Increasing Interest Rates & Real Estate

The inevitable escalation of the prime interest rate will have an impact on everyone in many situations. Some real estate situations will need to be resolved quickly. Planning ahead for this will be critical.

Inspect real estate assets to determine the winners and potential losers. Identify properties where marginal gains, or losses, are. Speak with the professional that handles these matters for you. Or, do the math yourself. The real estate that is not serving you, or would put you suddenly at risk of being in the red is the one that is far better off belonging to someone else. Property that will be eaten alive by these increasing interest rates may well be better off sold. Holding can be costly. Streamlining may be a necessary move to protect other properties from a whiplash effect.

The time-value of money is an important consideration. No one is well served by holding and spending on real estate that brings no immediate value or short-term accrual of value.

Ballooning payments can jeopardize credit rating if payments are not made in a timely manner. Sometimes the benefits of selling at a loss will far outweigh holding for the sake of holding. These are situations that can be fixed with time. Sentimentality does not belong here. Do not wait for the effect. Get on the cutting edge and make these decisions now.

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