Capitalizing on Both High and Low-Interest Rate Environments

Why Interest Rates Matter Less Than You Think. A Lot Less.

“Rates are important and should definitely be a consideration when choosing your lending partner.  However,  they are not the sole criteria.There are other aspects to consider, especially when discussing an investment property.” An excellent reason is: Grow your Business & Net worth!

High and Low Interest Rates

By owning multiple properties, investors can diversify their income, reduce their risk, and take advantage of different interest rate environments. For example, high interest rates present favorable opportunities for cost-efficient investments and equity extraction. These opportunities can be used to invest in more properties. Low interest rates can make it easier to secure advantageous borrowing terms, making it easier to buy properties and thus keep growing the wealth empire.

Knowledgeable investors are always looking for opportunities

They don’t let fear or uncertainty keep them from taking action and we shouldn’t either. Those investors are willing to take risks, but they also do their due diligence and manage their risks carefully. They are always looking for ways to grow their portfolios and achieve their financial goals.  Their goal is to Build an Empire or a net worth that can allow them to have more free time while earning a good living via passive income.

Diversification

By expanding their property portfolio, investors can effectively mitigate vulnerability to market fluctuations. This is because they can leverage multiple sources of income to reduce risk and improve chances of success. This strategy is called diversification and it’s consistent with the main principles of financing, which emphasize strategic growth over preserving the status quo.

Example

An investor has a property they own outright.  The appraisal value comes in at $470K. They contacted us about a Cash-out Refinance. Regardless of the interest rates now being much higher than last year, the loan scenario presented a unique opportunity. Here’s why:

With a net loan amount of $305,500 against a property valued at $470,000, the 65% loan-to-value ratio basically means the client has substantial equity in his property. The investor can now leverage this capital injection for various opportunities such as debt consolidation, or to invest in other properties or into his own business. In this scenario, the higher interest rate becomes less of an issue when balanced against the value of unlocking funds that can contribute to his overall  financial objectives.