For Florida landlords keen on expanding their real estate portfolios, timing the market can be a particular challenge. In a perfect scenario, low interest rates would simplify this decision-making process. However, we live in reality where interest rates fluctuate and make investment decisions more challenging.
This brings us to a pivotal question for investors: Is it wise to purchase rental properties when interest rates are this high? The answer largely hinges on your long-term objectives. Are you committed to being a landlord (or investor that hires a third-party management company) for the foreseeable future? Will these properties be part of your portfolio over an extended period?
Your responses to these questions will guide whether the adage “Marry the House, Date the Rate” resonates with your investment strategy.
Marry the House, Date the Rate
This phrase, a staple in real estate circles, defines a strategy of long-term commitment to a property while approaching the interest rates with the intention of refinancing once rates drop. This saying pops up much more frequently in times of heightened rates, as we currently experience due to various economic factors, including the Federal Reserve’s efforts to manage inflation.
The philosophy underpinning this saying is straightforward: acquire a property with an eye for long-term ownership, while staying open to refinancing options when rates become more advantageous. If you are buying and flipping homes in Florida then this does not apply (but it doesn’t mean you shouldn’t buy right now as those decisions come down more to your own personal financial situation).
Applying This Principle to Investing
For those investing in Florida’s rental market, embracing this mindset is particularly prudent if long-term ownership aligns with your goals. Consider the attributes of your potential investment: Is it a sought-after property that promises consistent rental occupancy? Does it sit in a neighborhood that perennially attracts tenants?
If your investment ticks these boxes, then committing to it, despite high interest rates, can be a sound decision. The rationale is simple – the rental income should comfortably offset the interest payments. Over time, this strategy becomes increasingly beneficial as you potentially refinance at lower rates while maintaining a steady rental income.
When interest rates are high, asking prices go down. For investors, this creates opportunities to acquire properties that otherwise would be unavailable to you on the market.
Protecting Your Florida Real Estate Investments
At Atlas Law, our focus is to support Florida landlords who play a vital role in providing rental housing to our communities. Making informed investment decisions is crucial, and our role is to assist you in safeguarding these investments. For guidance in navigating and securing your real estate investments in Florida, contact Atlas Law to get started.