The Future of Interest Rates

[Jimmy H.]

I know many on BP have voiced concerns over deflation and/or eventual "hyperinflation". I myself am more worried about stagflation.

I am looking at commercial MH investment properties, one 6 unit and one 8 unit. They are cash flow positive but not outstanding, as the units are in pretty nice areas. My concern is the typical 5 year balloon.

It is always tough to predict interest rates 5 or 10 years out, especially in this economy. Maybe you could argue we'll stay in this low rate environment for the next 5 years, but in 10 - with all of the money thats been pumped into the system and the government's apparent goal of devaluing the dollar I think interest rates will begin upwards sooner and more briskly than you might imagine (especially considering the multi decade lows they are at now). My concern is that these properties will be at even or negative cash flow in 5 or 10 years. Which with my salary I can handle....But I don't want to pay out of pocket I want to stay cash flow positive. My question is: Is there any way to get around this.

Is there any way to get fixed long term financing on such investments,? Or in this environment is the best answer just to buy 1-4 family units and lock in a low 30 year fixed. 1-4's are great but I really like this 6 fam and 8 fam i'm analyzing.

What are your pedictions for interest rates?

If you're predicting a rise are you shying away from commercial investments and buying only 1-4?

And, most importantly, is there anyway around this dilemma?

Thoughts or suggestions?