As you might know, the term “inflation” refers to an across-the-board increase of prices paid for most goods and services.
Inflation has been on the rise in large part due to the weakening of the U.S. dollar and the drastic run-up in the price of oil. When inflation rises, one of the things that the government usually does to combat inflation is to raise interest rates. Among other things, interest rate increases tends to increase the value of the U.S. dollar which frequently tends to push consumer prices back downward, thus fighting inflation.
I am not sure that the government will begin to aggressively raise interest rates to fight inflation simply because the U.S. dollar has been rising and oil prices have been declining very aggressively in recent weeks.
However, if interest rates are increased, it’s probable that mortgage rates will follow. Based on that, my suggestion to you is to consider acquiring investment real estate right away! Here’s why:
- While home sales are down nationally, many of the worst-hit markets are actually already improving quite dramatically
- Real estate prices are very low right now - without a doubt, real estate is on sale right now
- If you can acquire a mortgage to finance your properties now before mortgage rates go quite a bit higher, you’ll be able to charge higher rents in the near future because rental prices have a correlation to interest rates
This information is not really a prediction, though I think it’s possible things will play out this way. The real objective of this post is to give you an idea of how some economic factors (such as inflation, currency values, etc) have a very real effect on you as a real estate investor.
Have a great day, my friend! Please be sure to check out more information here on FreeRealEstateTraining.com!
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