How Rising Interest Rates Impact Real Estate Investors

Interest rates are rising, but with the right strategy and loan product you can build your portfolio in any market!

During the pandemic we saw interest rates fall to historic lows creating a highly competitive real estate market. As we move through 2022 mortgage interest rates are rapidly increasing. The Federal Reserve has announced that they will be raising interest rates as a means to combat inflation which will have short and long term effects on real estate investments, development activities, and home buying.

So how exactly will this impact the real estate market, and more specifically, investors?

Investors during the pandemic saw an opportunity to invest in more properties due to the historically low interest rates, however, as funds become more expensive to borrow it is less advantageous to continue investing at the same pace as before. Investors will need to prepare and budget for a continued increased cost of capital as they consider properties in this economy.

An investor's strategy will determine how rising interest rates will impact them. If an investor is interested in value appreciation and intends to hold onto the property as a rental, high interest rates might not be such a bad thing. For investors who have the option to adjust rent, rising interest rates may actually benefit them. With a fixed mortgage, the payment remains the same while rents can increase due to inflation and changes in the market. For investors that are more focused on strong, instant cash flow, they may experience reduced margins on their projects due to rising interest rates, forcing them to hold for longer than they had intended.

Regardless of rising interest rates, real estate acts as a hedge against inflation. With the right strategy and preparedness rates are nothing to fear as a real estate investor. Fortunately, with the product variety offered by private lenders, the question isn’t whether or not you should buy, but rather which loan product makes the most sense for you.

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About CALCAP Lending

A division of CALCAP Advisors, CALCAP Lending benefits from the expertise of a seasoned team of professionals with extensive, successful track-records covering a variety of disciplines and leading large, nationally-recognized institutions. A private money direct lender, CALCAP Lending provides short to mid-term financing for property investors and businesses looking to purchase, refinance, renovate, and construct residential or commercial properties.

Lending FAQs

You've got questions, we've got answers.

What is private money lending?

Private money lending is a collateral-based lending strategy that is often associated with shorter terms and more attractive features. A private money loan offers more flexibility than a conventional mortgage or bank loan.

How does a private money loan work?

Private money lenders provide financing using money from private entities. Private money loans often work as bridges to help investors gather funds to achieve their short term real estate goals, but long term, permanent options may also provide.

Why would I choose a private money lender?

There are many advantages to using a private money lender for your real estate investments! Private money lenders can be more lenient when it comes to borrower credit issues, often there are no prepayment penalties, you can leverage your cash to buy multiple properties, and private money loans are quicker when compared with institutional loans.

Can I get prequalified for a loan?

CALCAP has a responsive loan team who are able to prequalify you. Contact a loan specialist at 833.816.5580 to get started.

How long does the lending process take?

Private money lending can be a quick and painless process. From start to finish, 30 days is common, however, turn around times can be as short as 10 business days.

Can I still be approved for a loan if I have bad credit?

Generally yes, we understand that people have temporary financial issues that come up, and we want to work with you to help you rise up financially to a better place. Offsets to credit concerns may include experience as a real estate investor, good cash reserves, and/or larger down payments.

I am a broker or investor, how can I work with CALCAP?

Business is built on relationships. Ours is no different. CALCAP Value and Preferred Partners receive exclusive rates and services. For more details and to submit your application, visit our partners page.

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