Why Interest Rates are Rising and It Doesn't Matter to ME !

So when and why is an up trend not that important?

Apartment Buildings and Commercial Building prices follow fixed interest rates up, and down in opposites, when fixed rates go up, prices go down, when fixed rates go down, prices go up, this is also known as the Cap Rate Trend.  

The most money I've seen made in Multi Family and Commercial real estate is in this order:

1. Number of Properties Owned 

2. Timing of Purchase (before a market rise)

3. Number of Profit Centers (Ideally all 7)

4. Location of Each Property

5. Tax Structure

6. Interest Rate (notice this is last)

1. Number of Properties Owned. So how to own multiple properties? You can either build a Real Estate Portfolio business yourself, or invest with a seasoned professional with a track record of successful deals.  

2. Timing of Purchase. 2011 to 2015 I purchased 4 Apartment Buildings in Windsor Ontario, the unemployment rate was 12%, the vacancy rate was 10%, the timing was perfect, the market could not have gone lower and now unemployment is 5.4% and vacancy is 2.8%. Same is coming for Oil and Gas country, and I'm ready.

3. Number of Profit Centers. Think 7 = ELCPTAR, 1. Equity on Purchase 2. Leverage 3. Cash Flow 4. Principal Pay Down 5. Tax Efficiency 6. Appreciation, Forced and Market 7. Reinvest Equity/Profit.

4. Location of Each Property. The better the Location the higher the re positioned value of the Property and lower the risk in a downturn, buy under performing properties in good areas, then improve the property and income and watch the value skyrocket.

5. Tax Structures Matter! If you own Multiple Properties like I do setting up a flow through Holdco structure works well to Limit Tax and allows you to create Loans from one property to another and write off the interest your paying yourself, Wow! 

6. Interest Rate, Focus on it This Way. When rates go up many properties that are over leveraged end up being sold because the owner can't afford the new higher mortgage payments. We'll be seeing a lot of this in the Oil and Gas markets in 2017. 

For more on this feel free to contact me or join me at our monthly Meetup Real Estate Investing Education events.

Click this link;

https://www.meetup.com/SynergyREN/

Email or call me if you need a referral for an amazing Mortgage Broker!

Enjoy, Rick Genovese.