High Demand 

A low level of homeownership is one reason single-family rentals are in high demand. People are not seeking homeownership at the high rates of the past. Some seek single-family rentals to maintain their freedom to live anywhere. Others are would-be homeowners, but they have large amounts of debt from student loans and credit cards that make it difficult to qualify for or to pay a large mortgage.

With unemployment low and rising wages, strong job growth also is contributing to the high demand for single-family rentals. The country’s healthy labor market also is one factor that is leading the Federal Reserve toward a rise in interest rates, which would result in higher mortgage rates. An increase in mortgage rates would be good for investors in single-family rentals. Some people will continue renting because higher mortgage rates will price them out of homeownership.

Low Inventory 

Currently, there’s a low inventory of single-family homes. The combination of high demand and low supply means landlords can charge more in rent (see below).

Rising Rents 

A single-family rental has excellent potential for providing investors with positive monthly cash flow because rents are rising. Rental rates are expected to continue increasing in the near future.

Increasing Asset Value 

The value of single-family homes has increased over the past year and is forecast for continued growth in 2019. Long-term investors in single-family homes are likely to see these assets gain value over time.

Asset Volatility Unlikely 

Asset volatility is common in the stock market. However, prices in the housing market are not correlated to the stock market. The stability found in the real estate market may be attractive to equity investors.

Different Tenants 

Cultural shifts and demographic changes have put new faces on tenants who rent a single-family home. Young adults are not putting the cultural value on homeownership that previous generations did. Although many young adults aren’t planning a home purchase, they still want the benefits of a single-family home, such as a yard and additional bedrooms, for their children. Downsizing baby boomers rent because they either cannot afford or don’t want a new mortgage.