I'd like to make a simple argument. I'd buy either way. I know this sounds a little too simplistic, but I literally sold my financial practice after 18 years because I became convinced that real estate is where I needed to invest. So hear me out.

Rates Rising…

If I knew rates were going to rise, I'd buy now to get a rate lower than I would be getting gin the future. I'm a firm believer that values will not drop substantially while there is such an inventory shortage. Remember, we're talking about shelter. This is something people cannot do without.

For the record, I recognize that there are some markets across the country that I would not touch, but there is no shortage of healthy suburban areas where I'm comfortable investing in RE, and I would be shocked to see a substantial and widespread crash in values.

If that happens, I'll eat my words.

I believe if you purchase good assets in landlord-fair states/communities and for the long haul, appreciation is a reasonable thing to expect. If you disagree, please share two things: 1) Why you believe that, and 2) what do you recommend instead? And don't reply with "cash" or "sidelines". I don't consider a government's currency an "investment." It's the current between assets, not an asset by my definition.

Rates Falling…

If I knew rates would be lower, then I'd be willing to invest now with a confident expectation that when rates drop, the demand for my investment will rise as more people will re-enter the market.

And of course, I'd restructure my debt at a lower rate. I know this costs money, but do you know how much 5% appreciation on a $500,000 asset is? I think 5% is conservative if rates fall meaningfully, by the way. I'll take the appreciation and pay the cost of refinancing every time.

In short, the only reason I care about interest rates is because I need to enter the rate in my underwriting calculations. Of course, if the deal doesn't make sense, I won't buy it, and the rate does play a part in how well something will cash flow.

But rate alone should not keep anyone from purchasing a good asset with the bank's money.

Not to beat a dead horse too much, but remember the big picture here… The fact that you can borrow money at any reasonable rate relative to inflation to purchase a necessary asset that reliably appreciates over enough time and creates income is phenomenal.

Brady Mullen

Denver, Colorado

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